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By sea: The port nexus in the global commodity network (the case of the West Coast ports)

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By sea: The port nexus in the global commodity network (the case of the West Coast ports)

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Content INFORMATION TO USERS This manuscript has been reproduced from the microfilm master. UMI films the text directly from the original or copy submitted. Thus, some thesis and dissertation copies are in typewriter face, while others may be from any type of computer printer. The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleedthrough, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send UMI a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion. Oversize materials (e.g., maps, drawings, charts) are reproduced by sectioning the original, beginning at the upper left-hand corner and continuing from left to right in equal sections with small overlaps. ProQuest Information and Learning 300 North Zeeb Road, Ann Arbor, Ml 48106-1346 USA 800-521-0600 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. BY SEA: THE PORT NEXUS IN THE GLOBAL COMMODITY NETWORK (THE CASE OF THE WEST COAST PORTS) by Eileen Rhea Rabach A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFRONIA In Partial Fulfillment o f the Requirements for the Degree DOCTOR OF PHILOSOPHY (POLITICAL ECONOMY AND PUBLIC POLICY) May 2002 Copyright 2002 Eileen Rhea Rabach Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UMI Number: 3073837 Copyright 2002 by Rabach, Eileen Rhea All rights reserved. U M I " UMI Microform 3073837 Copyright 2003 by ProQuest Information and Learning Company. All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. ProQuest Information and Learning Company 300 North Zeeb Road P.O. Box 1346 Ann Arbor, Ml 48106-1346 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UNIVERSITY OF SOUTHERN CALIFORNIA The Graduate School University Park LOS ANGELES, CALIFORNIA 900894695 This d issertation , w ritten b y gv/eetn ^ A e ___________ U nder th e directio n o f h&*z.. D issertation C om m ittee, a n d approved b y a ll its m em bers, has been p re sen ted to an d accepted b y The G raduate School, in p a rtia l fu lfillm en t o f requirem ents fo r th e degree o f DOCTOR O F PHILOSOPHY '*™"BeanofGraduate Studies D ate May 10 , 2002 DISSER TA TIONCOM M ITTEE Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Dedication For Dana Marcelle, Sara Bart, and JNS Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Acknowledgements It is indeed true that a project of this proportion cannot be successfully completed without the generous support and encouragement of numerous individuals and organizations. It is my pleasure and honor to recognize some of the many whose contributions were not only indispensable to this undertaking, but whose various intellectual, methodological, emotional, or administrative assistance enriched, enlivened, and made this particular rite of passage both gratifying and meaningful. I apologize in advance for any omissions and claim any manuscript errors as solely my own. The quantitative core of this dissertation project, the West Coast Ports case study, could not have been successful without the respective contributions of the San Pedro Ports of Los Angeles (POLA) and Long Beach (POLB). It is to the great credit of the ports that Larry Keller, Executive Director of POLA, and Richard Steinke, Executive Director of POLB, and other senior management, notably Jim MacLellan, POLA Director of Marketing and David Mathewson, POLA Assistant Director of Marketing, appreciated the significance of a macroeconomic study such as this to the microeconomic business of the port. The Port of Los Angeles not only granted access to Port Import and Export Reporting Service (PEERS) data, but also formatted data in order to better fulfill the objectives of this dissertation. The extensive expertise of Frank Dubich, POLA’s Senior Port Planner, with PIERS data was fundamental to the empirical portion of this project. Frank’s professional acumen and good humor also invigorated an Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. otherwise tedious undertaking. Jeff Leong, POLA Harbor Planning and Economic Analyst, ensured that this project reached completion. The Port of Long Beach granted extensive access to the port, including a temporary office from which to access port data and interface with staff. I would like to especially thank Geraldine Knatz, Managing Director of Development, whose encouragement and support was vital to this endeavor. Special thanks are also in order for my initial POLB contact, Hal Hillard, and port economist, Anthony Shotwell. The Port of Hueneme, through Deputy Executive Director Judith Kofar, also facilitated interviews and tours that contributed significantly to this research. I am indebted to several other public and academic entities whose institutional support was important to this project. Foremost among them is the National Sea Grant Institutional Program at the University of Southern California, which hosted me as a Visiting Scholar during the Spring of 2001, provided access to any number of industry opportunities and underwrote the expense of creating GIS maps. Phyllis Grifman, Associate Director of Sea Grant, was among the first of administrators outside my field to recognize the rich interdisciplinary potential of this project and both warmly and actively encourage me to pursue them. Appreciated as well is the support lent by Sea Grant’s Director, Linda Duguay, and Judith Kildow, director of the Wrigley Institute at USC. I am grateful to Professor Nora Hamilton, my Dissertation Committee Chair, for her unrelenting high standards and good cheer, both of which were essential to the success of this dissertation. I am also appreciative of the theoretical and practical Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. V guidance of John E. Elliott, director of my home program of Political Economy and Public Policy (PEPP). He will be missed. Dr. Farideh Motamedi, PEPP Associate Director, provided tireless and generous administrative support. The Center for International Studies under Director Laurie Brand, with the support of the Center for International Education and Research (CIBEAR), provided encouragement and financial assistance through a CIS/International Business Issues Dissertation Research Award. My affiliation with METRANS (USC) under Director Randal Hall and sister program CITT (Center for International Trade and Transportation (USC/UCLB) under Director Marianne Vieneries, granted me both institutional support and plentiful industry contacts. I also thank Drs. Robert Kalaba and Rodney McKenzie for their participation on my Dissertation Committee, Professor Linton Freeman and Sandrine Zerbib of the University of California at Irvine, for identifying the potential of UCI-NET analysis to the PIERS data collected here, and Wendy Dishman for helping to initiate the editorial process. A great number of port and related transportation workers and experts lent their insights and knowledge to this project. Among them are the many ranks of the International Longshore and Warehouse Union (ILWU), and, in particular, Domenick Miretti of the Marine Clerks Association and Senior Liaison for the San Pedro Ports, who encouraged this project, opened industry doors, and graciously granted spot interviews whenever we met. The CITT/port industry sponsored annual ILWU Town Hall Meetings were especially critical to developing an understanding of the dynamics and issues which shape the San Pedro Ports. Captain Karsten Lemke Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. of Zim-Isreali Shipping Co., Inc., James Fawcett, Larry Cottrill, and Richard Hollingsworth, President of Gateway Cities Partnership, Inc., were all generous in sharing their time and understanding of this amazing industry. Comments from Professor Tom Dowd, University of Washington (retired), from the perspective of an academic with experience in the field were particularly appreciated. Thanks are also due to Dan Weikel, Los Angeles Times staff writer, Jack Kyser, Chief Economist for the Los Angeles Economic Development Corporation which partially sponsored this research through an industry internship, and to Joan Abrahamson of the Jefferson Institute, who helped facilitate this unique internship opportunity. I am deeply appreciative to Santa Monica College for providing a Sabbatical award which enabled me to complete the final stages of this research and for the encouragement and collegial support of many friends at SMC, preeminently, Professors Christina Preciado and Katherine Shamey. In closing, and as is often said, without the great love and commitment of my family, this work would simply not have been possible. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. VII Table of Contents Dedication ii Acknowledgments iii List of Tables viii List of Figures xi Abstract xii Chapter 1. Introduction: Theoretical and Empirical Overview 1 Chapter 2. Theoretical Foundations: From Marx to Globalization Theory 19 Chapter 3. Transportation: An International Network Goes Global 62 Chapter 4. International Economic and Geographic Concentration in the Ocean Shipping Global Commodity Network (GCN) 92 Chapter 5. The West Coast Port Nexus in the Ocean Transport Global Commodity Nexus (GCN) 136 Chapter 6. Conclusion: International Trade and Globalized Transportation 233 Bibliography 252 Appendixes: Glossary; Port Expenditures; Shipping Line Codes; Country Codes 266 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. v iii List of Tables No. Title Page 4.1 Container Throughput of World Ports 93 4.2 1998 Top Ten Cargo and Container Ports 98 4.3 The World’s Twenty Largest Container Ports 99 4.4 The Twenty Largest Container Shipping Lines - 1997 106 4.5 World’s Containership Capacity (as of February 2000) 107 4.6 Top Ten Merchant Fleets by Flag (in tonnage) 110 4.7 Top 20 Merchant Fleets of the World 112 4.8 Top 20 World Merchant Fleets by Country of Ownership 115 4.9 National Share of Shipbuilding 118 4.10 Shipbreaking Nations 121 4.11 Nationality of Ship Officers 123 4.12 Global Alliances 131 4.13 Shipping Line Commodity Chain by Dominant Region 134 5.1 US GDP Components 137 5.2 Trade as a Share of GDP 138 5.3 Sample Comparison of San Pedro Terminal Tenants - 2000 151 5.4 West Coast Port Volumes 154 5.5 West Coast Market Shares 155 5.6 Matrix of Sets of Data for GCN Analysis 166 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ix 5.7 West Coast Shares of Top Foreign Port Container Trade 170 5.8 Maj or Ports for West Coast Liquid Bulk Imports 172 5.9 Major Ports for West Coast Liquid Bulk Exports 172 5.10 Major Ports for West Coast Dry Bulk Exports 173 5.11 Major Ports for West Coast Dry Bulk Imports 173 5.12 Major Ports for West Coast Break Bulk Exports 174 5.13 Maj or Ports for West Coast Break Bulk Imports 174 5.14 Top Container Shipping Lines - West Coast Port Exports 177 5.15 Top Container Shipping Lines - West Coast Port Imports 178 5.16 Port Hueneme Sample Shippers - West Coast Market Share 190 5.17 Port of Portland Sample Shippers - West Coast Market Share 191 5.18 Top Shippers in the Container Trade 194 5.19 West Coast Port Share of Top Container Exporters 195 5.20 West Coast Port Share of Top Container Importers 196 5.21 Major Cargo Categories in Value and Volume 199 5.22 Sample Commodities by Code 200 5.23 Sample Container Exports - West Coast Ports 203 5.24 Sample Container Imports - West Coast Ports 204 5.25 Liquid Bulk Commodity Imports - West Coast Ports 206 5.26 Liquid Bulk Commodity Exports - West Coast Ports 207 5.27 Leading Dry Bulk Exports - West Coast Ports 208 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 5.28 Leading Dry Bulk Imports - West Coast Ports 208 5.29 Sample Breakbulk Commodities - 6000 Commodity Series 210 5.30 Sample Hueneme Imports and Market Share 211 5.31 Sample Hueneme Exports and Market Share 212 5.32 Japan Export Market Share of Sample 218 Bulk U.S. Imports 5.33 Japan Import Market Share of Sample 220 Bulk U.S. Exports 5.34 Leading Foreign Trade Partners - 224 U.S. Container Imports 5.35 Leading Foreign Trade Partners - 226 U.S. Container Exports 5.36 Leading U.S. Imports from Taiwan 229 5.37 Leading U.S. Imports from Korea 230 5.38 Leading U. S. Exports to China 231 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. XI List of Figures No. Title Page 5A Foreign Port to West Coast Port Trade Linkages (Container Traffic) 149 5B Shipping Line Market Share of Container Exports from West Coast Ports 179 5C Shipping Line Market Share of Container Imports to West Coast Ports 180 5D Foreign Country Bulk Exports (toWest Coast Ports) 214 5E Foreign Country Bulk Imports (from West Coast Ports) 215 5F Foreign Country Container Exports (to West Cost Ports) 216 5G Foreign Country Container Imports (from West Cost Ports) 217 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. xii Abstract By Sea: The Port Nexus in the Global Commodity Network (The Case of the West Coast Ports) Drawing on theories of globalization and global commodity chain research, this dissertation develops a hybrid construct, the global commodity network (GCN) in order to analyze the role of ocean freight transport as both a sector of production in its own right and as a vital pillar of circulation and global trade. Over the last few decades, the movement of international sea freight has been revolutionized by profound technological changes, including containerization, post-Panamax ships and complementary port technology, which have resulted in the partial realization of a seamless transport chain based on a multi-modal transport system integrated through the application of information technology. In the process of radically collapsing the amount of time required to traverse space, transport technology has facilitated shipping lines to establish an increasingly concentrated network of global ports through which the vast majority of trade is channeled. The U.S. West Coast ports, and in particular the southern hub ports of San Pedro, are analyzed in three aspects: geographically as part of an international port and regional trade network, economically in terms of the character of trade passing through these ports and the economic participants involved, and theoretically as a case study of a highly concentrated global commodity network. In order to accomplish these, this dissertation (a) maps the port of origin/port of destination network established through international trade by sea as it relates to the West Coast; Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. (b) evaluates the impact of complementary technology utilized by ocean carriers and ports on this network; (c) compiles and compares data such as the value, tonnage/TEUs, and commodity category representing trade passing through these West Coast ports, and (d) examines other trends in the port-shipping industrial cluster which are currently shaping this transport supply chain. Patterns of international economic integration characterized by economic concentration within the industry and by the geographic centralization of trade within a network of trading partners and regions are identified and analyzed as fundamental to the process of globalization. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1 Chapter 1. Introduction: Theoretical and Empirical Overview The Purpose of an Investigation of Ocean-Transport Networks Transportation research is a remarkably understudied area in political economy. Transportation is assumed to be obvious in its function, role in production, and importance. It is generally relegated to a peripheral role in the overall economy, limited to responding to the ebbs and flows of the sectors of production which utilize it as a service sector. The reasons why this may be true and the motivation behind the present study are well represented by Susan Strange in her seminal work States and Markets. What choice is made for the running of transport systems substantially affects who gets what in the way of benefits and opportunities...It is temptingly easy to take the political economy of transport systems for granted. Once set up, they tend not to change very much... Yet, as international trade grows every year faster than world production,... the nature of the transport services (people) use, the layout of sea-routes and air-routes, the prices charged and the terms customarily laid down for the carriage of goods or people becomes a more and more salient issue of international political economy (Strange 1988:137). Some of the most promising work delving into the contours of the current IPE falls within the general framework of globalization studies which have inspired the present project. This dissertation therefore begins with a general inquiry: How does the ocean-freight global commodity chain fit into globalization theory and what insights might an analysis of it lend to our understanding of globalization? What, in other words, does globalization have to do with the transport supply chain? The globalization studies referenced here suggest that an understanding of the geography Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. of the economy is essential to any comprehensive analysis of the capitalism today. A more specific investigation is therefore also undertaken: how might an analysis of the economic geography of a specific ocean transport chain be informed by and inform the study of globalization? Globalization literature assumes that the sectors of transportation and telecommunications have contributed significantly to the globalization of capitalist production. However, while studies of the latter abound, there are few parallel studies on the role of ocean transport in the global economy. This dissertation tackles such a study theoretically and empirically. Two areas of overlapping research in the field of political economy under gird the theoretical framework and methodological basis of this dissertation project: the analysis of global city regions (GCRs) inspired by Saskia Sassen’s global city research, and global commodity chain (GCC) research, which is situated within the Modem World Systems perspective. Both of these studies concern the ways international capitalism is integrated into global economic geography. They may be loosely gathered under a structuralist theoretical umbrella with Marxist roots. GCR research is preeminently situated on a geographical framework. Socioeconomic variables are ferreted out to help explain why the GCR was established, how various GCRs are linked, and how a GCR functions within the larger global economy. In contrast, GCC research typically begins at the industrial or sectoral level. Economic territoriality or the geographic dimension of the GCC is investigated as a consequence of tracking production links that straddle the world economy. Clearly, both of these approaches could benefit from more convergence. