Around the world, headlines are piling up about the slowdown in shipping cargo. Some articles place blame on China’s faltering economy. Others point to the strong U.S. dollar. Even some experts admit they have yet to identify the cause.
However, the California Ports of Los Angeles and Long Beach don’t seem to have gotten the memo. In fact, in January of 2016, these two large ports saw even higher cargo volumes than they did prior to the recession.
“We are encouraged by the strong start to the year, which stands in stark contrast to the congestion we faced a year ago,” said Port of Long Beach Chief Executive, Jon Slangerup, in a recent statement.
What are the reasons for the happier times in Southern California while the rest of the world is facing challenges? There are a few possibilities.
A year ago, the Pacific Maritime Association and the International Longshore and Warehouse Union were embroiled in a bitter and lengthy conflict. The labor unrest led to a major backlog of cargo at the Ports of Los Angeles and Long Beach.
This backlog meant cargo that might have come through Southern California was re-routed to the East Coast or elsewhere. No matter what was happening globally, cargo traffic would be slow in SoCal.
That labor dispute was settled in February of 2015. The backlog was cleared through the rest of the year, leaving plenty of opportunity for these ports to see growth. As 2016 began, companies that were shipping from the Pacific Rim saw that Los Angeles and Long Beach were once again available — and less expensive than shipping through the Suez or Panama canals.
Ready for Growth
Another reason the two Southland ports haven’t been hit by the slowdown may be due to the availability of docking space for today’s larger cargo ships. These spaces will continue to grow as the ports make capital investments and contingencies to maintain their position as hubs for the world’s cargo.
“”We are encouraged by the strong start to the year, which stands in stark contrast to the congestion we faced a year ago,” Slangerup said. “We are off to a solid start in 2016 and will continue to make the necessary strategic investments in capital, energy and innovative solutions to ensure that Long Beach remains the port of choice for international trade.”
Products, Not Oil
One of the other reasons for the growth in Los Angeles and Long Beach is the kind of cargo coming through the ports. The crash in oil prices globally has had a deeper effect on ports elsewhere, while these California ports continue to move goods and products.
For the ports of Los Angeles and Long Beach, the future looks bright. Capital investments will not only add space but add green initiatives that will put the ports in a position to maintain growth and weather international economic uncertainty.
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