Thursday, December 18, 2008

Port of L.A. Cargo Slump

Reported as "Los Angeles terminal operators 'in trouble':
Port of Los Angeles executive director Dr Geraldine Knatz has told the Los Angeles Harbor Commission that the port’s terminal operators are now facing a 20-30% drop in volume in the first quarter of 2009 and some terminals may have trouble meeting their minimum rent obligations Some operators have told Dr Knatz that volumes had “cratered” with one terminal down 50% on last year. LA’s biggest customer is Maersk and it has recently moved to pulls ships off the transpacific trade and consolidate some volume in Seattle at LA’s and Tacoma’s expense. Dr Knatz has written to port staff advising them of the need to understand that customers are in “survival mode.” To play its part the port is recommending that the Commission shelve the per TEU infrastructure fee slated to be levied from next January and “modify the clean truck program to lessen the [financial] impact.” Dr Knatz added that this is not the time to borrow for capital investment and projects that generate revenue for tenants must now have top priority. She has issued a hiring and overtime freeze and the port’s audit committee has made an additional US$20M in budget cuts (9% of expenditure) on top of cuts previously made. Some projects under the ports clean air action plan are certain to be delayed or cancelled. Dr Knatz warned: “Times have changed. We embarked on the clean air action plan when times were good and now we are trying to implement it when times are bad.”

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