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 3 The case study of the ocean transportation supply chain has apparently not been fully investigated by either method and is especially suited to benefit from such a hybrid investigation. A GCR-GCC hybrid conceptual construct may be regarded as a Global Commodity Network (GCN), which joins the GCR emphasis of geographic nodes (world city regions) with the GCC focus on industry linkages (stages of commodity production). A GCN approach helps unpack the many economic functions and geographic dimensions of a globalized industry. In the case study presented here, the network of key geographic sites, the port nodes, are analyzed in the context of its defining industry, the port-shipping transport supply line. To stake out yet another analytic construct is not the intent of this project, and therefore will not be fully developed as such. The idea of a GCN, however, is helpful in representing the hybrid GCR-GCC construct which provides the conceptual framework and analytic basis for this dissertation. Portions of globalization literature are analyzed here in order to (1) establish the theoretical underpinnings of a structuralist perspective of economic geography, traceable to Marx and including his remarks on transportation, which remain untapped by this research, (2) clarify in what ways the ocean transportation industry functions as a global commodity chain in its own right and as a network facilitating globalization in which hub ports serve as geographic nodes akin to global city regions, (3) develop a criteria to assess the extent to which this historically international supply chain is itself globalized. Both the theoretical and empirical Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 4 inquiries are informed by the many rich empirical studies of the sea freight industrial cluster found in transportation economics. The empirical case study of the West Coast ports is undertaken in order to address the following questions: What does an ocean-transport global commodity network look like economically and geographically? According to what system of governance do the many links represented by distinct agents within the chain operate? What is its function within the larger international network of ports and shipping routes it is a part of? Are such global commodity chains characteristically producer or buyer-driven? What might the commodity profile of trade passing through one such transport chain look like in terms of tonnage, value, cargo-type, and commodity category? How significant is this trade to the regional, national, and international macro economy? To what extent is the transport supply chain itself globalized? Although not all of these questions can be fully answered within the scope of this dissertation, posing these questions and applying them to the available data will illuminate the theoretical tasks enumerated above and contribute to setting the parameters and direction of future research. This case study will also be helpful in identifying the points of convergence within the structuralist theoretical approaches which investigate globalization. As a result this dissertation will contribute to a theoretical synthesis which is capable of analyzing the processes of globalization in a more systematic fashion than is now evident. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Theoretical Overview The globalization studies referenced here suggest that an understanding of the geography of the economy is essential to any comprehensive analysis of the capitalism today. Where, why, and how does capital touch down geographically? In this light, the empirical exploration of the economic geography of the West Coast based transport supply chain is intended to contribute an original and important case study to global commodity chain (GCC) literature, and also to develop the concept of global city regions (GCR) by determining how such a port hub is integrated into the GCR hosting it. The concept of a commodity chain was first introduced by Hopkins and Wallerstein, who defined it as a “network of labor and production processes whose end result is a finished commodity” (1986:159).1 More recently, spurred by the innovative research on the geography of industrial structures commodity chain researchers have gone global by tracking the geographic location of the many stages of the industrial production. Thus the literature is now replete with detailed studies of the international production stages and sites of a multitude of industries, but few to date focus on the service linkages without which there could be no commodity chain. Services, in general, represent the missing link in global commodity chain (GCC) research on the emerging global economy. Transport is one of a wide range of 1 Gereffi and Korzeniewicz have extensively elaborated this model by analyzing production segments or nodes according to (1) commodity flows to and from each node (2) relations of production within each node, (3) organization o f production and (4) geographic loci o f each node (Gereffi and Korzeniewicz 1990). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 6 service activities which provide linkages between the segments of production within a GCC and linkages between overlapping GCCs. The Global City Region theorists have best explored the essential role of services in the global economy. Saskia Sassen (1991), in particular, has deciphered a systematic network of relationships among far-flung regions, which she and other analysts in the field now tag as Global City Regions (GCR). These regions are critical to the great transnational economic empires that connect remote points of production, consumption, and finance. A synthesis of GCC and GCR concepts suggests that the service sector lends governance to GCCs by coordinating and integrating them geographically and transactionally. Financial and banking, insurance, telecommunications, consulting, and transportation services provide essential links which bind together the spheres of production and distribution. The astonishing acceleration of global trade, quadrupling since 1980, is due in large part to the tremendous advances made in these fields. This approach provides an excellent conceptual framework for differentiating the network and hierarchy of ports serving the West Coast GCC. In addition, the analysis of the shipping-port nexus further develops the GCR construct by elucidating a different and yet unexplored order of global networks. Finally, the many current and varied economic studies that investigate the technology of transport, industrial clusters, and ports rely on neoclassical economic assumptions that are typically unarticulated. Thus, economic developments in the transport supply chain are explained in terms of demand pressures of growing Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 7 consumer demand (tastes and preferences) exogenous to the transport sector, and endogenous technological pressures (the result of an implied technological imperative) on the supply side. These industry-oriented studies primarily track quantitative changes in freight tonnage or container TEUs moved by the transport supply chain. They do not ordinarily delve into the commodity (versus cargo) profile of this tonnage nor into the integration of the transport chain and network into larger macroeconomies. In contrast, the present study situates the empirical case study within a macroeconomic approach informed by the above theoretical perspectives. Significant work in the analysis of the transportation sector along these lines has been undertaken by Rimmer, Hugill, and Dicken, whose work is associated with a Modem World Systems perspective (see bibliography). Their scholarship is essential to any informed discussion of the transport sector and provides the basis for the present inquiry. The combined influence of these theorists provides the basis for the empirical case of the port-shipping global commodity chain from the vantage point of the West Coast ports. The Empirical Case Study of the West Coast Ports Trade analysts and transportation industry experts have issued numerous reports concerning the explosive growth rate of trade passing through the U.S. port system. It is evident in these reports and elsewhere in media related discussions, that the assumptions made about this trade growth can be summed up in three points: it is “big,” it is driven by economic demand (consumption), and that it will continue Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 8 unabated for some time to come. Studies of the ports therefore tend to be policy driven, and are currently focused on issues of efficiency and congestion at the microeconomic level. Questions concerning the governance of the larger international supply chain it is a part of, the commodity profile of this trade in terms of its value and character, the extent to which this trade is integrated into the local region or hinterlands, or a consideration of the economic and geographic networks etched out by these trade flows, are left largely uninvestigated. It is the purpose of the empirical portion of this dissertation to look inside the black box of seaborne trade through the West Coast ports in order to provide a foundation for the analysis of questions such as these. An empirical analysis of port trade which addresses these questions at the international macroeconomic level contributes toward (1) building a descriptive understanding of the character of port trade and its role in the U.S. economy in an global context, (2) an analysis of how the transport supply chain has been globalized, economically and geographically, and (3) an explanation of the conflicting trends of geographic decentralization and diffusion, on one hand, and economic concentration and centralization, on the other, which globalization literature suggests is characteristic of the current world political economy. This dissertation analyzes the U.S. West Coast ports, and in particular the southern hub ports of Los Angeles and Long Beach, in three aspects: (1) Geographically as part of an international port network, (2) Economically in terms of the character, size, and value of trade passing Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 9 through these ports, as well as in terms of the technology facilitating this trade, and, (3) Theoretically as a case study of a highly concentrated global commodity network. In order to accomplish these, this dissertation: (a) Maps the port of origin/port of destination network established through international trade by sea as it relates to the West Coast, (b) Evaluates the impact of complementary technology utilized by ocean carriers and ports on this network and examines trends in the port-shipping industrial cluster associated with economies of scale and economies of scope, which are currently shaping this transport supply chain, (c) Compiles and compares economic data such as the value, tonnage/TEUs, and commodity category representing trade passing through these West Coast ports in terms of imports and exports, (d) Tracks commodity data geographically to specific regions in the U.S.A. and countries of origin or destination, and Limiting Factors for Collecting International Data on Transportation The empirical portion of this dissertation project relies on extensive international data sources at the international, national, and local level. Much of the empirical data is gleaned from Lloyd’s List proprietary data bank, Port Import Export Reporting Service (PIERS), which was provided and configured by the Research and Planning Department of the Port of Los Angeles. This data bank was invaluable in obtaining a profile of trade as it passes through West Coast Ports. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 10 The methodology used here is a hybrid of two approaches in globalization literature represented by Global Commodity Chain studies and Global City Region analysis. The GCC model provides a robust conceptual framework for the analysis of the ocean freight transport sector. Each linkage in the transport supply chain will be tracked to its geographic region of economic concentration in order to map out the port-shipping GCC. GCRs provide a complementary theoretical construct by focusing on the networks formed by cargo and industry flows between what may be considered to be the central nodes in GCC chain linkages, the ports. This approach is applied in order to determine the extent to which the global ocean freight transport network is globalized. A hybrid GCC-GCR construct is used to identify the economic and geographical linkages which comprise the ocean freight transport sector at an international level. In effect, a new model of investigation of filiares and networks is synthesized: that of the global commodity network (GCN). Information concerning international shipping is limited for a number of reasons. Problems undermining reliable analyses of this sector emanate primarily from the difficulty of obtaining data and the uneven nature of data collected. These problems are due, in large part, to (1) the proprietary nature of information collection in the industry, (2) the lack of easily cross-referenced public information collection, (3) the lack of uniformity in data collection as a result of the fragmented nature of the industry in which many production linkages are sourced out. The first obstacle facing researchers is the limited access to information about the shipping industry. International shipping has long been a private enterprise coordinated by shipping Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 11 lines and has developed without the scrutiny or strictures of an intense public regulatory system. The recent implementation of privatization and liberalization policies, such as the Ocean Shipping Regulatory Act (OSRA) and the United States Ocean Shipping Reform Act which took effect in May 1998, has had the effect of further limiting public access to shipping information (Tirschwell 2000:1). Most information is gathered by the industry for industry purposes. Some of the best databases, including the one utilized in the present study, Lloyd’s List Port Import Export Reporting Service (PIERS), is proprietary and not typically made available to academic researchers nor configured to address questions of academic interest. According to a 1995 conference of European Ministers of Transportation, most research on transportation is designed to meet industry demands and as a consequence is short-term and partial. Others may be are readily available, but are compilations of are legal representations of company activities which may or may not accurately depict the reality of the firm. In order to gather information for a data base on transport firms in Italy, for example, Confertra (Confederazione del Traffico e dei Trasporti), an Italian coordinating body for trade associations in the sector, monitors balance sheets of approximately 1500 companies, including terminal operators, combined transporters, freight forwarders, waste transporters, with a focus on debt-equity, revenues excluding VAT, cost structures, and company structure. While such a system may be methodologically consistent, one transport expert was circumspect of its content; “(W)e have to regard the information contained in balance sheets with (great) caution” (Bologna 1995:11). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 12 Specialized data sources developed by major broking companies such as Feamleys (Feamley Research in Oslo), Simpson, Spence & Young, and Clarkson’s monitor world trade flows accurately and consistently. However, these private firms serve the industry and, as Winjnolst and Wegeland point out, “shipping is primarily interested in volumes of cargo f because “shipping is being paid per unit of volumes carried” (1996:13). Separate databases must be found for any detailed measurement of trade values. This problem is mirrored in the public sector as well, where public organizations conduct reliable and concrete research, but address policy problems which are typically of limited scope and therefore difficult to generalize from.2 The best opportunity to collect data on transportation flows is at a fixed point. Attempts by nation states to monitor physical flows of cargo at custom check points (ports, airports or public freight depots) are essential to the regulator process and the ability to obtain quantifiable data. This process has been considerably weakened by deregulation and liberalization worldwide. Trade pacts further loosened national standards and states relinquished much of their formal control over the transport chain. This motivated companies at each link of the GCC to seek to maximize their control over their comer of the supply chain by assuming the tracking functions previously controlled by public bodies. One inevitable by-product of this shift to 2 Several such international databases are published by United Nations’ agencies (such as SITC and UNCTAD publications). Excellent public data is also available the national level, such as publications by the U.S. Census (Department o f the Commerce). Very often, however, these cannot be integrated with national data banks that measure trade volumes such as those published by MARAD and MTA (email correspondence). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 13 privatized control, is a less objective and increasingly proprietary source of information. (Bologna 1995:11). The international information that is collected is gathered by country rather than by region or city. This is a limiting factor for any conclusions one may draw pertaining to a variety of global city regional networks. Network software, such as UCI-Net, holds considerable promise for the analysis of regional transport flows. Thus far other network software has been applied to tracking land transportation, particularly at the local level (METRANS conference 2000), and air passenger flows between (global) city-pairs (Rimmer 1998), and, to a limited degree, to ocean freight (Rimmer 1997a and 1997b). A promising future research project emanating from this dissertation is an analysis of the data collected here utilizing UCI-Net software in order to determine the pattern and magnitude of relationships that clusters of economic and geographic elements (i.e. ports, shippers, shipping lines, commodities, regions of origin and destination) form.3 Finally, transport firms have always been 'network' companies, and information is consequently quite scattered, fragmented, and often unreliable. Liberalization has deepened the industry’s already extensive use of outside service providers and sub-contractors. The availability of data on international transport flows is therefore quite limited and must be derived from a pool of eclectic and typically non-integratable data. 3 See Linton Freeman’s applications of UCI-Net netware, Krupel’s “network visualization” (http://www.mpi-fg-koeln.mpg.de/~lk/netvis/gravc4.html), and other work regarding netware. