Americans can breathe easier if a committee of West Coast dockworkers approves an agreement between West Coast shippers and longshore union workers on Dec. 9.
The six-month negotiation appears to be close to a resolution based on a tentative agreement reached last weekend and submitted for final approval by the union's oversight committee.
"I'm just glad they were able to settle this thing without another shutdown or before local business and consumers got washed out to sea," said Wally Baker, senior vice president of economic and public policy for the Los Angeles Economic Development Corp. (LAEDC).
He said the LAEDC has released new estimates as part of the OnTrac rail study placing the total trade disruption cost at $6.28 billion for just the two Los Angeles basin ports.
"This represents about two-thirds of the total trade value interrupted by the West Coast ports dispute," Baker said.
According to longshore union and shipping company representatives, new technology improvements -- a major sticking point -- were included in the final contract. National transportation consultants predict that the implementation of the new agreement will greatly increase productivity at West Coast ports but pave the way for congestion problems in trade corridors across the country.
"These productivity improvements increase the output of our ports and are going to be great initially," said Baker, "But after they get implemented, California's trade corridors and the trade routes to the Midwest, East Coast and Southern United States are going to be in hot water. There was already a lot of rail corridor congestion in the heartland before the productivity improvement at the ports.
"Our studies of just the LA basin rail corridors forecast about a four-year capacity on Southern California rail corridors, but that was before the new technology agreements. The changes will improve the ports' productivity, which is a good thing, but it will also increase the number of trains moving through the nation's corridors. I know Chicago, New York-New Jersey, and many, many other areas of the country are already in serious trouble with corridor capacity constraints. Increased efficiency on the West Coast is going to lead to serious rail congestion if we don't address the corridor capacity problem."
The OnTrac Trade Impact Study is an encyclopedia of U.S. trade data that analyses all international trade moving to and from each of the 435 U.S. congressional districts via the Los Angeles area ports, the OnTrac Corridor and other basin trade routes.
The Los Angeles and Long Beach ports are together, the third largest port complex in the world and connect to the OnTrac rail project in northern Orange County, Calif. The study identifies $196 billion in annual trade through the LA basin ports and corridors during the year 2000 or about two-thirds of all West Coast waterborne trade flows. The other West Coast ports combined are estimated to represent the additional one-third or $100 billion in trade annually.
"We can see how important trade is to all of the country as a result of this dispute. Sometimes it takes a crisis to help us appreciate how much money, taxes and how many jobs are tied to waterborne trade," said Ken Ackbarali, vice president and senior economist at LAEDC. "The OnTrac Trade Impact Study was designed to help members of Congress better understand why corridors and ports are one integrated system and cannot be separated from their economic benefits."
Ackbarali, an economist with expertise in international trade, said, "A 75-85% recovery rate for trade disruption and congestion costs by importers and exporters is a good yardstick. Recent quotes of a cost of $1 billion per day for all West Coast ports during the 10-day shut down is a reasonable estimate if understood specifically as a business disruption or trade congestion cost. However, the billion dollars a day figure does not represent permanent lost business. The permanent business loss for just the 10-day shutdown was probably closer to $150-250 million daily for all West Coast ports. That's a very big number for lost business."
The next phase of the OnTrac study is also under way. Baker said, "We still have a big job ahead of us with this study. In the second phase of the study, LAEDC economists and the Rand Corp. are working together on the economic impact of homeland security on the OnTrac Trade Corridor as well as our ports of entry." The homeland security phase of the study is planned for completion in late January 2003.
The six-month negotiation appears to be close to a resolution based on a tentative agreement reached last weekend and submitted for final approval by the union's oversight committee.
"I'm just glad they were able to settle this thing without another shutdown or before local business and consumers got washed out to sea," said Wally Baker, senior vice president of economic and public policy for the Los Angeles Economic Development Corp. (LAEDC).
He said the LAEDC has released new estimates as part of the OnTrac rail study placing the total trade disruption cost at $6.28 billion for just the two Los Angeles basin ports.
"This represents about two-thirds of the total trade value interrupted by the West Coast ports dispute," Baker said.
According to longshore union and shipping company representatives, new technology improvements -- a major sticking point -- were included in the final contract. National transportation consultants predict that the implementation of the new agreement will greatly increase productivity at West Coast ports but pave the way for congestion problems in trade corridors across the country.
"These productivity improvements increase the output of our ports and are going to be great initially," said Baker, "But after they get implemented, California's trade corridors and the trade routes to the Midwest, East Coast and Southern United States are going to be in hot water. There was already a lot of rail corridor congestion in the heartland before the productivity improvement at the ports.
"Our studies of just the LA basin rail corridors forecast about a four-year capacity on Southern California rail corridors, but that was before the new technology agreements. The changes will improve the ports' productivity, which is a good thing, but it will also increase the number of trains moving through the nation's corridors. I know Chicago, New York-New Jersey, and many, many other areas of the country are already in serious trouble with corridor capacity constraints. Increased efficiency on the West Coast is going to lead to serious rail congestion if we don't address the corridor capacity problem."
The OnTrac Trade Impact Study is an encyclopedia of U.S. trade data that analyses all international trade moving to and from each of the 435 U.S. congressional districts via the Los Angeles area ports, the OnTrac Corridor and other basin trade routes.
The Los Angeles and Long Beach ports are together, the third largest port complex in the world and connect to the OnTrac rail project in northern Orange County, Calif. The study identifies $196 billion in annual trade through the LA basin ports and corridors during the year 2000 or about two-thirds of all West Coast waterborne trade flows. The other West Coast ports combined are estimated to represent the additional one-third or $100 billion in trade annually.
"We can see how important trade is to all of the country as a result of this dispute. Sometimes it takes a crisis to help us appreciate how much money, taxes and how many jobs are tied to waterborne trade," said Ken Ackbarali, vice president and senior economist at LAEDC. "The OnTrac Trade Impact Study was designed to help members of Congress better understand why corridors and ports are one integrated system and cannot be separated from their economic benefits."
Ackbarali, an economist with expertise in international trade, said, "A 75-85% recovery rate for trade disruption and congestion costs by importers and exporters is a good yardstick. Recent quotes of a cost of $1 billion per day for all West Coast ports during the 10-day shut down is a reasonable estimate if understood specifically as a business disruption or trade congestion cost. However, the billion dollars a day figure does not represent permanent lost business. The permanent business loss for just the 10-day shutdown was probably closer to $150-250 million daily for all West Coast ports. That's a very big number for lost business."
The next phase of the OnTrac study is also under way. Baker said, "We still have a big job ahead of us with this study. In the second phase of the study, LAEDC economists and the Rand Corp. are working together on the economic impact of homeland security on the OnTrac Trade Corridor as well as our ports of entry." The homeland security phase of the study is planned for completion in late January 2003.
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