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Some business leaders worry Panama Canal expansion could threaten jobs in Valley, region

Canal ExpansionBy Kevin Smith, Staff Writer - International trade has long been one of Southern California's top economic drivers, but some business leaders fear that expansion of the Panama Canal could divert freight movement away from Southland ports and threaten much-needed jobs in the San Gabriel Valley and beyond. A diversion of goods could slow business for scores of importers and logistics and warehousing operations in Industry. A project to widen and deepen the Panama Canal is scheduled to be completed in 2014. The expansion includes the construction of two new sets of locks - one on the Pacific side and one on the Atlantic side - as well as the widening and deepening of existing navigational channels. The expansion will allow the canal to take on bigger ships. More importantly, it will make ports in the southern and eastern United States more desirable to Asian shippers. "There are some very significant concerns," said Lee Harrington, executive director of the Southern California Leadership Council. "If you look at the big picture, one in four jobs in California is related to trade flows." Much is being done to streamline and speed the flow of goods moving to and from the ports of Los Angeles and Long Beach, and more projects are planned, but if some of those planned improvements aren't stepped up, freight movement at the ports may erode and jobs will be lost, according to Harrington. "The Panama Canal is being built with the objective of taking away a big part of our market share in terms of trade flow," he said. "A 25 percent cut in our market share is not inconceivable." (more)

Ninety percent of the goods that come into California move through Southern California at some point in their journey, Harrington noted, and all of that activity boosts regional employment.

"There are lots of opportunities for hands to touch and value to be added to the flow of trade, and that's what creates the jobs," he said. "We have a half-million jobs involved in that sort of trade, and they are pretty-good-paying jobs. They are a source of replacement for some of the jobs we've lost in manufacturing."

The San Gabriel Valley - and Industry in particular - has numerous companies that warehouse and distribute goods moving to and from the ports.

The San Gabriel Valley is traversed by two Union Pacific railroad mainlines that converge in Pomona.

A 2010 study by the Alameda Corridor East Construction Authority counted 67 freight trains per day - a number that's expected to rise to 127 per day by 2025.

"About 70 percent of our 2,500 businesses here are receiving goods that are either coming from or headed to the ports," said Don Sachs, executive director of the Industry Manufacturing Council. "That's our bread and butter."

Still, Sachs said he isn't so sure the Panama Canal expansion is a bad thing. The project, he said, could boost the flow of merchandise coming to Southland ports.

"If they can improve the amount of ships getting through the locks, that could be a positive," Sachs said, "but we'd have to determine what kind of trade relations we have with South America and whether there would be an increase in taxes placed on imports. If that gets too high, it could create an imbalance to our exports."

Phillip Sanfield, a spokesman for the Port of Los Angeles, said the port is closely monitoring the Panama project.

"About half of the cargo that comes into our port stays in the region and moves out via truck and rail," he said, "but the other half is what we call discretionary cargo, which goes further away, to Chicago and other places."

When the Panama Canal expansion is completed, that discretionary business could be at risk, he said.

"We take any threat to our position as the nation's largest trade gateway very seriously," Sanfield said.

The ports of Los Angeles and Long Beach already have the best infrastructure, warehousing capacity, logistics network, intermodal system and available rail lines in the nation, according to Sanfield.

A number of projects, however, are under way to further improve operations at the ports, including terminal upgrades, modernizing of infrastructure and deepening of the port channel, which should be completed in two years.

"We've been building infrastructure at the rate of $1 million a day," Sanfield said.

The Port of Long Beach has about $4 billion worth of infrastructure projects planned that will place the port in a very competitive position in the coming years, port spokesman John Pope said.

A planned $1 billion project will replace the Gerald Desmond Bridge. Currently, large ships can pass under the bridge only at low tide, and the new bridge will better accommodate larger vessels, allowing more traffic to pass throughout the day.

Another billion-dollar project will combine two existing terminals into one bigger and more- modern terminal, Pope said.