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission 14 Wijnolst and Wegeland conclude that because international seaborne trade statistics are typically gleaned from many sources which each compute data differently, “it is impossible (for a data user) to judge which source to rely on” (1996:13). They suggest that consistency over time may therefore be the most important variable, but concede that time series collection for international flows of freight, telecommunications, and passenger flows are rarely much more than a decade old, or non-existent4. Macroeconomic International Context and Working Hypothesis Concerning Ocean Transport Global Commodity Network (GCN) Growth of the transport industry is driven predominately by world economic growth. One estimate is that the demand generated for ocean transportation in a country is approximately one and one-half times each unit increase in GNP (imaritime Consulting 2001). Due to the astronomical rate of international economic trade, which has outpaced world GDP growth, there are now well over .2000 ports sending and receiving over 5.5 billion tons of merchandise (Clarkson Research Studies 1999). The workhorses of this network are the top ten port hubs which handle 200-300 million tons per annum (the largest exceed 300 million tons of cargo a year). As an industry ocean transport has entered its third decade of growth rates averaging greater than 3% per annum. “Oceanbome trade has grown at rates higher than those for world gross domestic product (3% per year) due to increased 4 The authors note, for example, that the last publication covering world total seaborne trade by commodity and region was a United Nations series last published in 1989 for the years 1983-86. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 15 specialization, reduction in trade barriers, privatization, and advances in transportation and communications (United States House Committee on Transportation and Infrastructure 1996). Consequently, countries are trading larger shares of what they produce. Estimates for the transportation sector as a whole suggest that as an industry it generates in excess of $225 billion a year, amounting to 3-5% of world GDP. The value of the trade transported is several magnitudes greater still. Various accounts estimate that anywhere from 80% (International Maritime Administration) to 90% (the World Bank) of all merchandise (by weight) traded internationally relies on this global commodity chain. The predominate cargo freighted by sea is bulk cargo, such as agricultural and mineral products, i.e. basic food, raw materials and energy products.3 These commodity groups “constitute approximately 90% of world seaborne transportation work” (Rimmer 1997:19).6 Although the majority of bulk cargo by weight consists of low-value added commodities, bulk cargo also includes valuable liquid bulk, notably petroleum products, as well as manufactured breakbulk cargo, such as automobiles and 5 On the average, between 1962-1995, 75% o f all international seaborne “transportation work” was comprised o f the five main bulk commodity areas: crude oil, oil products, iron ore, coal, grain (International Maritime Organization). This is not surprising as bulk goods are generally heavy and relatively inexpensive. Water remains the traditional and cheapest method o f transporting these goods to this day. 6 If transshipment weights are excluded, maritime international shipping by weight in 1987 amounted to 56.4% o f the total weight o f imports and 31.4% o f exports, but only 27.9% in import value and 24.4% in export value. The highest share o f cargo value by mode of transport is by truck. The specific value for aviation is nearly thirty times higher than for road (see Table 6 in Comparative Mode o f Transport Freight profile by weight and value, Roundtable European Ministers o f Transportation 1994). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 16 machinery, which represent the highest value-added segment of this cargo type. As of 1996 greater than 75% of the value of world trade has been derived from manufactured goods. These commodity groups constitute only 10% of the tonnage of “the transportation work” in seaborne trade. The highest-value added commodities travel, for the most part, as containerized cargo, which is not only the highest-value added segment of the ocean freight GCC, but the fastest growing cargo as well (Rimmer 1998: 433). A finding of the empirical portion of this dissertation is that the highest value cargo is concentrated within a specific Pacific Rim geographic network. As a result of enormous global and sectoral economic growth, fierce competition, and technological innovation, the ocean freight transportation sector is presently characterized by several important trends: (1) an acceleration of industry consolidation (through mergers and acquisitions) and dispersion (through the spinning out of non-core activities), which has facilitated global economies of scope, (2) the related increase in the average vessel size necessary to achieve ever greater economies of scale and, (3) the necessary and huge capital investments in port infrastructure necessary to receive these ultra-large-carriers, which have resulted in the development of port hubs or load centers, (4) a branching out into information technology which has transformed the major carriers from what was once referred to as commodity providers to full logistical service providers. Taken cumulatively these changes have impacted the relationships between various stake-holders and participants in the transport supply chain and have Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 17 embedded transport logistics into the production schedules and management systems of commodity production. Two pivotal hypotheses can be suggested based on these trends. The first is that the ocean transport supply chain is globalized as a distinct industry in its function as a sector of production in the world economy. The second is that transportation is not merely responsive to the production sectors it serves, but is also a determining factor in the geographic configuration of globalization through its essential role in the globalization of other industries. The working hypothesis underlying this research project maintains that there has been a deepening of the consolidation and centralization of sea trade to and from a handful of global port links and among a few multinational shipping lines due to key economic variables, most notably: (a) the impact of transformational technology related to containerization, multi-modal transport systems, and telematics, on the viability of port facilities, (b) the exponential growth of world trade which is forecast to result in a doubling of trade through the San Pedro hub by 2010, (c) the mergers and alliance agreements between shipping lines which have resulted in mega-ships, mega-shipping-lines, and mega-ports. These factors combined have, on one hand, resulted in the network of transport supply chains playing an increasingly critical role in the sphere of circulation of particular sectors of the global economy and, on the other, resulted in a globalization of the transport supply chain in its own right. The globalization of this GCC is evident in the horizontal integration of carriers across international lines into alliances, and the increase of vertical integration of carriers into port construction around the world. In addition, a taxonomy of ports is with permission of the copyright owner. Further reproduction prohibited without permission. 18 constructed based on their geographic and economic integration within the global economy. Assumptions associated with this hypothesis are already operative at global ports such as WorldPort Los Angeles. Its brochure states, Global shippers and carriers are consolidating their volumes through a select number of gateways, for greater efficiency and control over the supply chain. The resulting trend toward bigger ships, marine terminal, and rail yards can only be satisfied by the largest ports - those with sufficient land and development capabilities (2001). An investigation of the forces shaping this trend, and more importantly, the significance of this geographic network of trade in terms of the global economy, has yet to be accomplished. Such a project is inherently suited to the field of political economy and is represented by the case study of the West Coast Ports7 . 7 Although a thorough analysis o f the transport sector is developed in Chapter 3 and the West Coast case study in Chapter 5, it is helpful to be familiar at the outset with terminology as well as key economic actors in the port-shipping global commodity network (GCN). See Glossary (Appendix I). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 19 Chapter 2. Theoretical Foundations: From Marx to Globalization Theory Marx on Transportation and Economic Geography Contemporary radical inquiries into the ways geography and capitalism intersect have gradually, particularly in the last two decades, eliminated any reference to Marxism or Marx himself. They rely, however, unequivocally on a structuralist perspective whose historical and theoretical roots are to be found in Marxist political economy. Interestingly, a common critique of these various studies, often offered as a disclaimer by the authors themselves, is the absence of a clear theoretical foundation. The author of the world city concept, Friedman, for example, wrote that, "The world city hypothesis . . . is primarily intended as a framework for research. It is neither a theory, nor a universal generalization among cities, but a starting point for a political enquiry "(Friedman 1986). It might therefore be surprising to some to note that distance, if not geography per se, and transport are clearly referenced in Marx’s analysis of the political economy of capitalism. In fact, when taking stock of Marx’s various and dispersed discussions of transportation and communication, the degree to which Marx was prescient of the consequences of technological breakthroughs in these fields, as well as of the analytic approaches undertaken by structuralist analysts who follow him, is remarkable. This section provides a theoretical compass for our investigation into the economic geography and industrial dynamic of the port and larger service nexus in global commodity chains. Marx’s and Engel’s commentary on transportation is first Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 20 explored in order to identify how economic geography, and the larger problematic of space and time, is theoretically grounded in Marxist thought. To accomplish this some analysis of Marx’s theory of political economy and the complex forces driving capital accumulation and determining capitalist distribution is required. Once the theoretical context is in place, Marx’s references to the role of transportation as well as his indirect references to economic geography can then be explored. Marx’s writings are replete with historical and empirical arguments that provide additional insight into his theoretical analysis of capitalism. Those pertaining to the themes of transportation and the relevant context of economic geography are included here as well. It is important at the outset to emphasize the theoretical motives which context Marx’s queries into his own 19th century technological revolution in communications and transportation. They are well summarized by de la Haye,1 who surveyed much of the body of Marx’s and Engel’s work in this light. He notes that Marx and Engels’ interest was “not in the question of communication for itself, the technology of transporting commodities for itself, the transmission of messages and the journeys of explorers in themselves, but rather in the connections, links and relationships which these phenomena imply for production, the State, colonialism, the constitution of classes, the division between the city and the country, monetary 1 Unless otherwise noted all quotations o f Marx and Engels are excerpted from Marx and Engels on the Means o f Communication: the movement o f commodities, people, information and capital edited by Yves de la Haye, (1979). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 21 circulation, the forms of realization of value, and public security” among others (de la Haye 1979:11). As a result, his references to this sector are scattered and typically part of a larger theoretical investigation. Nonetheless, it is clear that Marx regards the sectors of distribution as uniquely straddling both the spheres of circulation and production. Transportation operates within the sphere of circulation by serving commodity production through the distribution of material inputs and outputs, and, within the sphere of production as a collection of industries in its own right. Distribution and the Transition from merchant-capital to capital To fully understand the theoretical place of the distribution supply chain in Marx’s production-circulation matrix we must consider the original economic actors of commerce, merchant capital. (Although the specific history of merchant capital’s rise is beyond the scope of this study, it is relevant to mention the deep roots of this class in first the Dutch, and then the British, merchant marine.) In several passages in the German Ideology Marx makes clear that merchant capital, which predates capitalism, was historically “the stepping stone” to the capitalist mode of production. “Merchant’s capital is older than the capitalist mode of production... [I]n fact, historically [it] is the oldest free state of existence of capital.” Since merchant’s capital is penned in the sphere of circulation, and since its function consists exclusively of promoting the exchange of commodities, it requires no other conditions for its existence...outside those necessary for the simple circulation of commodities and money. Or rather, the latter is the condition of its existence. Merchant capital is also a necessary, but not sufficient condition, for the advent of capitalism. However, once merchant capital placed itself “in the service of Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 22 manufacturing, by investing in it or by contributing to the realization of the value of its products,” then it acquired a new economic dimension. In effect, merchant capital “becomes an appendage of the productive sphere, a function of productive capital” and the “servant of industrial production” (de la Haye 1979:15). It is at this point that the business of commerce was transformed into another sector of industry, controlled and coordinated by capitalists. “Thus the transition was made from trade to transportation,” from a haphazard uncontrolled system to one regulated, insured, and complex”.2 From a Marxist perspective the distribution of labor, rather than the exchange of products or services, is the central dynamic and very signature of capitalism. In The Gritndrisse, Marx writes that before distribution means distribution of products, it is, first, a distribution of the means of production, and secondly,... it is a distribution of the members of society among the various kinds of production (the subjection of individuals to certain relationships of production). The distribution of products is manifestly only a result of this distribution” (Marx 1971). Marx’s point is two-fold. Marx is first suggesting that, the distribution of commodities, although realized within the realm of circulation, is directly related to 2 Merchant capital cannot explain the origins o f capitalism. Rather, manufacturing was the first sector o f production to escape the feudal guilds and economic tyranny o f personal relations. Mercantilists, remarks Marx, have only theorized appearances by “making money and commerce the basis o f wealth and the axis o f economic development” (Marx de la Haye 1979:13). In Capital III Marx writes, “And when in the 16th, and partially still in the 17t h century, the sudden expansion o f commerce and emergence o f a new world-market overwhelmingly contributed to the fall o f the old mode o f production and the rise of capitalist production, this was accomplished conversely on the basis o f the already existing capitalist mode o f production.” Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 23 the distribution of labor among the means of production.3 In short, to have something to distribute there must be something produced, therefore “[t]o treat production apart from the distribution which is comprised in it is plainly an idle abstraction.” Secondly, Marx makes the important point that distribution is accomplished by using methods determined by the means of production. (On this point also see Engels’ Anti-Duhring, de la Haye 1979:169-171). In this context, transportation functions as an industry like any other situated within the sphere of production. The following section will develop Marx’s analysis of transportation theoretically within the matrix of production and circulation. Transportation within the Marxist production-circulation matrix Within this production-circulation dialectic is to be found the real abscissa and ordinate of social development -Frederich Engels'*. In his discussion of the circulation of capital in Capital 11 (de la Haye 1979:162-163), Marx begins by simply identifying the spatial elements of the production process in linear time. Marx’s construct, interestingly, resembles the most general form of a commodity chain model: Within each process of production, a great role is played by the change of location of the subject of labor and the required instruments of labor and 3 The distribution or division o f labor is at the heart o f Marx’s entire theory of capitalism. "The division o f labor results in concentration, coordination, cooperation, the antagonism o f private interests and class interests, competition, and the centralization o f capital, monopolies and joint stock companies -so many contradictory forms o f unity which in turn engenders all these contradictions" (Marx 1971:68). The dialectical relationship between the concentration o f capital on one hand, and the division o f labor on the other, constitutes a theme in Marx’s Capital I too vast to properly address here. It is, however, fair to extrapolate that for Marx, the division o f labor characterizing capitalist production gives form to the economic spatial coordinates o f capitalism. 4 From Anti-Duhring, de la Haye 1979:14. