[Local Color 1] Economic Denial In Miniature: Projections From The Port of Los Angeles

by: Paul Rosenberg

Sun Aug 30, 2009 at 08:30


The Port of Los Angeles (POLA) is the nation's largest container port, followed closely by its next-door neighbor, the Port of Long Beach (POLB).  Both ports have taken a considerable hit in terms of container traffic, and long-term projections have been revised downward--which is only to be expected.  But note that the downward revision in the chart below (for POLA) shows no repetition of the sharp downturn we've been through:

Okay, I can maybe understand that they want to project a smooth curve, just for conceptual simplicity's sake.  Besides, it would be rather presumptuous to assume to know when another recession might hit.  But at the very least doesn't it seem prudent to at least present a range of future projections--at the very least a high, low and medium growth scenario? Would it be too much to ask that the port's planners--working for the largest container port in the nation, remember--do some serious homework looking at various factors that could impact future growth rates and come up with a range of possibilities?  Can't they even learn that much?

Well, surprisingly, the answer is "no" when it comes to the port's main business, but their cruise ship consultants can generate some alternative scenarios (charts on the flip).  But only just barely, despite the fact that a recent report discusses a rather wide range of potential impacts on future levels of traffic.  All in all, it appears that POLA is still in a state of denial about the degree of uncertainty that the future holds, especially in light of more than $6 trillion in lost housing assets over the past two years--losses that are largely due to the bursting of the housing bubble, which is very unlikely to re-inflate any time soon.

Paul Rosenberg :: [Local Color 1] Economic Denial In Miniature: Projections From The Port of Los Angeles
When it comes to the cruise ship industry projections, I don't have a simple comparison chart available, but I do have separate charts from a 2006 survey and another one from earlier in 2009.

The 2006 one is the best (if not most legible) in terms of projecting a range of possibilities:

As you can see, they never saw any sort of downturn coming, and projected a passenger throughput of between 1.4 and 2.2 million in 2015.

In sharp contrast, the new projection sees passenger throughput anywhere from about 1.1 to 1.35 million--a drop of 0.3 to 0.85 million:

BTW, the sharp drop was not due entirely to the recession--or at least not directly.  A major cruise ship--The Monarch of the Seas--was relocated to the Caribbean market.  But if that's what the cruise ship company did, then they certainly had their economic reasons for doing so.  The optimistic projection in the chart above depends upon finding replacements to take up the slack of the missing ship--a rather dubious proposition, to say the least.  It's far more likely that the lower scenario is what should be expected--at best--which would not see the peak 2006 levels reached again unitl 2023.

Now let's consider what these projections mean.  Until quite recently the local ports have been in deep denial about the environmental impacts of their operations.  Under extreme public pressure--and after loosing a costly lawsuit for violating the California Environmental Quality Act (CEQA), which governs the environmental review process required of any major construction project--the ports finally decided it was better to switch than fight... although switching on their own terms has meant that community, environmental and public health activists have had to keep fighting any way.

What the ports have done--and industry has joined in--is adopt a rhetoric of "green growth".  This rhetoric has been criticized from the beginning by a number of different activists for a variety of different reasons, most notably by Tom Politeo, the co-chair of the Sierra Clubs "Harbor Vision Task Force", who put it quite bluntly--we need the ports greened, whether there's growth or not.  What was once a theoretical objection is now anything but.

So now, ironically, one of the ports' imperatives in confidently projecting continued growth, once this downturn passes, is that it has to commit to such projections in order to proceed with its plans to stop killing quite so many with its air pollution.  (Of course, the downturn in container throughput has already accomplished that goal by a much more straightforward means.  Details, details....)