On Dec. 7, the Panama Canal Authority and the Port of Long Beach signed a memorandum of understanding aimed at generating new business and economic growth, and at promoting international trade between Long Beach and the east coast of Latin America via the Panama Canal.

"This partnership will help increase our reach to Latin America, an emerging trade partner for our region," Port of Long Beach executive director Richard D. Steinke said when the agreement was signed.

Since 2007, the Panama Canal has provided a passageway for close to 21 million metric tons of trade between the Port of Long Beach and trading partners on the east coast of South America.

Both ports weathered a decline in business during the nation's recession, but they saw a significant uptick last year, officials said.

In 2010, the Los Angeles port handled 7.83 million TEUs, or 20-foot-equivalent units, of merchandise. That represented a 16 percent increase over the previous year, but it was nowhere near the port's peak of 8.47 million TEUs in 2006.

Long Beach handled 6.32 million TEUs last year, up from 5.07 million in 2009. The Port of Long Beach hit a peak of 7.29 million TEUs in 2006.

Nancy Sidhu, chief economist for the Los Angeles County Economic Development Corp., said some Southland business leaders are falsely assuming the worst in regard to the canal expansion.

"They are assuming that all of the cargo that could go that way will go that way," she said. "It's cheaper to go through the canal, but travel by ocean takes longer. So if all you want to do is get your goods on the shore of the U.S. and you are coming from Asia ... the fastest way is to bring it here."

America Token Enterprise Inc., an Industry operation that imports Asian condiments, won't be affected by the Panama Canal expansion, company representative Bobby Wong said.

"We don't use the Panama Canal," he said. "Unless you have products going to the East Coast, you don't need to."

And even then, Southern California ports are still a better option, according to Harrington.

Harrington said cargo that comes into Southland ports and moves east by rail can arrive seven days earlier at East Coast locations than merchandise that travels through the more-circuitous Panama Canal route.

And once current port- related projects are completed, merchandise could arrive 10 to 11 days earlier, he said.

Improvements such as the Alameda Corridor East project, which is creating grade separations to separate vehicle and rail traffic at intersections throughout the San Gabriel Valley, are making for a better flow of freight - and less vehicle traffic congestion, Harrington said.

A clean truck program at the ports also has reduced air pollution, and ships that dock at the ports are now running on electricity, as opposed to idling with their regular air-polluting engines.

A $202 million Colton Crossing project is also planned to separate two rail lines that cross in the city of Colton, allowing for the continual movement of port-related freight.

"Right now it's a like a four- way traffic stop," said Wally Baker, a consultant for the Southern California Leadership Council and the Southern California Association of Governments. "When one train comes, it has to wait for the other one to cross. It's a big mess."

Harrington said a Beat the Canal coalition is being formed that will include "all the real players" who are involved in Southland freight movement through the ports.

The players will include the ports, logistics firms, railroad companies, labor unions and transportation agencies that would be involved in updating some of the infrastructure.

"They are all coming together with the perception that we can be the closest, the fastest, the cleanest and the most-reliable route," Harrington said.

Peter Peyton, president of the Marine Clerks, International Longshore and Warehouse Union, Local 63, agreed that Southern California's ports and surrounding infrastructure have a lot going for them.

But Peyton - whose union represents some 50,000 workers along the West Coast, including Canada and Hawaii - is also concerned that market share could be lost.

Peyton said the Panama Canal expansion opens up new opportunities for ports in Houston, Savannah, Ga., and Charleston, S.C.

"The tall blade of grass is the first one cut," he said. "We're concerned not only for regular jobs, but for indirect jobs and the tax base that this activity creates for cities."

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Some business leaders worry Panama Canal expansion could threaten jobs in Valley, region | 1 comments | Create New Account
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Some business leaders worry Panama Canal expansion could threaten jobs in Valley, region
Authored by: Anonymous on Sunday, January 30 2011 @ 06:50 PM UTC

No shit...these guys in Southern California are just figuring this out...