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 24 labor-power - such as cotton trucked from the carding to the spinning room or coal hoisted from the shaft to the surface. The transition of the finished product as finished goods from one independent place of production to another located at a distance shows the same phenomenon, only on a larger scale.5 Once the locational movements required by production are complete the commodities enter the sphere of circulation: The transport of the products from one productive establishment to another is furthermore followed by the passage of the finished products from the sphere of production to that of consumption. The product is not ready for consumption until it has completed these movements. This, Marx remarks, makes transportation simultaneously an essential element in the circulation process and an industry (in the productive sphere) in its own right. The circulation, i.e. the actual locomotion of commodities in space, resolves itself into the transport of commodities. The transport industry forms on the one hand an independent branch of production and thus a separate sphere of investment of productive capital. On the other hand its distinguishing feature is that it appears as a continuation of a process of production within the process of circulation and for the process of circulation. The circulation of commodities in capitalism, however, can be resolved in the circulation of capital, requiring no locational change whatsoever.6 Within the circuit of capital and the metamorphosis of commodities, which forms a part of that circuit, an interchange of matter takes place in social labor. This interchange of matter may necessitate a change of location of products, their real motion from one place to another. Still, circulation of commodities can take place without physical motion by them, and there can 5 The following excerpts from Marx, Capital II (1885) are culled from de la Haye 1979:Section 24:162-163. 6 Similarly, the circulation o f goods can take place without necessitating any exchange whatsoever, although certainly not within the capitalist political economy. Marx continues, “On the other hand, transportation played a prominent role in the land o f the Incas, although the social product neither circulated as a commodity nor was distributed by means o f barter.” (Presumably Marx is referring to the welfare system o f the Incas within which all resources were owned by the government and distributed great distances throughout the Empire). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 25 be transportation of products without circulation of commodities and even without a direct exchange of products. A house sold by A to B does not wander from one place to another, although it circulates as a commodity. Movable commodity-values, such as cotton or pig iron, may lie in the same storage dump at a time when they are passing through dozens of circulation processes, are bought and resold by speculators ... What really does move here is the title of ownership in goods, not the goods themselves. As a branch of commodity production, transportation contributes value to commodities in conformity to the general law of commodity production. Quantities of products are not increased by transportation. Nor, with a few exceptions, is the possible alteration of their natural qualities, brought about by transportation, an intentional useful effect; it is rather an unavoidable evil. But the use-value of things is materialized only in their consumption, and their consumption may necessitate a change of location of these things, hence may require an additional process of production, in the transport industry. The productive capital invested in this industry imparts value to the transported products, partly by transferring value from the means of transportation, partly by adding value through the labor performed in transport. This last-named increment of value consists, as it does in all capitalist production, of a replacement of wages and of surplus-value. ... Consequently, although the transportation industry when based on capitalist production appears as a cause of circulation costs, this special form of appearance does not alter the matter in the least. In sum, Marx is again emphasizing the subordination of the role location and transport play in the sphere of circulation to the determining elements of the productive realm. The great technological feats Marx witnessed in his day in the form of steamships and the telegraph do not alter this principle. It applies equally to these emblems of the transport and communications ‘revolution’ of his day, and to the telecommunications and containerization ‘revolution’ a century later. The absolute magnitude of the value which transportation adds to the commodities stands in inverse proportion to the productive power of the transport industry and in direct proportion to the distance traveled, other conditions remaining the same ...The productivity of labor is inversely Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 26 proportional to the value created by it. This is true of the transport industry as well as of any other. The smaller the amount of dead and living labor required for the transportation of commodities over a certain distance, the greater the productive power of labor, and vice versa. Marx was extraordinarily impressed with the role that the enormous scale requirements of transport technology played in boosting the production of other prime mover machinery and in providing networks for far- flung networks of trade. His remarks concerning both of these are examined below. Marx on the Technology of Transportation and the Creation of World Markets Marx establishes the critical role of the capitalist means of transport at length. He declares in a letter to Danielson (1879) that the Rail Road, steamship, and telegraph are “the couronnement de l’oeuvre” (crowning work) because they were the means of transportation and communication “adequate to the modem means of production” (de la Haye 1979:19). In the first volume of Capital Marx could not be more emphatic about the influence the development of transportation and communication systems wields over capitalist industrialization and the establishment of the world market. The means of communication and transport handed down from the manufacturing period soon became unbearable trammels on Modem Industrialization, with its feverish haste of production, its enormous extent, its constant flinging of capital and labor from one sphere of production into another, and its newly-created connections with the markets of the whole world. Hence, apart from the radical changes introduced in the construction of sailing vessels, the means of communication and transport became gradually adapted to the modes of production of mechanical industry, by the creation of a system of river steamers, railways, ocean steamers, and telegraphs. But the huge masses of iron that had now to be forged, to be welded, to be cut, to be bored and to be shaped, demanded, on their part cyclopean machines, for the construction of which the methods of the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 27 manufacturing period were utterly inadequate. Modem industry had therefore itself to take in hand the machine, its characteristic instrument of production, and to construct machines by machines. It was not until it did this, that it built up for itself a fitting technical foundation, and stood on its own feet. Machinery, simultaneously with the increasing use of it, in the first decades of this century, appropriated, by degrees, the fabrication of machines proper. But it was only during the decade preceding 1866, that the construction of railways and ocean steamers on a stupendous scale called into existence the cyclopean machines now employed in the construction of prime movers. The result of this astonishing productivity gained by technology, according to Marx is three-fold and equally evident today: (I) the significance of transportation in the international capitalist economy is heightened, (2) transport costs fall through economies of scale which results in the concentration of the means of production in fewer hands, and (3) labor value increases through the commodification of ever larger, more numerous, and far-flung markets. The capitalist mode of production reduces the costs of transportation of the individual commodity by the development of the means of transportation and communication, as well as by the concentration - increasing scale - of transportation. It increases that part of the living and materialized social labor which is expended in the transport of commodities, firstly by converting the great majority of all products into commodities, secondly, by substituting distant for local markets. At this juncture, it is important to distinguish some of the developments within Marxist theory regarding economic geography which are complementary, but not identical to Marx’s own constructs. For example, on one hand Marx does not restrict capital to national capital and suggests that in many respects capital is international, in its reach, markets, and investments. On the other hand, Marx frequently uses the term -world market, but his concept of a world market falls short of the requirements suggested by globalization. This is in concert with the concept of Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 2 8 globalization, although the latter suggests that the production process itself is internationalized and transcends trans-border flows confined to the sphere of circulation. For the most part Marx’s discussion of economic geography takes place through the very important construct of a world market. In Marx’s words, “([]he world-market itself forms the basis for this (capitalist) mode of production.” It is not commerce, which is nested in the sphere of circulation, that provides the material substance of this basis of capitalism. Rather, the transformation of commerce and therefore the creation of the world market is driven by production. “[T]he immanent necessity of this mode of production to produce on an ever-enlarged scale tends to extend the world-market continually, so that it is not commerce in this case which revolutionizes industry, but industry which constantly revolutionizes commerce.” Marx further clarifies that “commercial supremacy itself is now linked with the prevalence to a greater or lesser degree of conditions for a large industry.” Marx compares England to Holland and concludes that, “the history of the decline of Holland as the ruling trading nation is the history of the subordination of merchant’s capital to industrial capital” {Marx Capital III). The necessity for capitalist expansion within a world market is characterized by Marx’s references to the universalist tendencies of capitalism, (see de la Hayes, 1979:Section 15). In the Grundrisse, Marx reiterates that “capital must seek to pull down every local barrier to commerce,... destroy space by means of time, i.e. to restrict to a minimum the time required for movement from one place to another. The Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 29 more developed capital is, and thus the more extensive the market through which it circulates and which constitute the spatial route of its circulation, the more it will aspire to greater extension in space for its market, and thus to greater destruction of space by time.” As capitalism crashes through time and space the tendency of capital is “towards universal development of the productive forces -and wealth in general, (and) also the universality of commerce and a world market” (Marx 1971:121/ The elimination of space and time in the service of the construction of a world market requires a seamless supply chain feeding an endless stream of demand. A different translation from the same passage emphasizes this aspect of capital’s great momentum. The more production comes to rest on exchange value, hence on exchange, the more important do the physical conditions of exchange - the means of communication and transport - become for the costs of circulation. Capital by its nature drives beyond every spatial barrier. Thus the creation of the physical conditions of exchange -of the means of communication and transportation - the annihilation of space by time becomes an extraordinary necessity for it (from Marx’s Grundisse, cited in de la Haye). These physical entities are creations of capital and they remain a “condition for production based on capital and an essential component of it” only to the extent that they serve the realization of profit. Therefore, no matter the degree to which these means facilitate and enable an ever expanding and accelerating capitalist mode of production, they must be understood as a piece of the Marxist matrix of production and circulation. For Marx, economic geography designates a spatial location. More importantly, for our understanding of the post-Marxist concept of globalization, the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 30 economic geography of capitalism does not provide any dynamic feedback into the capitalist process. Space (and time) are presented as barriers to capitalist expansion which must be (technologically) overcome. In a dynamic, but somewhat linear fashion, capital expands through space (and time) to exploit more and more labor and derive greater profits. While Marx does not posit any spatial or geographic limitations of any kind that need to be recognized by capital, he also does not ascribe much theoretical significance to the economic geographical configuration of capital. Thereafter, several lines of Marxist influenced structuralist thought not only acknowledge the importance of economic geography, but integrate it conceptually into theories of imperialism, dependency, and globalization. The Structuralist Bridge to Globalization Theory Early twentieth century studies of monopoly capitalism, such as those of Lenin and Hobson, and Rosa Luxemburg, represent the origins of contemporary radical investigations into the geographic dimensions of capitalist development and the relations of power that they circumscribed. Their work became the basis for the proliferation of a wide range of studies focused on economic development and domination which exploded after the second world war. Lenin’s theory of imperialism, in particular, is critical as it is, if not the first, certainly the most prominent radical Marxist perspective to explicitly reference economic geography. Imperialism, the highest stage of capitalism, features the formation of monopoly capital, whose reach and power is of global proportion. Several schools of thought, and even social movements, have developed from this Marxist-Leninist theory. They Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 31 each delineate geographic tiers of development within which national economies participate, and reference the international economic and political relations regulating them. The later writings of the United Nations ECLA (Economic Commission on Latin America) economists such as Raul Prebisch, the diverse Dependanistas such as Frank, Evans, and Arrighi, Modem World Systems theoiy inititated by Immanual Wallerstein, and other structuralist thinkers, some of whom are referenced below, all incorporate notions of the economic significance of geography in the development of capitalism. Together, they and a host of other multinational thinkers, birthed a vision of a world based on the geographical divide of the developed and developing world, northern and southern hemispheres, core and periphery, first and third world. It is not within the scope of this study to do more than reference the many radical perspectives which have continued to develop apace: Modem World System (MWS) theory, the much critiqued New International Division of Labor (NIDOL) model, and others which have contributed to our understanding of the economic geography of capitalism. The next section will review those that provide the theoretical context necessary to situate the case study of the ocean freight sector in the global economy.7 7 Other important schools o f thought outside the mainstream have also profoundly influenced globalization literature. Most prominent for studies o f economic geography has been Systems theory o f the 1970s. Both Systems and Marxist theories, “agreed that recent locational trends are intimately connected to changes in the structure o f industry, such as the growth o f monopoly and oligopoly control, the concentration o f industrial capital in large corporations, and the advanced division o f labor” (preface o f Storper and Walker, 1979). The importance of the geographical dimension o f Systems theory is unambiguous, but undeveloped. In Systems theory the driving force o f industrialization is technology, which touches down in specific geographic sites. Not only do “(t)echnological innovations have Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 32 Globalization. Localization, and Transport In the forward to Saskia Sassen’s collection of essays on globalization, it is suggested that, “(t)hroughout recorded history, men and women have traveled great distances ...we are a traveling species as much as a settled one” (Appiah 1998). The extension of this point, that these migrations have ever been accompanied by and are today exceeded by the enormous traffic and flow of goods around the globe, is manifest in the daily life of the vast majority of world citizens today. One example will suffice to evoke a broad range of similar examples. The soccer jersey of the Irish national team is, or at least was in the mid-1990s, made in China, manufactured by Adidas (a German-French owned firm), and sponsored by Opel, a German automobile manufacturer owned by General Motors, an American firm (Knox and Taylor 1995:3). Consumers, in general, may not be familiar with the fast-changing and increasingly arcane details, but the idea that any particular commodity is a product of considerable cross-border activity is now a mundane point. These networks of production and distribution are at the center of globalization research organizational and geographical points o f origin,” but the three basic organizational imperatives o f technology, are “expressed through systems which are organizational and geographic” (15). These in turn lead to extension into new markets, oligopolistic consolidations, and vertical integration to secure inputs and access to the market. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 33 and understood to represent the shift from an international economy to a global one (Dicken 1992). Globalization theorists distinguish international trade from globalized economic activities. “Internationalization refers simply to the extension of activities across national boundaries: globalization involves more than this and is qualitatively different. It implies a degree of purposive functional integration among geographically dispersed activities" (Rimmer 1992:106) or, alternatively, “the integration of spatially separate locations into a single international market” (Turnbull and Wass 1997:127). Neoclassical-based studies, even ones predicated on the theme of globalization, tend to dismiss or neglect the significance of geography in a world flattened by the homogenizing effects of the market and falling transport costs. They argue that the combination of liberalization policy and the technological revolution in transportation and telecommunication had rendered the world borderless and spaceless. Ohmai, for example, believes that the rise of the information economy has lessened the importance of boundaries "so much so that a borderless global economy has emerged” (Ohmae 1990). According to this view, the influence of traditional factors on locational choices of businesses have ebbed and flexible modes of production hooked up to the information highway have eclipsed both the Fordist technological-economic paradigm and neutralized place and distance. Technological revolutions inevitably lower business costs and shipping is no exception. According to one analyst, the cost Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 34 of shipping goods between Asia and the U.S. has fallen by two-thirds over the past two decades and transportation now accounts on the average for only 1 percent of a product's cost. In neoclassical fashion, this analyst reduces production decisions to cost considerations and claims that such low transport costs, "make (the) country of origin largely an afterthought in purchasing decisions” (Wooster 2000). In contrast, many structuralist studies in political-economy and sociology feature economic geography as central to the analysis of the development of capitalism. The fact remains that as footloose as firms are, due to innovations in both telecommunications and transportation (as well as a host of other political and economic factors), they must remain within the concentrated networks of capital. World cities should be seen as a junction in flows' of goods, information, and people rather than as fixed locations for the production of goods and services.” (Harris 1994). They constitute a global web of connections, characterized by an economic geography of dispersal and centralization. Equally concentrated networks of transportation facilitate these connections between otherwise fragmented clusters of economic and social activities on a global scale. What is unaccounted for in the above neoclassical transportation equation, then, is the probability that the cost of transport reflects is calculated on the basis of established transportation networks and infrastructures. Transport from areas beyond this network is, in fact, prohibitive. Thus, the concerns of several developing nations regarding the cost of feeder Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 35 services and foreign currency outlays for transport of national products through foreign ports (UNCTAD conference 1972). The synergy between hubs and networks have resulted in remarkable urban development, on one hand, and the further development of the hubs, on the other hand, as firms engaged in transport logistics, telecommunications, air passenger and sea freight transportation locate there. Nodes require steep investment allocations by public and private entities alike by way of teleports, airports, ports, and associated terminals. Freight networks, in particular, develop as corporations incorporate global transport logistics systems, just-in-time production methods, and both economies of scope as well as of scale. All of these are manifestations of an integrated approach to corporate economic activities. Two globalization models, in particular, attempt to capture this dynamic of economic integration and geographic dispersal: global city regions (GCRs) and global commodity chains (GCCs). Structuralist globalization theorists utilize economic geography to develop explanatory constructs to help demonstrate the economic territoriality of international capital. For example, Global Commodity Chain (GCC) research builds industry case studies by grafting the stages of production (or links of the GCC) of a selected industry onto the geographic sites of production (Gereffi 1996). GCR research suggests that the forces driving the global economy emanate from the dynamic relationship between the regional characteristics of particular global city regions and the international flows of capital between them (Sassen 1990; GCR Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 36 Conference 1998). Michael Storper’s studies of regimes of innovation indicate that international capital is dependent on the local synergies and social relationships of the regions hosting it (Storper 1989 and Salais and Storper 2000). Three researchers who have especially influenced this dissertation, Dicken, Hugill, and Rimmer, are among the few to have included analysis of transport linkages in their work on the economic geography of capitalism. Taken together, these overlapping, but distinct literatures, have succeeded in producing a vivid picture of the international geography of production and developed a wealth of industry and regional case studies. Globalization research has also produced a significant conceptual framework for research into the political economy of capitalism by joining the geographic grid of interconnecting global cities with the economic flows between them. A central premise of the present study is that there are numerous orders of overlapping and interconnected grids and associated capital flows. Analyzing transportation networks as a web of port nodes and ocean cargo flows provides an excellent means of deepening our understanding of the content and workings of the global economy. This section analyzes globalization and related economic location theory for the purpose of theoretically situating the empirical analysis of the port-shipping industry as a global commodity network (meaning as both a GCC and as a distributive network in the global economy based on the GCR network thesis). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 37 Traditional Trade and Location theory Traditional explanations of international production, trade, and investment which date back to the classical economists of the late 18th and early 19th century still underpin modem trade theory today. It is important to understand how transportation, distilled down to a cost, fits into classical economic theory, in order to better grasp how transport networks fit into the more general schematic of capitalist accumulation. The most common and superficial of explanations regarding the choice of location for economic activities can be traced back to Adam Smith’s writings on the division of labor. Land, and the resources endowed in it, is simply regarded as a single factor, and subservient to the other factors of land and capital. The entire process, of course, is driven by individual self-interest which determines the distribution of resources in conformity to the laws of demand and supply. Peter Dicken believes that the spacelessness implicit in the work of Smith and Ricardo helps account for the limited role geography has played in international trade theory Dicken 1992:92-93). David Ricardo conceived of his 1817 treatise on comparative advantage as “the most basic concept in the whole of international trade theory” and it is still taught as such, particularly in the United States. The principle states that a country or any geographic area should specialize in producing and exporting those products in which it has a comparative, or relative cost advantage compared with other countries and import where the corresponding comparative disadvantage is manifest. Devotees Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 38 of this theory, in Utilitarian fashion, expect this specialization to result in the greater benefit of all. Dicken identifies this principle as “at the heart of traditional attempts to explain geographic differences in production and trade. But, in itself, it says nothing about why such differences occur” (Dicken 1992:92). The work of two Swedish economists, Eli Heckscher in 1919 and Bertil Ohlin in 1933, developed Ricardo’s basic theory on an international scale into the Heckscher-Ohlin theory of interregional and international trade. In this theory, as in classical and neoclassical theory in general, location is merely a requirement determined by the division of labor after factoring in technological and other such developments. All products require a combination of different factors of production -natural resources (land and raw material), a labor supply, capital in the form of money to buy the materials and machinery, technology, and so on. Different products vary in the precise combination in which these factors are used. Some industries occupy huge areas of land whilst others operate on tiny sites. Factors of production, of course, are very unevenly distributed geographically, particularly at an international scale (Dicken 1992:92). Therefore, the theory suggests that comparative advantage determine production functions based on factor endowments, particularly labor and capital endowments. Accordingly, “countries with an abundance of labor should export labor-intensive products while capital-abundant countries should export capital-intensive products” (Dicken 1992:93). The more interesting aspect of neoclassical trade theory for our purposes pertains to its operational assumption regarding factor mobility and transportation Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 39 costs. In trade theory, factors are assumed to be fixed and immobile geographically. An area has a particular endowment of production factors and this endowment forms the basis of the area’s comparative advantage. In addition, transport costs are assumed to be zero. The irony of this assumption is best captured by Hugill, whom Dicken quotes. In other words, despite its explicit concern with trade between areas, trade theory, in common with much other economic theory, remains curiously spaceless. In fact, neither of these two assumptions can be maintained in a study of the real world. Apart from land, factors of production are not geographically immobile and fixed in their location though they are different in the degree of mobility of different factors. In general, for example, capital is far more mobile geographically than labor, while skilled labor tends to be more mobile than unskilled labor. Such differential factor mobility is an important element in the shifting global pattern of economic activity... more specifically, geographical distance imposes a cost on movement, whether of materials, finished products, people or less tangible things such as knowledge and information. Each of these differs in its degree of sensitivity to geographic distance. Within manufacturing industry itself, some materials and products are extremely costly to move in relation to their value whilst others are, relatively speaking, cheap to move. Either way, any explanation of the geographical distribution of economic activity at the global scale must incorporate the role of distance and transport costs (Dicken 1992:91) Nonetheless, the assumptions of classical economics, with its assumptions regarding the unfettered operation of markets and the nature of economic decision making, did give rise to classical location theories regarding economic activity. Hugill refers to these location theorists as “a generally maverick band of scholars anxious to break out of the spaceless world of economic theory” (Dicken 1992:93). They were less interested in explaining the actual location of economic activities, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 40 than incorporating space into economic and trade theory. Location theory is divided between two explanations for location decisions. The first focuses on the costs of production as the pivotal determinant of industrial location; the second focuses on the size and shape of a firm’s market area. Probably the most influential industrial location theory pioneer is Alfred Weber whose 1929 Theory o f the Location ofIndustries treatise aimed to identify the optimal location for an individual firm (one plant) ceteris paribus (Dicken 1992:94). He found two determinants: (a) prim ary or general set of factors such as transport costs and labor costs. The lowering of the costs of transport of inputs and product to market was based on the “initial determinant” of weight-gaining or weight-losing properties. Therefore, location was selected as the point of minimum total transport costs, unless other locational forces proved to be more powerful. “jT]he major cause of such deviation, [Weber] suggested, would be the existence of geographical differences in labor costs” which would have to outweigh additional transport costs otherwise known as agglomeration; (b) Secondary or local factors such as those characterizing the forces of agglomeration (external economies of scale) or deglomeration. This second set of factors have made their way into the basic terminology of economic geography, and are of special relevance to processes of globalization. The spatial concentration of producers in a single location may well generate additional economies, particularly where producers are linked together in a functional manner. For example, in some industries closeness to suppliers Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 41 and customers may be desirable or even obligatory. More generally, a cluster of economic activities makes possible the provision of a variety of services which might not be feasible for a single, isolated firm. Such external economies might also include an appropriate pool of labor. In this respect, labor and agglomeration factors may coincide in creating a strong locational pull. But in Weber’s analysis, the location of production would shift from the minimum-transport-cost point only if the savings of the cheaper-labor or agglomeration location were greater than the additional transport costs which would be incurred...At first sight it would appear that Weber’s approach is most relevant for those economic activities in which transport costs are especially important. But this is a shrinking category as a result of technical changes in the transport media themselves and in the process of production. As transport costs and raw material sources have come to exert less of a locational influence, Weber’s emphasis on the locational attractions of labor locations has become increasingly relevant, particularly at the global scale (Dicken 1992:94). It is interesting to note that for purposes of analyzing the location decisions of other industries, Weber automatically relegates transportation to the first category of primary and general factors. Dicken, however, declares it to be of waning significance in this first category. In these terms, transportation is another business expense, and as transportation costs decline due to technological improvements, its influence over location decisions declines. It should be noted here that this is an ironic assertion for a globalization theorist such as Dicken. If transportation is conceptualized as a globalized network concentrated within other global circuits of capital, then transport costs are a function not only of microeconomic variables, but of global features, such as the extent of integration into the global economy of varying economic and geographic transport sites as well as of transport users. Transport costs would be an outcome of weightier macroeconomic variables and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 42 location decisions would be reflective of the extent to which transportation networks are globalized as well as their costs. Whereas Weber attributes location decision to transport cots, Dicken dismisses transport costs as a significant factor in location decisions. Dicken critiques Weber’s work, which was ground-breaking at the time, for reducing industry locational choice to an analysis of cost factors. He therefore cannot explain why agglomerations appear and limits their dynamism to one-dimensional growth. Traditional location theory, then, cannot explain the highly complex and interconnected process organizing economic activities that Dicken dubs global shift. To do this, Dicken introduces an element of governance in the form of the transnational corporation and a causal element in the form of technology. He states that, global shift is a “manifestation of the internationalization and globalization of capital in the form, primarily, of the TNC” (Dickens 1992:120). Despite its limitations given a plethora of other institutional and organizational forces, “the TNC is undoubtedly the primary force shaping and reshaping the geography of the contemporary global economy” (Dicken 1992:95). This point is agreed on by globalization theorists in general as is discussed below. Further, globalization theory addresses the question implicitly raised by this conclusion: “How are we to understand what accounts for the locational decision of TNCs which results in these agglomerations?” We will explore that question in the section on GCRs and follow by it with a discussion of the role of transportation as an enabling industry Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 43 facilitating globalization in the realm of circulation. We will then be prepared to analyze the corresponding transformation of deep sea transport into a globalized industry utilizing the GCC construct. The Coordination of the Global Economy: Transnational Corporations. GCRs. and High Valued Services It is generally assumed, by economists of all stripes, that TNCs provided the necessary economic platform for the burgeoning of international trade growth in the second half of the twentieth century. Exponential growth rates in world trade, foreign direct investment and cross-border production attest to this. Dicken sees globalization as a dynamic process which is an outcome of the complex interaction between transnational corporations (TNCs), through their worldwide operations, and nation-states, through trade, foreign direct investment, and industrial policies, within the context of a volatile technological environment (Dicken 1992:105). Knox and Taylor suggest that the transition from a mere international economy to a global one is evidenced by the economic and geographic webs spun by TNCs beyond the regulatory reach of the nation-state. Whereas the “international economy” conducted cross border trade by individuals and firms under the supervision and management of nation-states, “in the global economy goods and services are produced and marketed by an oligopolistic web of global corporate networks whose operations span national Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 44 boundaries, but are only loosely regulated by nation-states” (Knox and Taylor 1995:3).' The international political economist, Susan Strange, located the power of TNCs in their gatekeeper role in the present global economic system. TNCs control access over information and knowledge which enables them to control “decision making” over their subsidiaries and smaller business associates. “The technical changes in the knowledge structure impacts production structures” and have “centralized power in the big TNCs” (Strange 1988:130). “If information is king then so is the TNC” (Strange 1988:130). As a consequence, Strange maintains, TNCs may be “less centralized,” but their power is more concentrated than ever (Strange 1988:131). Indeed, TNCs represent the nerve centers in both GCCs and GCRs for this reason. (This conclusion is also borne out by the empirical study of transnational shipping lines in the port-shipping GCC discussed below). In GCC literature it is assumed that big capital (i.e. core TNC firms) occupy the core niches of GCCs. Core niches are inhabited by big capital, typically based in key metropoli, and are characterized by high-growth and high-value-added services (ones which depend on knowledge, capital and sophisticated technology). Control of these services grants competitive advantages in production or in distribution networks. These core services, such R&D, telecommunication systems, product 1 The empirical studies o f transnational corporations by Stephen Hymer in the early 1970s substantiated structuralist theories hypothesizing the intensification of capitalist concentration and centralization on a global scale (also see work o f the same period by Paul Sweezey, Barnet, and others. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 45 design, marketing and sales enable capital to coordinate and therefore directly and indirectly control geographically and economically dispersed segments of GCCs (Dumaine 1992). The central role of TNCs in the GCR model, as discussed by Saskia Sassen, is acknowledged but somewhat transformed and refined when mediated through the GCR construct. TNCs are able to coordinate global economic activities in part due to the sheer concentration of capital assets they own and resources they can rally. However, "(t)he massive trends towards the spatial dispersal of economic activities... (that) we associate with globalization have contributed to a demand for new forms of territorial centralization of top-level management and control operations" (Sassen 1998). TNCs are still central to the process, but the process itself is increasingly geographically dispersed. "There is a tendency to see the internationalization of the economy as a process operating at the center, embedded in the power of the MNCs today and of colonial enterprises in the past...What highly developed countries have is strategic concentrations of firms and markets that operate globally, (that constitute) the capability for global control and coordination, and power" (Sassen 1998: Footnote ). What is critical to wield global power today is access to the economic agglomerations which are gathered within and between particular geographic regions. These global city regions (GCRs) are, in effect, harnessed by TNCs. The organizational power of key economic actors such as TNCs, is derived in part by Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 46 economic geography. Sassen emphasizes this point with a rhetorical question, “(W)e can ask whether an economic system with strong tendencies towards such concentration can have a space economy that lacks points of physical agglomeration. That is to say, does power, in this case, economic power, have spatial correlates?” (Lo and Yeung 1996:391). The obvious answer for globalization theorists is the affirmative. GCRs are the strategic sites where capital touches down and from which capital coordinates global economic activities. In globalization theory, TNCs are principle, but not solitary actors. They may coordinate massive supply lines across continents, but they too, like all capital, and in some fashion, are tethered to specific regional agglomerations. “Globalization can be deconstructed in terms of the strategic sites where global processes materialize...export processing zones, offshore banking, (etc.)" and they are all integrated through global cities (Lo and Yeung 1996:392). The result is that the “geography of globalization contains a dynamic both of dispersal and of centralization... ” (Lo and Yeung 1996:393). (W)ith the potential for global control capability... certain cities are becoming nodal points in a vast communication and market system... but, centralized control and management over geographically dispersed array of plants, offices, service outlets do not come about inevitably as part of a 'world system.' They require the development of highly specialized services and top- level management and control functions (Lo and Yeung 1996:397). This simultaneous trend of concentration (of control) and decentralization of economic activities and their associated geographic sites has been made feasible by transport and information technologies. Globalization theorists believe that the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 47 processes of globalization are highly conditioned by new information technologies, service intensity, and the acceleration of movement of capital and labor. In addition, these trends are assumed to be mutually reinforcing, resulting in a complex brew which is theoretically difficult to deconstruct. "Telematics and globalization have emerged as fundamental forces shaping the organization of economic space" (Lo and Yeung 1996:391). The silicon chip has facilitated both the spatial virtualization of economic activities and reconfigured “the geography of the built environment for economic activity” (Lo and Yeung 1996:391). The information industry is itself physically “place-bound” (Lo and Yeung 1996:393). It requires a vast physical infrastructure and a hyperconcentration of facilities. All dominant niches in network industries do. Ironically, some researchers emphasize the meta-routes which electronically link physical space and dismiss the significance of physical linkages. These theorists routinely grant telematics and electronically generated space the most credit for the reconstitution of the global economy. Lo and Yeung attribute the emergence of global cities to their information-based “centrality.” However, as central as telematics is to the present phase of capitalist development, it is and must be physically tethered to infrastructure and a host of non-cyberware. Without acknowledging the physicality of the linkages, which facilitate touch-down at global city nodes, these theorists risk falling into a trap similar to the one they accuse Ohmae of falling into. The very important and many financial connections (FDI), high-value services, computerized networks, and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 48 other services are ultimately dependent on trunk lines, terminals, and other telecommunications infrastructure, including the means of transportation which ships them. Thus, we have come full circle. The function of a city is centrality. Cities feature agglomeration economies, massive concentrations of information, and market-places. However, as Sassen shows, centrality is still key, but "it can assume several spatial correlates, ranging from the central business district to a new global grid of cities" (Sassen 1996?). As a result, globalization theorists emphasize, that the technological innovations associated with globalization have amplified, rather than diminished, the importance of place in the global economy. This proves to be true in the case of the world shipping network in terms of the impact of technology on the port system as discussed in Chapter 4. Sassen’s notion of the existence of several sets of economic-spatial correlates inspires the present approach of conceptualizing the economic-geographic interface of the port-shipping grid as a global commodity network (GCN). The GCN concept joins the GCR emphasis of geographic nodes (world city regions) with the GCC focus on industry linkages (stages of commodity production). In the case study presented here, the network of key geographic sites, the port node, is analyzed in the context of its defining industry, the port-shipping transport supply line. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 49 The Dialectics of Global Commodity Networks: Concentration and Decentralization. Competition and Cooperation. Localization and Globalization Global city research broke apart the paradigm driving traditional central place theory. Cities were geographic elements within national economies and the only system they belonged to was a nested hierarchy of national cities and markets. The growth potential of any particular city was proportional to population size and the scale economies that afforded. It is notable that in such a system, transportation costs were seen as key to understanding locational choices. The national system of cities featured cities of varying sizes and specializations which were integrated in discrete hierarchies in a hub and spoke fashion. This nested hierarchy of cities and markets was eroded in advanced capitalist countries “first by the development of small, but specialized, cities with high-order functions and then by the more recent emergence of city networks,” with their own hierarchy (Lo and Yeung 1996:435). Sassen is generally recognized as among the first to identify “a new system of global cities (not just New York, and London, but Bombay, Sao Paulo, and Hong Kong) and new kinds of economic regions (not only Silicon valley, but the industrial zones that sit at Mexico’s border with the U.S.)” (Forward by Appiah, Sassen 1998).2 2 Camagni did a foundational study o f global cities in 1993 which attempted to identify the essential characteristics o f a world city. Camagni’s project, like global commodity chain (GCC) research, is descriptively strong, but lacking theoretical rigor. Camagni utilized multivariate analyses in order to develop sets o f cities based on population size, polarized employment and income structures, number o f Head Quarters o f Fortune Magazine top 500 corporations and o f international institutions, openness to foreigners, and number of conventions hosted (1993 Camagni From C ity H ierarchy to C ity Network: Reflections about an em erging P aradigm in Structure an d Change in the Space Economy). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 50 Her work deciphers a systematic network of relationships among far-flung regions which she and other analysts in the field now tag as Global City Regions (GCR) (GCR Conference 1999). “They are not, like the cities of the past, at the hearts of geographically bounded regions whose economies they center,” rather, they are connectors between remote points of production and consumption (Sassen suggests that a tri-level hierarchy of city networks has emerged. It has replaced the traditional urban hierarchy characteristic of an industrialized, but not globalized, and independent national economy. Peter Rimmer recognizes “top-ranking city regions” as the “key nodes in this emerging network structure” (Rimmer 1997). Their ability to function as global points of coordination is derived from their own local and regional advantages. Their access to global technological, commercial, and financial networks are now “the most critical factors in locational decision-making by main firms” (Rimmer 1997). Rimmer and other economic geographers have also identified second-level specialized national cities. These typically specialize or serve as a less synergistic input-output market within the national economy, although they also share cooperative links. Third-level cities are specialized regional cities (within national economies) with similar input-output and trade links. A fully developed port is often ingredient enough to capture the status of either of these. Rimmer emphasizes that for all world cities the qualitative gateway functions such as these are a more accurate standard of global city status than quantitative descriptives such as Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 51 population size which earlier world city research made pivotal (Rimmer 1997:437). Rimmer’s important case study of transportation and telecommunications utilizes the existence of these networks to assess “if they are useful determinants of world city status.” In contra-distinction to this dissertation, which focuses on the ocean transport global commodity network in its own right, Rimmer investigates transportation and communications networks in relationship to their urban hosts in order to understand what implications can be drawn from their development for urban policies (see Chapter 3). GCRs form networks which exhibit a variety of dialectical tensions. They are economically concentrated, yet geographically dispersed, and engage in both cooperation and competition. The network function is cooperative, and often facilitated by international bodies that develop harmonized infrastructure and standards. GCRs embrace these because "(h)orizontal and non-hierarchical linkages among complementary centers... offer externalities derived from cooperation, synergy, and innovation" (Rimmer 1997:437). The corollary in the transportation GCN is the sector’s international reliance on uniform standards and regulations which cross the boundaries of industry linkages and nations. Examples such as the standardized container, which unifies the intermodal transport supply chain, uniform traffic control signals, and the current effort to establish international environmental standards, abound. Harmonized Standards (HS) for the classification of internationally traded commodities are now Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 52 incorporated into routine bills of lading and appear on electronic platforms used for data and product tracking around the world. Standardization can emerge on the basis of a dominant technology or a dominant economic actor who establish a base technology which competing firms must conform to (i.e. air reservation systems in the 1980s). This technological platform is shared by competing firms and provides the support structure which competing innovative technologies must conform to. Uniform standards can also be established by international forums. The twenty equivalent foot container (TEU) was declared standard by policy makers in order to replace the pot-pourri of containers ocean carriers interfering with international transport. (These dimensions were objected to by Sealand Inc., whose founder McLean, invented the container. The ability of the International Maritime Organization to override Sealand and a host of other container users has made the standardization of the TEU container a textbook example successful harmonized standards). Each node, be it GCR or economic firm, however, is also engaged in a pitched competition with at least a handful of other centers. Transportation networks are both a product and contributor of this effect. "[Gjlobal markets and new transportation and communication technologies have encouraged a restructuring of economic competition" as well, as GCRs compete to be privileged sites of TNC production (Scott, Agnew, Soja and Storper 1999). Nodes in secondary networks, such as ports, similarly compete, to become a hub among the hundreds of Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 53 international GCN routes. They generally cannot succeed, however, without the public assistance and coffers of their regional hosts (see section on Ports below). From this perspective it can be argued that although global cities have certainly not replaced the myriad functions of states, they are now the informative unit of analysis regarding international capital. It is the world city that invites and hosts capital and the innovations continuously transforming the world economy that capital sets into motion. This is the d\sXin^x\s)xmg function of the world city in the world city system. These regions, not nation-states or national macroeconomic policy, integrate local economies into the global economy, and by doing so, have created the current configuration of the global economy. Their ability to provide these global functions is based in specific and local social and material preconditions. The processes underpinning globalization depend on the network of global cities, and global cities are global because of their membership within this functional network, although their membership is predicated on local factors. Several globalization researchers maintain that global functions are based primarily on local factors. Michael Porter’s work is especially influential in this 3 The Global City Region (GCR) concept builds on and is traceable to the "world cities" of Hall (1966), Friedman & W olff (1982), and to Sassen's "global cities" (1991). They are decidedly not referenced to large cities with populations greater than ten million. Rather, city-regions are “fundamental spatial units o f the global economy" (1 G lobal C ity Regions- theme p a p e r conference 10/21-23/99 Allen J. Scott, John Agnew, Edward W. Soja, Michael Storper). Large cities, however, may very well be a platform to world city status i f as Lo and Yeung claim, they “perforce (become) centers o f transport, telecommunications, and increasing connectivities” (12 (Lo & Yeung '96: E m erging w orld cities in P acific A sia in ( < G lobalization an d the W orld o f Large C ities, eds. Fu-chen Lo and Yue-man Yeung, 1996 U N University Press, NY, Tokyo). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 54 regard (Porter 1990). Meric Gertler, has coined the term, global localization, to indicate the simultaneous increased dominance of transnational or global corporations, but also the distinctiveness of particular regions they operate in (Gertler 1997). Clusters of competing giants "draw their strength from a well- developed base of technically advanced local suppliers and a local market of demanding and sophisticated consumers" (Gertler 1997:22). In addition, intense linkages also emerge between small and medium innovative firms which operate globally, but are locally entrenched. These local linkages have encouraged “the geographical clustering of productive activity" represented by localisation and an emphasis on flexible production and niche marketing. Storper suggests the the Post- Fordist pursuit of "more ephemeral, smaller, more fragmented niche markets, product quality, time-to-market, and responsiveness to consumer tastes... have supplanted cost and scale as the primary arbiters of competitive success" (Gertler 1997:15). Again, established global distributive networks are essential for competition on this basis. A similar concept is developed by Jean Marceau, which she dubs glocalisation (Marceau 1997). Her work suggests the important implication that there is a spatial corollary to the just-in-time (J-I-T) production goals that have resulted in flexible production processes. J-I-T processes have fostered the construction of production spaces that span the globe and are well documented by global commodity chain research. Marceau contends that this trajectory of Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 55 production methods, and the liberalized economic environment fostering them, have been “facilitated by developments in transport and telecommunications technology." Indeed Harvey argues that these technologies have resulted in a 'time-space compression', whereby places are brought closer together and the time required for capital to complete it circuit from production to realization and back again has been dramatically reduced (Harvey 1989)” (Rimmer 1989:14). Swift production and distribution linkages are vital for a production process which is increasingly vertically disintegrated, externalized and 'linkage-intensive'” (Scott 1988). GCC research has focused effectively on these global production and distribution linkages at the industry level. Global Commodity Chains and the Service Sector The global commodity chain (GCC) construct descriptively captures the maze of international production processes and transactions which characterize globalization. Whereas GCR analysis begins with the geographic network of GCRs, global commodity chain research begins at the industry or economic sector level. GCCs represent the routes and processes by which actual commodities traverse the theoretical circuit of capital M-C-M’ where capital (M) is invested in commodity production (C) in pursuit of surplus value (M') (Marx 1977:247-257; Fine and Harris 1979:3-12). This cycle joins the realm of commodity production, site of surplus value, with the realm of commodity exchange, where surplus value is realized and commodity is once again transformed into capital, only on an expanded basis Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 56 (M' > M). GCC research focuses on commodity production structurally, sectorally, and geographically. The many empirical studies utilizing the GCC model have presented extensive data and provided detailed profiles of individual and industiy-specific GCCs (Gereffi and Korzeniwicz 1990; Lee and Cason 1992). These studies denote the accelerated rate and broad scope of the atomization of production that increasingly characterizes international capitalism. An ever increasing number of discrete economic activities is required to produce a given final output or commodity (Dunning 1991:2). “[Mjost products are themselves intermediate in nature; they form the inputs to a subsequent stages in the production process. Consequently, product and process innovation are inextricably interdependent... one firm’s product is another’s manufacturing equipment or material... [and] the production process is a system of linked productive units (Utterback 1987)” (Dicken 1992:114). This fragmentation of the production process has heightened the importance of services in GCCs. Each increase in the number of production processes generates an even higher increase in the number of transactions entailed by production. Because of the globalization of production "an increasing proportion of those transactions is of a cross-border nature" (Dunning 1991:3). This rise in the transactional intensity of production requires a very high level of coordination which can only be achieved by service sector activities. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 57 The rise in transactional intensity, referred to as "round-aboutness" by economists (Grubel and Walker 1989:19), vertically disintegrates the production process. In the process, highly specialized and routinized or standardized services alike, have been sourced out and in the process facilitate the further atomization of production processes. “[MJost products are themselves intermediate in nature; they form the inputs to a subsequent stages in the production process. Consequently, product and process innovation are inextricably interdependent... one firm’s product is another’s manufacturing equipment or material...the production process is a system of linked productive units” (Utterback 1987 quoted in Dicken 1992:112). Such increasing transactional demands on the marketplace incur mounting problems not only of coordination, but of control, as the opportunity for market failure rises. These can only be resolved by still more service activities. Indeed, the increased fragmentation of production, has often been attributed to the heterogeneous and mushrooming capabilities of the service sector. It is therefore remarkable that, despite the dramatic proliferation of production processes and service activities, the international economy is characterized by significant geographic and economic concentration. Indeed, this fragmentation is accompanied by a marked consolidation and centralization of the number of economic agents exerting a dominant influence over the operation of GCCs and function of GCRs. Services encompass a countless range of activities which are, in a sense, grafted over the entire process of production. Firstly, they coordinate the successive Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 58 streams of inputs and outputs of GCCs and secondly, the interaction of high-end services with production processes not only facilitates the transformation of these inputs into outputs but continually transforms the commodity chain itself. Service activities interconnect the production process of GCCs in a variety of interrelated ways including (1) what is produced (product conception and design as well as R&D reside in the upstream segment of GCCs); (2) how it is produced (this reflects management decisions pertaining to the organization of production and choice of technology); (3) other facilitating services (related to 1 and 2); (4) marketing and distribution; and (5) spatial coordination, e.g. transportation and telecommunications (which implies a time coefficient) which are critical to the national transborder flows essential for globalized production. They transmit information and courier products, components and personnel between commodity chain nodes. Although services are complementary to and integral to the process of production, they are assumed to be distinct from activities at the point of production. GCCs have been analyzed primarily in terms of the production segments comprising commodity production. That is, the commodity "chain" has been conceptualized of as a succession of production sequences, transforming inputs into successive outputs. As a result, the production processes within each "box" (a box represents a stage or portion of a stage of commodity production), is quite detailed, as is the flowchart of directional arrows connecting inputs and outputs at each stage. Service activities, including transport, have typically been relegated to the status of Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 59 mere auxiliary linkages in much of GCC research. However, as indicated by GCR research, services are integral to the coordination and operation of GCCs. Service activities not only provide linkages between the segments of production within a GCC, but they also bind together the spheres of production and circulation within a GCC and between different GCCs. Globalization theorists have identified two different orders of network coordination which are explanatory of the ways in which services bind together the global economy. Tangible networks are realized by concretized linkages which are established temporally and spatially. Transportation networks (by air, land, or sea), communications networks (and the physical infrastructure they require whether satellite or fiber optic cables), networks established by commodity production (as represented by global commodity chains), other functional networks established at the industiy level, such as financial and service networks, all are included here. Sassen’s global city networks focuses on pivotal, high-value added routes of capital in the service sector which tangibly interconnect specific global city regions. Thus, this network of regions is made visible by tracking the routes of foreign direct investment and similar international financial transactions. Intangible networks are those that cannot themselves be methodically tracked spatially or temporally, but nonetheless provide the means to accomplish highly innovative and dynamic spatial-temporal organizations of capitalist modes of production (Storper 1989). Intangible networks are established through cultural and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 60 socioeconomic networks (such as those carved out by routes of immigration or established in sectors utilizing sophisticated, but unstandardized, technology). Storper situates these in specific economic geographies that establish le a rn in g a n d in n o v a tio n re g im e s (Storper 1997; Salais and Storper 1999). They are characterized by technologically sophisticated, fast-changing, and innovative processes and products. They therefore rely on the physical proximity of participants (face-to-face contact) which typically generates a high degree of sectoral spill-over effects. In this way networks of global capitalism are both tangibly and intangibly bound together. Geographically, both tangible and intangible networks converge in global city regions. In the present study the port-shipping GCC is conceived of as a network in two respects. The port-shipping GCC is embedded in a network of associated GCCs which are associated with the production of a core product: ocean carrier transport services. This GCC is also a part of a network analogous to that of GCRs in which the central port nodes are the geographic and economic sites where global cargo flows converge. The port network represents a s e c o n d a r y o r d e r of global networks in the sense that they correlate to both Rimmer’s definition of s e c o n d o r d e r global cities which are integrated into the first order economic and geographical nerve centers of high end coordinating services are found in f ir s t o r d e r g lo b a l city regions. The Pacific Rim network of ports are asymmetrically integrated into these GCRs as is evident from the asymmetry of imports to exports at various ports, as well as the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 61 differentiation of cargo content based on origin and destination of commodities by country. In general, ports can be categorized as import, export, or transshipment hubs. Import hubs are closely linked to the GCR hosting it, while export and transshipment hubs are less closely tied to a host GCR, and therefore the experience much greater competition (see Chapter 3). Again, this hybrid GCR-GCC analytic approach is captured by the Global Commodity Network construct. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 62 Chapter 3. Transportation: An International Network Goes Global Transportation: The First Revolution T ra n sp o rt is c o n c e r n e d . . . w ith th e tra n sfe r o f p e o p le o r g o o d s in o r d e r to s a tis fy th e n e e d f o r re lo c a tio n . (Jan Simons 1994) An efficient freight transportation is arguably a vital precondition for the effective functioning of the economy. It is not an isolated activity but one performed in the service of other sectors and of strategic importance to the global economy. In terms of Piero Sraffa's (1962) distinction of basic and luxury goods it is a b a sic g o o d , meaning it is used directly or indirectly in the production of all other goods in the economy. (Luxury goods, by definition, are never used in the production of basic goods). In Sraffa's model "all basic goods are vital in the sense that if one is totally lacking the entire economic system will seize up" (Simons 1994:46-7) Simons argues that “(freight transportation in the generic sense is a basic good since it is, directly or indirectly, vital for the production of other goods and services in the present-day economy with its division of labor, increases in scale and extensive, large-scale markets" (Simons 1994:47). As part of the freight transport sector, and on the basis of its importance to the global economy (liquid bulk transport of petroleum alone fulfills this requirement), ocean cargo transportation clearly qualifies as a basic good. In terms of a simple and static microeconomic model, ocean transport is a system of production organized for the purpose of relocating people or goods and comprised of three components: two permanent elements, the infrastrucuture (port) and mode of transport (carrier), and one temporary element, the load carried. Due to Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 63 this basic function, transit companies have traditionally been networked companies, stitching together the trade relations of other economic sectors. In order to fulfill this function, the geographic scope of ocean transport companies has historically been international. Transportation, communication and markets are all, by definition, triangulated and networked systems. They bridge the separation between goods and people spatially and temporally. “The extent of a market in past centuries had always been determined first by the limits of the transportation system connecting suppliers to buyers” (Strange 1988:127). Similarly, information required physical transportation to be transmitted any significant distance. It took time to transverse space. The messenger (or the merchant) had to get from here to there to deliver the message (or the merchandise) and so the temporal and the spatial dimension of systems were inseparable. According to Dicken, “A fundamental prerequisite of the evolution of international production and of the transnational corporation is the development of technologies which overcome the frictions of space and time” (Dicken 1992:102). These are enabling technologies in that they make international production and the TNC itself feasible. All three pillars of liberalization: liberalized financial markets, liberalized commodity markets, and multinational production have been facilitated by developments in transportation and telecommunication technology. These technologies, in effect, compress time and shrink space. They bring places closer together and reduce the time required for capital to complete its circuit from production to realization and back again. (Harvey 1989, Gertler 1997). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 64 “(W)ithout them today’s complex global economic system simply could not exist” (Dicken 1992:103). Despite centuries of significant development in transportation, particularly by sea, “the speed and efficiency of transport was staggeringly low and the costs of overcoming the friction of distance prohibitively high” (Dicken 1992). The major breakthrough came with two closely associated innovations: the application of steam power as the means of propulsion and the use of iron and steel for trains and railway tracks and for ocean-going vessels. These, coupled with the linking together of overland and ocean transport and the cutting of the canals at Suez and Panama, greatly telescoped geographic distance at a global scale (Dicken 1992). Steam was introduced first into rail and then into shipping during the early nineteen century.1 This had a profound influence on the transport of passengers and cargo as well as the shipping sector itself due to the establishment of the liner conferences. The steamship’s reliance on coal also fed into the contemporary political economy of imperialism as the great powers vied for coal ports to fuel the dependent vessels. This would explain many an otherwise inscrutable war. The Falkland Islands, for example, was claimed by Britain due to its strategic geographic location as a coal port. Nineteenth centuiy transport systems also introduced an incipient form of intermodality as linkages between maritime shipping, continental rail, and barge transport along inner-waterways, developed a complex rail and waterway network. 1 Fulton’s steamship was invented with the intention o f an intermodal connection between rivers and railroad tracks (Hugill). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 65 Coal-powered steam was rendered obsolescent by the invention of petroleum in 1885. Oil produced more energy more productively and made links to previously remote regions for the purposes of trade and obtaining raw materials possible. The applications of new fuel systems to shipping, steam power followed by petroleum, rapidly depressed the price of transport. The industry quickly ran into the "law of eventual user-saturation" prompting the development of dedicated systems in which the transport of cargo and passengers in most modes of transport developed into separate production processes. Travel by ship was transformed from a necessity into a luxury and passenger cruises became a commodity of the tourist industry. Aviation presents an exception in dedicated service due to limited cargo flows relative to economies of scale. To this day the vast majority of cargo transported by air is carried in the belly of passenger planes. Once air developed into a viable mode of transport it rapidly eclipsed the use of passenger ships for inter-continental or long distance travel (and popularized the cruise ship industry), but it still cannot rival the efficiencies of cargo transport by dedicated modes. (With advanced logistical systems, for example, it has been speculated that a trucker can queue up at port, pick up a container, and leave, in less time than an airline passenger can retrieve a checked-in suitcase upon arrival at a hub airport.) Dicken believes that nineteenth century rail and ocean transport could not have “developed as they did without the innovation of the electric telegraph and later, the oceanic cable. Only with the ability to transmit information at great speed - for example to coordinate flows of commodities on a global scale -could the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 66 potential for the transport technology be fully realized. Similarly, the far more complex global transportation system of the present day depends fundamentally on telecommunication technology” (Scott, Agnew, Soja, Storper 1999:105). The dramatic changes wrought by technology stimulated the flow of materials, products, humans and possibility of geographic specialization. These innovations were a “major factor in the massive expansion in the global economic system” during the 19th centuiy and into the early twentieth centuiy (Dicken 1992:104). The inter-war period was characterized by a severe slump in shipping which reflected world depression. The shipping industry' has long been characterized by cycles of demand-driven growth punctuated by recession. Growth spurs technological improvements that lead to over-capacity when macroeconomic growth falters. The industry is also vulnerable to the many microeconomic markets it serves and depends on. The rocketing of oil prices in the 1970s, for example, first cut into the tanker trade and then caused ocean freight rates to rise across the board as supply-shock set off a world-wide recession. The next surge in technological developments in the shipping industry was precipitated by World War II which boosted shipping industry trade, introduced a certain degree of handling mechanization, and expanded terminal facilities (Van Driel 1990 quoted in Simons 1993:61). World economic growth between 1950 and 1970 accompanied a growing internationalism of production, re-re-igniting demand for ocean transport. The real revolution in merchant shipping began... after WWII. Two major events in the 1950s, and one more in 1962, conspired to produce it. After WWII it became clear that a genuinely global economy based on the US as the critical 'hinge' between the long-established Atlantic trading world and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 