(The following story by Russ Wiles appeared on The Arizona Republic website on December 19.)
TUCSON, Ariz. — Rising exports and imports flowing through the massive container ports of Los Angeles and Long Beach have increased employment, investment and economic activity here, while also bringing more congestion, pollution and other side effects.
As America’s trade expands with China and throughout the Pacific Rim, Arizona’s link to the two Southern California ports has tightened also.
“We’re a land bridge for a lot of that freight,” said Victor Mendez, director of the Arizona Department of Transportation.
While Arizona economic-development officials often stress the state’s north-south ties to Mexico and Canada, the east-west links also are substantial and growing:
• A large amount of the clothing, toys, electronic items and other goods being given as presents this holiday season went through the ports, mostly arriving by September for later distribution over land.
• Arizona generates about $9 billion in container-based trade annually tied to Los Angeles and Long Beach, ranking sixth among the states in the value of such trade.
• The ports support an estimated 4,300 Arizona jobs tied to exports and result in $27 million in state and local tax collections here.
Those figures come from a 2007 study by the ports and California’s Alameda Corridor Transportation Authority that shows trade through Los Angeles and Long Beach swelling nearly 250 percent in little more than a decade.
Imports dominate the mix. Exports account for just 14 percent of trade through the twin Southern California ports, which dwarf Oakland and Seattle-Tacoma among container rivals in the West.
(Mexican seaports, despite occasional discussions to the contrary, still don’t generate much trade activity to or through Arizona, said Arnold Maltz, an associate professor in supply-chain management at Arizona State University.)
More than two-thirds of the trade through Southern California starts or ends up in states located east of here, making Arizona a key ground link.
In turn, that’s exerting pressure to expand highways, construct more warehouses and upgrade rail links in Arizona.
For example, Union Pacific is in the middle of a five-year, $1-billion Arizona investment campaign that will feature such improvements as a new switching yard near Picacho Peak opening in 2010 and double tracks along its main line from Los Angeles through Yuma and Tucson to El Paso.
“Consumer goods of all types – sporting goods, electronics, and clothing are a few examples – (move) from the ports,” said Mark Davis, a spokesman for the railroad. “That line also has trains bringing lumber and other materials for construction, along with automobiles.”
Union Pacific employs more than 1,200 people, counts 750 customers and owns nearly 700 miles of track in Arizona.
BNSF Railway, formerly known as Burlington Northern Santa Fe, operates nearly 600 miles of track across the state, with a main east-west link through Flagstaff.
BNSF has invested more than $200 million in Arizona in recent years for capacity expansion and maintenance, while employing nearly 1,400 people in the state, said Lena Kent, public affairs director.
BNSF’s freight mix through Arizona includes packaged goods, paper products, mail, clothing, appliances, electronic products and auto parts.
Expanding rail operations mean more demand for yards, tracks and other infrastructure, not to mention heightened congestion from trains that can run 1.5 miles or more in length.
“As trains get longer with the increase in trade, the impact on crossings and local streets will increase,” said Mendez. “We’ve heard a lot of concern about that in the Flagstaff area.”
Meanwhile, Arizona highways are being improved and additional roads planned, at least partly because of truck traffic to and from the coast. ADOT and local governments are studying the long-term impact. Proposals include a Phoenix-Tucson bypass route.
“The volume of trucks in and out of the ports of Los Angeles and Long Beach now exceeds 30,000 per day, with much of the outbound traffic heading to locations in Arizona and beyond,” states a recent ADOT report, which expects port activity to triple over the next dozen or so years.
Even more visible to metro-Phoenix residents, Pacific Rim trade and port-related commerce is changing the look of the Valley, especially along Interstate 10 from 35th Avenue to Buckeye, where dozens of warehouses have gone up.
“That’s definitely been influenced by the amount of trade coming through the ports over the past seven or eight years,” said Pat Feeney, a senior vice president at CB Richard Ellis.
Combined, Los Angeles and Long Beach represent the nation’s largest container-port complex and the biggest anywhere outside Asia. Because congestion is a huge problem at the ports and some surrounding areas, that provides opportunities for Arizona.
For example, warehouses here can be operated for less money than similar facilities in or around Los Angeles, said Feeney, citing higher labor costs in California and burdensome worker-compensation rules in that state.
“Besides, it’s impossible to house all those goods in California,” he said.
Arizona firms that import or export through the seaports enjoy a slight edge in cost and time compared to competitors located further east.
“It takes about 22 days, give or take a couple days” to ship from China to Phoenix, said Steve Taylor, chief operating officer at Great American Merchandise & Events, a Scottsdale firm that sells Chinese-made pool and spa accessories.
The cost to transport a container from China to here that would roughly fill a tractor-trailer is about $3,500, he adds. Great American imports about 200 containers each year through Long Beach.
Most goods destined for Arizona from the ports arrive by truck. With Phoenix only about 400 miles from the docks, trains aren’t a viable option.
“Typically, rail become competitive after about 600 to 800 miles,” said Maltz. “There’s a large fixed cost to run a train, and it’s expensive to stop a train and unload a car.”
Conversely, railroads are more fuel-efficient than trucks for lengthy routes and generates less air pollution per ton mile, rail advocates point out.
Barring any surprise disruptions, Pacific Rim trade will continue to increase, securing Los Angeles and Long Beach in their roles as preferred gateways for the commerce.
That will mean expanding opportunities as well as growing pains for Arizona – landlocked but close enough to the coast to play a pivotal role.