When it comes to the cruise industry, there's an even more bizarre situation.  In 2001, the newly elected mayor, James Hahn, pledged to deindustrialize the mainland San Pedro waterfront and build a waterfront promenade "from bridge to breakwater."  Hahn lost his re-election bid in 2005, but the man he lost to, Antonio Villaraigosa, had also made a similar pledge in 2001.  Nonetheless, even under Hahn the port staff had stubbornly concocted a series of plans sharly at odds with what the community had in mind when it extracted those pledges from mayoral candidates.  Earlier such plans fell apart under the weight of their own sheer ridiculousness, but the one now in the works calls for the building of a new cruise ship terminal in what's known as the "outer harbor"--a plan that would generate hundreds of extra bus trips each way any time a ship was in port, producing needless congestion and air pollution--in addition to impinging on non-revenue generating recreational activities, for which the area has always been used, and was intended to continue being used, at an ever higher level of activity and quality under community-supported plans.

In short, the Port is now determined to move forward with a community-opposed plan for a commercial development that its own commissioned report says is almost certainly not needed.

I go into this level of detail because (a) I've been covering these stories for years now, and I'm quite familiar with them, and (b) I think they're almost certainly typical of many other local and regional government entities nationwide, who are still blindly clinging to now clearly quite questionable models, rather than seeking to explore more varied future options, and trying to discover if some of those options might enable them to reach other important goals--such as reducing pollution, reducing greenhouse gas emissions and enhancing quality of life,

The message here is clear: It's not just DC that's in denial.  The denialist tone that's being set in DC is being echoed in many other places.  Not all of them, to be sure.  State governments, which have to balance their budgets have tight limits on certain sorts of denialism that they can engage in.  But unfortunately those limits tend to make them less free to innovate in making eco-silk purses out of econ-sows' ears.  This all means that there's plenty for activists to do at the state and local level to fight against the denial and for a turn toward thinking that's both more reality-based and more visionary.

All the action is not in Washington.  Local battles do matter, and the power of local examples can sow the seeds for national policy to follow. So, at the very least, try to become informed about what sorts of assumptions and planning are happening in your neck of the woods, and then see how they might be improved.


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The projections past 2010 (4.00 / 1)
on the first graph really are a hoot. Where on earth (literally, on earth) do they think the natural resources to resume exponential growth of containerized freight are going to come from?

Oil production peaked in 2007, which makes sense, to look at their graph. Oil demand is down because the world economy crashed, so investment in oil and other non-renewable resource extraction has gone sharply down. A realistic view is that resource extraction in general is probably at or past peak for most non-renewables. Certainly the data (including the port's own data) is consistent with this.

My bet is that 2007 was the peak year, world wide, for containerized freight. It was always a ridiculous business to build cheap crap, that could be built anywhere, and ship it 12,000 miles (which is about as far as anything can be shipped on earth, really.)

Of course freight will be important for as long as there is civilization, but that doesn't mean we will ever again need to move as many shipping containers as in 2007. They were mostly filled with garbage that was never more than a few months away from going into a land fill.

I am actually an economic optimist (in some ways) but the Bush-style resource extraction driven economy is the dumbest thing we've ever done. Technology, including things like well-informed organic farming techniques, is our only way out of the mess we are in now that resource extraction has peaked. One day we will look back and wonder why people thought a tractor was higher technology than a mule. It's not all just about how much you can burn.

ec=-8.50 soc=-8.41   (3,967 Watts)


Well 2007 May Not Have Been The Peak For Containerized Freight (0.00 / 0)
We could well see another one sometime down the road.  But you're absolutely right that the dynamics underlying the trend data have shifted in ways they don't even seem vaguely aware of.  

They've done very well by externalizing massive costs, but they can't keep doing that forever. Here in California, more people die from pollution generated by goods movement than die from homicides.  That's thousands of deaths per year.  But in China, I've seen figures as high as 750,000 deaths per year from air pollution--a huge chunk of which is from production for the American market.

People may be expendable to them, but as you rightly point out, oil not so much.  Oil doesn't reproduce itself.  You can keep fighting wars for it that others pay for, but there's only so much of it out there.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3


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