ness,” Snyder explains. This is not to say
that the loading and unloading of trains
does not constitute logistics, he adds, but
demand for West Coast distribution space
is driven by the port traffic that remains
here as opposed to the freight that is
shipped elsewhere by train.
With this close connection between
port traffic and the economy, a surge in
container shipments indicates the begin-
nings of a recovery, but just looking at
the numbers alone can be tricky. Ryan
says that a recent surge in imports at the
Port of Los Angeles, for example, up
approximately 24% year-to-date, was “an
aberration.”
Ryan follows such numbers closely
because Watson is among the largest
developers of industrial centers in L.A.
County and one of the largest owners of
distribution space near the Southern
California ports. He says the 24% surge is
an anomaly “due to historically low inventories” and an effort by some importers to
bring product into the US early in order
to avoid a potential clerical union strike
at the ports while a contract was being
negotiated.
Retail inventories reached historic lows
because, at the height of the financial
crisis in the latter part of 2008, stores
began to scale back inventories in preparation for a weak holiday season and an
uncertain 2009. This trend continued
throughout 2009, until the rebound in
import volume this year, as retailers lifted
inventories to more typical levels. Despite
the aberration represented by the 24%
surge, Ryan says, import activity has
remained strong through September
2010. In fact, he points out that August
2010 was the busiest month for the Port
of Los Angeles since October 2006, when
overall container volume reached its previous peak.
Overall, however, the port statistics
send a mixed message about recovery
right now, according to a report from
Grubb & Ellis Co. “With retail sales being
hit hard by the recession, logistics operators have felt the pinch in the form of
reduced demand for space,” the report
says. On the other hand, conditions have
improved from their nadir. From June
2009 to June 2010, total import cargo
volume at the ports of Los Angeles and
Long Beach increased 15%, driven mostly
Container traffic at the ports of Southern California plunged by 2. 5 million units between 2008 and 2009. However, August 2010 was the busiest month for the Port of Los Angeles since October 2006.
