The continuous increase of port congestion in the San Pedro Bay is pushing every day more importers to relocate the port of entry of their goods. However, both ports of Long Beach and Los Angeles provide facilities and service that can not be found in any port. This reports first aims to present a study of the different relevant factors to be considered when considering alternative ports by an importer/exporter of products currently using these 2 ports. It secondly lists and assesses the possible alternate ports according to these requirements.
4 factors have been highlighted:
1. Sea transportation, taking into account the effects of the shipping lines available at the port.
2. Port and area infrastructure, which assess the facilities and services required.
3. Lead-time, from China (major importer for these ports) to terminal dispatch.
The research then proposes 3 different areas where the imports can enter the continent: the Northwest Coast, the secondary ports of California, and Mexico.
The Northwest Coast ports (Vancouver, Tacoma and Seattle) provide good sea transportation, and are the closest ports from China. Being fairly large, these ports provide good infrastructures and service levels. However, the lead time is subjected to decrease if the consumption of the imported good is not in the Southwest for areas such as the East Coast or Midwest. The possible cost reduction will depend on the industry and the market in which the company operates.
In California, being fairly close to Los Angeles-Long Beach ports, Oakland and San Diego are natural alternatives to be considered. The switching costs may be smaller than relocating to the Northwest, and the move relatively easy. Some of the potential distribution centers in the Los Angeles area may still be kept under these options.
Mexican ports are increasingly being considered as real alternatives to Los Angeles port congestion. Still a relatively small port, Ensenada is expected to grow significantly, being at the door of the United States. The largest Mexican Pacific port, Manzanillo, although being further provides good equipment and services. Lazaro Cardenas results to be more appropriate to serve the Mexico City area.
The research concludes by giving some short and long term recommendations. In 2005, the Los Angeles Port Authorities only decided to increase the off-peak use, by offering discounts at these hours. However, companies know that this temporary adjustment may not be sustainable in the long run. Imports from Asia are expected to continue to grow at a significant rate and since areas of extension are rare in the San Pedro Bay, a relocation decision seems to be inevitable.
[...] (See Appendix 1 Worldwide Container Traffic Figures Graphs) This increase in trade from China had a clear effect in congestion during the peak season (late June to November) in Los Angeles Port in 2004. Major shortages in labor and infrastructure to meet the Port's demand were the major cause of this congestion. According to Yvonne Smith, the major causes of the 2004 Los Angeles port congestion were: 1. Labor shortage: port part time workers had fallen to 3,700 in 2004 after having 6,000 workers in 2000. [...]
[...] However, the lead time is subjected to decrease if the consumption of the imported good is not in the Southwest for areas such as the East Coast or Midwest. The possible cost reduction will depend on the industry and the market in which the company operates. In California, being fairly close to Los Angeles-Long Beach ports, Oakland and San Diego are natural alternatives to be considered. The switching costs may be smaller than relocating to the Northwest, and the move relatively easy. [...]
[...] Information sources for this factor may include port websites, direct contact and visit to ports of interest, US Customs website, if serviced by a major railroad company they can supply all the information regarding rail status and technology available in the port of interest and US Federal Highway Administration. Lead time The following diagram shows the average time it takes a container to get from Hong Kong to It takes an average 21 days to move a container through the entire route. [...]
[...] However, the gains in time might be cancelled by a greater inland distance to the main consumption markets. It will depend on where the distribution centers are located: if a company usually ships the imports from California to a DC in the Midwest or the East Coast, then a change in the port of entry is conceivable. In a case where imports are split up and distributed to the consumption area from a single location in south California, a move to the Northwest ports seems to be a major challenge, including high switching costs. [...]
[...] The weight given to each factor may then be used to calculate a rating for the alternative that can then be used to compare and select the best one. Alternative ports available This research is considering different possible alternatives a company may have in order to avoid in the long-run the Los Angeles/Long Beach congestion. The following table synthesizes the ranking of the Pacific North American Ports (by number of TEU in 2004, for the ports that exceeded 500,000 TEU in that year): ince The following portion of the study will assess the qualities of each port according to the criteria previously explained. [...]
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