Citing a drop in market share by the busiest port complex in the U.S., the Los Angeles 2020 Commission has issued a recommendation to merge the ports of Los Angeles and Long Beach, an idea likely to revive tensions between the rival seaports.
The commission, made up of prominent business, labor and civic leaders, outlined a series of recommendations to reduce city bureaucracy and make the city more responsive to business investment.
Their proposal to merge the largest and second largest ports in the U.S., however, is among their most ambitious.
The Port of Los Angeles said it welcomes “the opportunity to discuss additional collaborative efforts that would both retain and expand the existing cargo and jobs at the San Pedro Bay port complex,” said Phillip Sanfield, a port spokesman. “The two ports have a strong track record of working together on a wide range of initiatives related to the environment, security and efficiency improvements.”
The two ports are operated separately by different governing boards and process 40% of U.S. imports. The two account directly for about 595,000 jobs in the region.
The L.A. 2020 Commission pointed to examples of regional cooperation at the ports of Seattle and Tacoma, as well as by New York and New Jersey officials. “We should be competing with ports in other regions, not with each other,” the report said.
Long Beach sued Los Angeles last year over a $500-million rail yard planned by the BNSF Railway. Long Beach was treated “very poorly by the port and the city of Los Angeles,” Foster said.
Foster said no one from the 2020 Commission had contacted his city about the idea of a merger.
The commission said it relied on data and interviews with people who do business at the ports. “Of course, the people of the ports of Long Beach and Los Angeles aren’t going to endorse the idea of a merger,” said Austin Beutner co-chair of the commission. “They’re going to fight for their turf.”
Jock O’Connell, an international trade economist who follows the ports, said that the idea of a merger objectively sounds like one worth considering but that the road would be “fraught with political uncertainties.”
Entering an agreement to work together could consolidate marketing efforts, he said. It could also make it easier for a consolidated port authority to fend off competition from other ports, including the looming threat of the Panama Canal expansion project.
But he warned that it would be a “politically difficult task” to get the two ports to agree to a merger.
John Husing, an Inland Empire economist, said the idea is unlikely to get traction.
Furthermore, the proposal itself isn’t a sound idea, according to Husing. “The public benefits from competition between them,” he said.
PMA, ILWU Negotiations Begin on Positive Note
Contract negotiators between the International Longshore and Warehouse Union and the Pacific Maritime Association began yesterday on an upbeat note.
“Both sides said they expect cargo to keep moving until an agreement is reached,” the ILWU and the employers association that represents shipping lines and terminal operators said in a joint statement.
The current six-year contract expires at midnight June 30, and negotiators will meet daily in San Francisco until a contract is reached, the statement read. Negotiations will alternate each week between the headquarters of the ILWU and the PMA.
The union seeks to negotiate a “fair agreement that protects the good jobs and benefits that support thousands of families and dozens of communities” on the West Coast, said ILWU International President Bob McEllrath.
PMA President Jim McKenna noted that West Coast ports in recent years have lost “significant market share” to ports in Canada and Mexico and to other U.S. ports. Employers seek to negotiate a contract that powers jobs and economic growth and protects the West Coast’s standing as the “gateway of choice for goods sent to and from Asia,” McKenna said.
-Bill Mongelluzzo, Senior Editor | May 13, 2014 9:12AM EDT
The Journal of Commerce