SEASIDE

Eight lessons you can learn about the global economy by visiting America’s busiest seaport

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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 crane’s 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 China’s economy. Because it is the deepest port on the west coast of the US and 19 million people live within 200 miles (320 km), it’s 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 billion—equal to almost 2% of US gross domestic product.

My recent visit to one of the world’s key trade hubs underlined a few things about how that trade works.

1. Bigger is better—or at least, more efficient

The bulk of the port’s 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. Here’s what merchant ships looked like just as the container revolution was getting underway—the S.S. Lane Victory is a World War II-era cargo ship built in Los Angeles that is now a floating museum:

old-school-freighter
The S.S. Lane Victory is 139 meters long (Quartz/Tim Fernholz)

And here’s what container ships look like today. Evergreen Shipping’s 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 one—a “post-Panamax plus” vessel—can 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 destination—customs, 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 labor relations at ports are rarely easy, especially as many truck drivers are employed as contract laborers 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 stoppage—a 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 carriers”—robots 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 forecast—jumping from $245 million to $510 million—and 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.

Traffic rolls over the the Vincent Thomas Bridge in the San Pedro section of Los Angeles on Monday Aug. 20, 2012. Tony Scott, director of such Hollywood hits as "Top Gun," ''Days of Thunder" and "Beverly Hills Cop II," died Sunday Aug. 19, 2012, after jumping from the Los Angeles County bridge, authorities said.  (AP Photo/Nick Ut)
The bridge to somewhere. (AP Photo/Nick Ut)

But with the advent of containerization—the standard size for shipping containers was set in 1961—Thomas’s 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 harbor, but the last tuna cannery in the United States was shut down near the port in 2001.

4. Even geo-political enemies work together

Evergreen-and-china-shipping
Commercial détente.

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 China’s 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 Shipping’s containers side-by-side with its own in Los Angeles.

5. The biggest sort of contraband isn’t 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 don’t wind up on the shelves. Port officials say that the most frequent customs violation isn’t drug or human trafficking, but fake designer clothing coming in from Asia. The three biggest imports to the port are furniture—some 400,879 containers’ worth in 2013—followed by automobile parts and apparel. Electronics only took up 217,617 containers. (Then again, electronic devices tend to be smaller.)

6. One country’s trash is another country’s trade

scrap-metal-recycling
The port’s scrap-metal processing center. (Quartz/Tim Fernholz)

The number one export from the Port of Los Angeles is air—empty shipping containers, to be precise. It’s 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 country’s 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 cool—fruits, 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:

evergreen-air-condition-containers
A rack of reefers. (Quartz/Tim Fernholz)

8. Energy and its byproducts underlie everything

An oil lighter loads up, surrounded by a protective boom.
An oil lighter loads up, surrounded by a protective boom. (Quartz/Tim Fernholz)

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 engines—a reduction in carbon emissions equivalent to taking some 250,000 cars off the highway. That came about because labor 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.

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