(The following story by Russ Wiles appeared on The Arizona Republic website on January 4.)
TUCSON, Ariz. — For a landlocked state, Arizona is getting quite a boost from ocean-borne trade.
Rising exports and imports flowing through the major container Ports of Los Angeles and Long Beach, Calif., have increased employment, investment and economic activity in Arizona.
The trade also has brought greater congestion, pollution and other side-effects, not to mention major infrastructure demands.
Imports from China alone have quadrupled in the past decade, with Los Angeles and Long Beach preferred destinations for that commerce. As America’s trade expands with China and throughout the Pacific Rim, Arizona’s ties to the two Southern California ports have tightened, as well.
“We’re a land bridge for a lot of that freight,” said Victor Mendez, director of the Arizona Department of Transportation.
In fact, more than two-thirds of the trade through Southern California starts or ends up in states east of here. As the goods unloaded at the ports are dispersed, much of the cargo eventually passes through Arizona en route to points farther east, with some of it stopping in warehouses in the West Valley or elsewhere in the state.
That trade link exerts pressure to expand Arizona’s highways, construct warehouses and upgrade rail facilities.
“The challenge is to find ways to work with that rail freight and that truck freight,” Mendez said.
Although Arizona economic-development officials often stress the state’s north-south ties to Mexico and Canada, the east-west links are substantial and growing:
• A large amount of the clothing, toys, electronic items and other goods given as presents this holiday season went through the ports.
• 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, which includes imports, exports and related employment.
• 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, accounting for 86 percent of trade value through the Southern California seaports, which dwarf Oakland and Seattle-Tacoma among container rivals on the West Coast.
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.
From ship to wheels
Toys, clothing, electronic gadgets and other items made in Asia typically spend a couple of weeks crossing the Pacific Ocean stacked in container ships that measure three or four football fields in length.
After those ships round the Palos Verdes Peninsula, they dock somewhere along the 78 miles of waterfront that make up the twin Ports of Los Angeles and Long Beach: a maze of piers, railroad tracks, cranes, warehouses, oil tanks, drug-sniffing canine units, customs inspectors and idling trucks.
Cranes standing 20 stories tall hoist the containers ashore, placing goods onto the 55 trains or the thousands of trucks that slip into the ports each day.
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.
Goods passing through the state often are moved by train.
“Typically, rail becomes competitive after about 600 to 800 miles,” Maltz said. “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 generate less air pollution per ton mile, advocates point out.
Rail expansion
As trade has increased, so has the demand for better infrastructure.
Union Pacific is in the middle of a five-year, $1 billion Arizona investment campaign that will double its tracks along its mainline from Los Angeles through Yuma and from Tucson to El Paso. The railroad plans a new switching yard near Picacho Peak, off a stretch of its Sunset Route mainline. In 2010, the company hopes to open the yard, which has generated community protests because of its location.
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 also wants to build a rail yard in an unincorporated area that will be annexed by Surprise that would include warehouses and an auto-transportation facility. Some area residents oppose the plan, citing potential traffic and safety hazards, noise and pollution.
Expanding rail operations have led to congestion from trains that can measure 1.5 miles in length.
“As trains get longer with the increase in trade, the impact on crossings and local streets will increase,” Mendez said. Despite such investments, Arizona still hasn’t developed into a major rail hub, said Barry Broome, president and CEO of the Greater Phoenix Economic Council. He sees railroad congestion as a key challenge for the state but also one offering opportunities, such as the potential to add rail infrastructure and jobs in Yuma.
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 new Phoenix-Tucson bypass route.
Major volume
“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.
Among trains, trucks and ships, air pollution has become a serious issue at Los Angeles and Long Beach, prompting port authorities in November to pass a landmark clean-air initiative that gradually will ban the oldest and dirtiest trucks from the area. The measure, which takes full force in 2012, should benefit Arizona’s skies, too, by removing the worst smog-belching vehicles from the network.
However, the costs for cleaner trucks will boost transportation outlays that could wind up being passed along to consumers.
“Arizona is more vulnerable than many (states) to the potential added costs of cargo moving through the port,” said Fred Johring, founder of California trucking firm Golden State Express.
Two Valley-based trucking companies, Swift Transportation and Knight Transportation, did not respond to interview requests.
Warehouse growth
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 sprung up, offering an alternative to congestion at the ports and surrounding areas.
“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.
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 workers’-compensation rules in that state.
Trade advantage
Arizona firms that import or export through the seaports enjoy a slight edge in cost and time compared with competitors farther 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 added. Great American imports about 200 containers each year through Long Beach.
Competitors farther east have greater driving time to tack on.
Barring any disruptions, the Southern California seaports will continue to play an expanding role in the growing Pacific Rim trade, bringing Arizona along for the ride.
“The real question is how you handle that,” Broome said. “We see a real opportunity to manage that, working in conjunction with the LA-area ports.”