Eight lessons you can learn

about the global economy

by visiting Americas busiest
seaport

This is how your Ikea furniture, Gap jeans and Nike shoes got to the United

July 7, 2014
The first thing you notice on a visit to the Port of Los Angeles is the cranes
towering along the water, poised over the massive ships beneath them. The
second is that there are no people, at least none visible: Sometimes you
catch sight of a silhouette in a cranes control room or a truck cab, but the
work that goes on is largely far above human scale.
This is the US gateway to the most important economic trend of the
new century: The epic export-driven growth of Chinas economy.
Because it is the deepest port on the west coast of the US and 19
million people live within 200 miles (320 km), its the busiest port
in the United States. It handles the most containers and the most
goods by value, and is the sixteenth busiest on the globe (seven of
the 10 busiest ports in the world are in China). Last year, it handled
2,143 ships, and cargo worth $285.4 billionequal to almost 2% of
US gross domestic product.
My recent visit to one of the worlds key trade hubs underlined a few
things about how that trade works.
1. Bigger is betteror at least, more efficient
The bulk of the ports cargo travels in containers, the 20-foot (6.1-
meter) long metal rectangles that standardized global shipping and
helped make the global supply chain possible. The port handles 7.9
million of them each year. Heres what merchant ships looked like
just as the container revolution was getting underwaythe S.S. Lane
Victory is a World War II-era cargo ship built in Los Angeles that is
now a floating museum:
The S.S. Lane Victory is 139 meters long
And heres what container ships look like today. Evergreen
Shippings Ever Chivalry was unloading cargo at the port when we
were visiting. At 334 meters, it is over twice as long as the Lane
Victory, and carries nine times as much cargo by weight:
Massive container ships like this onea post-Panamax plus vesselcan
carry about 7,000 to 8,000 containers, although the newest models being
manufactured can carry up to 18,000. When they come in, tugboats and
pilots pull them into berth, and massive cranes pluck containers from the
ships, dropping them onto trucks that carry them to their next
destinationcustoms, one of 40 trains that departs the port each day, or
the highway.
2. Automation can be harder than it looks
Right now, a single crane at the port can unload about 30 containers per
hour, but there is pressure to speed up the system, especially as ships get
bigger. Every hour a vessel spends in port is money wasted, and labour
relations at ports are rarely easy, especially as many truck drivers are
employed as contract labourers rather than full employees. When I visited
the port in June, competing shippers were sharing berthing space to make
sure they unloaded their vessels before the port workers contracts expired
at the end of the month. While the port workers union is continuing to
negotiate (pdf), shippers still fear a costly work stoppagea strike in 2012
left $1 billion a day on the docks and idled thousands of workers without
pay.
In 2009, the port decided to upgrade one of its container terminals with
new, super-size cranes and automated straddle carriersrobots that
follow magnetic strips in the ground to position themselves over
containers, snag them, and stack them. Such a system could increase the
unloading rate to 40 containers per hour, but the one for the port of Los
Angeles cost more than twice as much as forecastjumping from $245
million to $510 millionand has become price-inflation folklore in the
port world.
3. You never know where investment will pay off
But for all the cost, the investment might be worthwhile. Fifty years ago,
this was mostly a fishing port, and a ferry ran between the mainland and
Terminal Island, the site of much of the port infrastructure. Back when
Terminal Island was home to just a few canneries processing fish, a local
lawmaker, Vincent Thomas, began a two-decade-long effort to build a
bridge to it. His opponents called it a bridge to nowhere when it was
finally completed in 1963.
The bridge to somewhere.
But with the advent of containerizationthe standard size for
shipping containers was set in 1961Thomass vision appeared
prescient. It allowed trucks loaded with cargo to leave the port and
go straight into the US highway system. It was a major advantage
for the port. Today, a few purse-seiners still fish out of the harbour,
but the last tuna cannery in the United States was shut down near
the port in 2001.





4. Even geo-political enemies work together

This picture is a reminder of the binding force of international
trade. Shipping companies lease terminals at the port to manage
their cargo. Evergreen is a Taiwanese shipping conglomerate that
once refused to handle trade from Chinas state-owned shipping
company because of political tensions between the two nations. But,
as over-capacity has led shipping firms to work more closely
together to protect prices, Evergreen processes China Shippings
containers side-by-side with its own in Los Angeles.
5. The biggest sort of contraband isnt drugs, but clothing
knock-offs
Officials at the port brag that 40% of the goods on US shelves come
through their facility, and they may not be too far off. They may also
be moving goods that dont wind up on the shelves. Port officials say
that the most frequent customs violation isnt drug or human
trafficking, but fake designer clothing coming in from Asia. The
three biggest imports to the port are furnituresome 400,879
containers worth in 2013followed by automobile parts and
apparel. Electronics only took up 217,617 containers. (Then again,
electronic devices tend to be smaller.)
6. One countrys trash is another countrys trade
The ports scrap-metal processing center.
The number one export from the Port of Los Angeles is airempty
shipping containers, to be precise. Its a very tangible manifestation of the
US trade deficit with the rest of the world: When you import more than
you export, a lot of containers go back empty.
But after air, the next biggest export is trash. Specifically, 293,523
containers worth of wastepaper, much of which goes to China to be
recycled into boxes to feed that countrys own export machine. The
port also handles scrap metal at a dedicated terminal. The terminal
includes a mega-shredder that can dismember cars and other
large metal objects in seconds. After leaving the United States, the
metal heads to Mexico, China or Brazil, where laxer environmental
regulations allow it to be recycled more cheaply into raw metal,
some of which eventually returns to the US.
7. There are lots of huge metal reefers
Most containers are just metal boxes, but some of them are special:
They have an air conditioner stuck on the back so they can transport
goods that need to stay coolfruits, vegetables, fish and meats.
These refrigerated containers are known as reefers, and the port
of Los Angeles brings in lots of live crustaceans inside of them, and
exports a good deal of frozen beef:
A rack of reefers.

8. Energy and its by products underlie everything
An oil lighter loads up, surrounded by a protective boom.
Like any center of the modern economy, the port has to deal with
the pollution that comes with consuming lots of energy. It
launched a massive program to upgrade more of its trucks to low-
emitting hybrid or electric enginesa reduction in carbon
emissions equivalent to taking some 250,000 cars off the highway.
That came about because labour unions seeking to improve working
conditions found common cause with environmentalists.
The port is also working to upgrade all of its berths with electrical
power that ships can plug into. Previously, ships would simply run their
diesel engines in port, which is not exactly efficient or clean.
Oil-spill paranoia also abounds. Ships off-loading oil products only do so
when enclosed by an oil-catching boom, and an industry-funded rapid-
response vessel is on alert 24 hours a day, ready to clean up any spills. Port
officials say the water is safe enough for swimmers (there is a public beach
in the port) and that sea life, including seals, dolphins and the occasional
whale, is frequently seen.