Port of San Diego’s Cushion for Economic Downturn

Monday, 24 November 2008

Despite faltering American financial markets and fear of global recession, the San Diego Unified Port District is working to compensate against an economic downturn that some are predicting will continue well into next year.

While trade in some commodities may decrease at the Port, some revenue will be recouped through new trade opportunities and strengthening relationships with current clients, including Dole Fresh Fruits, which brings in 12.4 percent of the total U.S. banana imports through the Tenth Avenue Marine Terminal.

 

To cushion against a drop in some trade and cargo imports, the Port's Maritime Trade Development Department has embarked on a series of trade missions and sales trips in hopes of attracting new business.

In late October, Port representatives returned from a 10-day mission to China, Japan and South Korea. Board of Port Commissioners Chairman Michael Bixler, Assistant Vice-President, Industry and Trade Development Ron Popham and Manager of Maritime Trade Development Joel Valenzuela made the trip, visiting four major cities in the three countries. During the trade mission the team met with more than 50 people from 18 companies.

Particularly significant outcomes of the mission included increasing and diversifying the Chinese sources of steel coils that are imported through the Port as well as additions to the portfolio of windmill component manufacturers that use the Port of San Diego. Additional bookings of project cargo also resulted from this trip.

Joel Valenzuela called the trip a success. "Through this trip, the Port acquired new business, retained current business, improved prospects for future business, and solidified relationships with Asian and Asia-based cargo interests," he said.

Additionally in October, Maritime Trade representatives Miguel Reyes and Connie Le Fevre attended a number of conferences and trade shows in North America. These included a wind energy conference and Vancouver trade show, which is Canada's largest renewable energy event. It attracted more than 2,000 wind energy experts as well as more than 200 exhibitors. Attendees included major wind product manufacturers and developers. A large number of windmill components for wind farms in California, Arizona and the Pacific Northwest have been imported from the Far East through the Port.

Reyes and Le Fevre also attended the 19th Annual Breakbulk Transportation Conference and Exhibition in New Orleans which is an important transportation industry conference attended by service providers in the transportation supply chain. The Tenth Avenue Marine Terminal specializes in breakbulk, which are goods that don't fit in containers. Reyes said that several at the conference complimented the Port for its business operations.

At each event, Maritime Trade staff emphasized the Port's attributes with the aim of attracting new business. The terminals' benefits include extensive on-dock warehousing and cold-storage facilities, highly skilled labor, customer service and uncongested facilities the likes of which are not seen at many ports in the United Sates.

Both conferences resulted in current customers indicating their intent to send additional cargo through the Port of San Diego as well as potential customers signaling their interest in doing business with the Port.

The banana trade is unlikely to be affected by the economic downturn. Bananas are America's No. 1 imported fruit with the average American consuming more than 28 pounds annually. Dole imports 468,000 tons of bananas through the Tenth Avenue Marine Terminal. Put another way, Dole brings in 185 million bananas each month through the Port's Tenth Avenue terminal.

The construction industry has been hard hit by the mortgage crisis and falling home prices. As a result, revenue from cement imports has decreased. However, the downturn has been offset by the revenue produced from more military loading and offloading at the Tenth Avenue Marine Terminal and revenue generated by the imports of energy-related goods such as windmill parts.

The high price of gas, the tightening of the credit market and the greater environmental awareness of consumers has resulted in fewer imported automobiles being shipped through the National City Marine Terminal. While overall car sales are down, the changing market could provide an opportunity for enterprising car manufacturers from the Far East seeking to gain entry to the American market. Those importing vehicles such as hybrids and smaller, cheaper, more fuel efficient cars which have shown an increase in popularity may also benefit.

In hopes of capturing some of this business, Chairman Bixler and the Maritime trade representatives met with car shipping companies and manufacturers during their Asian trade mission, with some signaling their interest in doing business with the Port of San Diego in the future. Additionally, Reyes traveled recently to China with several other local business representatives and officials from the World Trade Center to attend the 12th annual China International Fair for Investment and Trade (CIFIT) in Xiamen, China, which is the largest international fair for investment and trade for China. Reyes met with a number of Chinese car manufacturers looking to enter the North American market. Although Chinese car exports to America are still several years away, the Port is taking proactive steps to be prepared for this business.

Despite the current economic slowdown and the uncertain future of the U.S. economy, the proactive approach taken by the Port in developing new business as well as the constant strengthening of current relationships, is bearing fruit. Valenzuela said that the Port's Asian partners and customers unanimously presented bullish long-term views. "The companies we met with appreciated and underscored the importance of the Port's commitment to the long-term viability of its cargo business and customers, and its efforts to plan for throughput growth in the future," he said.

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