67 the new Pacific world was emerging. The rebuilding of Japan as a major industrial and commercial power was the key to some of this trade, but US and Canadian raw material resources were also critical, Japan having no raw material resources of consequence (Hugill 1993:150). During this period the rate of trade growth in processed goods outpaced trade in raw materials and agricultural products (Van der Wee 1983 quoted in Simons 1993:48). The means of transport became more varied in response to the heavier and more differentiated demands made upon it. “For transport these changes meant that the quantity of transported goods rose rapidly and that the transport chains generally became longer” (Hugill 1993:48). As a result, general cargo costs rose as the average distance carried increased. The second event affecting shipping was the 1956 closing of the Suez Canal by the Egyptians Hugill 1993:151). (The United States refused to support British and French military efforts to reopen the canal. As a result oil flow was cutoff from the Middle East Europe. Ship owners began to invest in highly specialized bulk oil carriers to transfer oil from the Persian Gulf to Europe around Africa. With size limits no longer imposed by the Suez Canal, larger ships proved more profitable than the earlier generation of small ships. Very large crude (oil) carriers (VLCCs) emerged in the years that followed Suez. Until 1956 ships up to 35,000 tons had been able to transit the canal. The first specialized bulk-oil carrier of 1950 weighed in at 28,000 tons. The first 100,000 tonner was launched in 1959 and by 1980 the first 500,00 tonners were in service, monster carriers such as Batillus, 414 meters long and 63 meters in the beam (fig 3-2). Operating costs fell drastically. In 1956 the extra cost of moving one ton of oil around Africa instead of through Suez was $7.50. By 1970 the total cost of moving one ton of oil from the Persian Gulf to Europe around Africa had fallen $3 (Hugill 1993:150-151). By 1960 Super ships (S-ships) had granted huge economies of scale to tankers and other bulk transporters. During the 1970s shipbuilding costs dropped dramatically as armies of “men riveting steel plates together by hand” were replaced Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 68 by unskilled labor assembling Henry Kaiser’s prefabricated aluminum parts into cargo ships (Strange 1988:146). These technological developments opened doors to Japan, and then Korea, Taiwan, Brazil, Yugoslavia and the USSR into the modem era of shipping and shipbuilding, and contributed to a slump in shipping (Strange 1988). These large economies of scale facilitated the economies of scope that worldwide ocean bulk transport required. Port-side complements enabled dry and liquid bulk to be directly pumped or otherwise mechanically loaded and unloaded. The transport of general cargo, however, did not experience any corresponding modernization. Labor productivity transshipping this cargo lagged behind the increased flow of goods. Lack of terminal space, combined with labor shortages aggravated the increasing congestion at the ports. Port congestion became the main bottleneck for general-cargo transport (Van Driel 1990 quoted in Simons 1994:48). This cut into shipper’s profits who responded by pressuring carriers to modernize transport. There was no increase in the average size of general-cargo vessels, however, "since this produced no commercial benefit as long as transshipment remained slow” (Van Driel quoted in Simons 1993:49). Clearly, a new technical revolution was required to fulfill new transport needs. The key was in the form of cargo unitization, namely the container. Previous to the container, freight has been amalgamated into a miscellany of packaged forms, sizes and shapes: bagged, boxed, and with the introduction of the fork-lift, tied to pallets. Loads were measured and priced according to weight. In contrast, a “unit Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 69 load," such as a container, is based on volume. Thus the size of a container vessel is expressed in numbers of units that a vessel can contain (Winkelmans et al. 1991). This technical revolution in the packaging of ocean transport cargo reverberated throughout the freight transport sector, resulting not only in the content and volume of goods transported, but in the transformation of the entire transport supply chain (Kuiler 1973 quoted in Simons 1993:50). Containerization: Transport Development in a Package In an interview with the Journal o f Commerce (1999), Malcom McLean, inventor of the container, declared that, “The method of shipping didn’t change the world. It just made things easier to ship, more economical to ship... Customers change the world, not the one who moves the freight” (quoted in Los Angeles Times obituary of McLean, May 29,2001). Notwithstanding McLean’s claim to the contrary, his invention of the container triggered the next technological revolution in water transportation after the steamship, and its impact on both the shipping industry and on the growth of international trade can hardly be overestimated. Containerization, special purpose vessels, and the development of the complementary portside technology they require had the most immediate and dramatic effect of replacing the scions of labor previously essential to the management of freight with the technology of cranes and dock-side trucks. This not only restructured the shipping industry and increased trade volumes on existing routes, but opening up previously untapped regions to trade due to lowered costs and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 70 high efficiencies. Until McLean devised a method of standardizing the transport of cargo by sea, the process was slow, costly, and labor-intensive process. Through the 1950s, ocean transport of general (dry non-bulk) cargo used break-bulk (i.e., on pallet) methods: pallets were moved, generally one at a time, onto a truck or rail car that carried them from the factory or warehouse to the docks. There each pallet was unloaded and hoisted, by cargo net and crane, off the dock and onto the ship. Once the pallet was in the ship's hole, it had to be positioned precisely and braced to protect it from damage during the ocean process was then reversed at the other end of the voyage, making the ocean transport of general cargo a slow, labor-intensive, and expensive process (Talley 2000). McLean, a trucking magnate, devised the container as the solution to the myriad of problems trucks encountered in the loading and unloading of ocean borne international cargo. In 1955 he purchased a small tanker company named Pan Atlantic and modified two of its ships to carry detachable trailers which could easily be moved between ship and truck. In order to stack the trailers, he removed the wheels, strengthened the sides, and eventually installed locking mechanisms at each comer that could be secured to a truck chassis, a rail car, a crane, or other containers on a ship. The result was Ideal X, the prototype of what would become the TEU (twenty foot equivalent units) and now dominant double TEU (forty foot equivalent units) of today.2 It took ten years for the container-converted carriers to achieve their first international voyage. In 1966 and in the face of continued opposition from labor and ports alike, the ships sailed from their home port of Elizabeth, New Jersey, across the 2 Standard-size containers are commonly 8 feet wide, 8.6 feet tall, 20 or 40 feet long, and weigh up to 20 tons. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 71 Atlantic to Rotterdam. However, it was not until McLean’s shipping line, Sea-Land Services, became a major carrier of materiel for the US military in Vietnam, that containerization took hold. “To fill empty containers on the return leg, Sea-Land sought cargo for export to the US from Hong Kong, Taiwan, and Japan. The region soon found its niche as a low-cost producer of consumer goods for export - all carried away on ships piled high with containers” (Taggart 1999). The international success of the container was therefore birthed in the Pacific Rim. Containerization spiked labor productivity to such a degree that a new model for contract negotiations between earners and labor was necessitated. For the West Coast it came in the form of the historic Mechanization and Modernization (M & M) contract negotiated by ILWU leader Harry Bridges and PMA head St. Sure Marie that institutionalized containerization at the dock. In 1970,30,000 longshoremen were employed in the Port of NewYork/New Jersey; by 1986 this number had declined to 7,400 dockworkers. (Chadwin and Pope 1990) Employment numbers continue to fall as retirees are not replaced. Today, a total of 7,599 longshoremen are registered in all ports along the West Coast (Pacific Maritime Administration web site). Currently, Pacific Maritime Association (representing shipping lines) and International Longshore and Warehouse Union negotiations are protracted due to similar automation issues, although these are associated with the logistical IT revolution containerization later led to (see below). Packaging general cargo in equivalent units facilitated mechanical loading and unloading techniques that had profound effects on the transport industry beyond Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 72 drastically reduced labor requirements and costs. Containers eliminated bottlenecks in ports thereby making the operation of substantially larger vessels profitable. The container is indispensable to affordably moving massive volumes of producer and consumer goods between continents. In 1998, more than 15 million TEUs moved through the port of Singapore. “That's the same as shifting around one of New York's World Trade Center towers each day” (Taggart 1999). The economies of scale provided by the simple TEU are now of fantastic proportion. According to John Vickerman, consultant of TransSystems Corporation, 100 of the 167 container ships on order worldwide hold 5,000 TEUs or more (ILWU Town Hall Meeting 2000). Maersk Line already has a dozen super-panamax container ships built or on line which hold 6000 TEUS, are over 1000 feet long, hold 17 containers across, and features the world’s largest diesel engine which cruises at over 25 knots with only a fifteen member crew (Maersk-Sealand website). Indeed, ship designers at the cutting edge have already envisioned a 15,000 TEU ship that would be 1,312 feet long and 226 feet wide, with 28 containers across, and a draft of minus 46 feet (Vickerman 2000; Weikel 1999). This translates into enormous cargo movements given the capability of a single box to be stuffed with a possible 4403 VCRs or 10,000 pairs of shoes (AAPA website 2001). Economies of scale soon facilitated economies of scope. Containers can be loaded and unloaded so swiftly that ships could take more trips, more places, per year. Containers also limit pilferage and cargo damage, an additional bonus for both the shippers who own the cargo and the shipping lines which insure cargo en route. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 73 The greatest benefits of containerization, ironically, accrued not to McLean’s truckers, but to the shipping lines he eventually joined. Containers bring far fewer productivity benefits to haulers who still are subject to time constraints associated with landside congestion and container content handling. Standards development on an international level often involves years of debate over which company, or even national industry, will cede over their practices to create a world norm. According to Dr. Christoph Seidelmann, a leading world expert on container standards and chairman of the International Organization for Standardization (ISO) technical committee, “the story of how the container industry became standardized offers a potent model for the standardization of world trade practices” (Zuckerman 1998). ‘It would be impossible to visualize the world today without standard containers,’ according to Warren Serenbetz, Director of Interpool Inc.and a major player in container standardization from the late 1950s through the 1970s. Serenbetz contends that ‘it's standards that really created this industry and permitted globalization of freight movement.’ ... Almost all containers conform to standard sizing, which allows for standardized handling. That's because the global trade community, through years of negotiating, has adopted upwards of 20 international standards that relate to containerization (Zukerman 1998:). The problematic of cargo packaging centers on making the transport of cargo manageable by conforming it to the requirements of the dominant mode of transport: the ship. Semi-trailers were designed to accommodate the standardized ocean carrier container, railroads introduced double-decker container cars and together with ports built dock-side linkages. [Transhipment operations continued to be concentrated on the largest participant in the transport chain --generally, ocean-going vessels. Everything Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. was arranged (in terms of warehouse space and vehicles) to permit direct (and immediate) transshipment... The nature of the freight and the kind of transport and transshipment were closely interrelated (Hugill 1993:64) Truckers were integrated into the new intermodal transportation supply chain as "highly flexible service providers" working in tandem with Rail Roads, whose double-stacked container service provides passage across continental land bridges (meaning rail road tracks). Air freight service became more accessible by the development of intermodal air-sea routes which resulted in cost-efficiencies. By the 1990s door-to-door transport services (i.e. multi-modal transport connecting sea, land and air) was a product package. It developed as a function of technological innovation and of capita l concentration. In the process, globalization deepened as marginalized routes and services became extinct (Rimmer 1998:439). The ubiquitous container now rides by ship, truck, and rail. Today, enough shipping containers exist on the planet to build an 8-foot-high wall around the equator - twice (Taggart 1999). The standardized container became the key to an intermodal transport chain on an international scale, facilitating the movement of cargo between origin and destination points by more than one transport mode. By the early 1990s, containerization was a mature transport system. It not only dominated the majority of liner services world wide, but created compulsory complimentary technology. Vessel design, gantry cranes, and port operations are all designed to conform to container requirements. In sum, the adoption of containerization by shipping lines meant the beginning of a transport system. The container revolution structured the paradigm framing transportation systems today by introducing the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 75 concept of intermodality and the possibility of achieving a seamless and global transport supply chain. A Seamless Transport Supply It is clear that the advent of the container as a form o f transport is increasingly emphasizing the importance o f logistics in the freight industry. (Roundtable European Ministers of Transportation 1994) As pioneers in organizing chains involving many participants across continents, ocean transport companies are the ultimate in the ‘network company’ concept. At its heart, ocean shipping is a network business, just like airlines and telecommunications. Passengers, bulk goods, data - all three represent uniform-size cargo, shooting through global transport and sorting systems 24/7/365. Viewed this way, airline seats, data packets, and 40-foot shipping containers are much the same - commoditized units for carrying content (Taggart 1999). This process clearly requires massive product standardization and harmonization. "Maritime shipping, in particular, has optimized the turnaround times and capacity utilization ratios of its expensive means of transport” (Bologna 1995:59). Production processes must be routinized and information easily codified and stored. “Unlike containerization, which was characterized primarily by technical features and design, intermodality focuses on the organization and synchronization of the transport system” (Hayuth 1981:203). The quest for door-to-door, even shelf-to-shelf transport, requires a global commodity network which can not only offer intermodality, but a flexible and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 76 reliable means of connecting highly variable points of origin and destination.3 By definition this involves cooperation between the various modes in the transport chain" (Bologna 1995:59). Intermodality therefore quickly led to the adoption of EDI and logistical systems. The adoption of these information technologies in transportation transformed the transportation industry in two interrelated respects. Firstly, telecommunications facilitated the globalization of the industry (Rimmer 1997: 95-6), and secondly, the transport product itself was transformed. According to Bologna, the introduction of integrated logistical systems into transport constitutes such a radical innovation that the entire structure of freight transport is transformed, so that "partial innovation or improvements... (is) no longer sufficient..." (Bologna 1995). Bologna suggests that the 'transport product' is now less a product of the freight transport sector than of a 'flow mangement mega-sector” (Bologna 1995:22). Traditionally the forwarding agent linked up the various stages of transport and acted as a “binding agent” between the independent links in the transport chain represented by manufacturer (importer and exporter), trader, and transporter. Increasingly, however, transport operators themselves have been organizing intermodal linkages in the form of distribution systems. The strategy of NYK, Japan’s largest shipping line, to transform itself into a “total logistics mega-carrier,” rather than a terminal-to-terminal container operator, epitomizes the industry trends afforded by the introduction oflogistics into transportation. 3 Flexibility drives the fifth phase of Dickens schematic o f historical stages o f information technologies (Dicken 1992). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 77 The end of liner conferences in the early 1980s spiked competition in the industry. Conferences had protected the position of very large carriers, including Japan’s NYK. With the entrance of “very large-scale outsiders (i.e. Evergreen and Hanjin) and small-scale operators offering wholesale port-to-port services, however ... the market share and power of the conference system over a range of routes” declined (Rimmer 1997). Subsequently, over-capacity in the industry stemming from purchases of ever-larger ships led to intense competition, lower prices and limited profitability. Recurring heavy losses prompted NYK and the other mega carriers to reform their oligopolistic grouping through a Transpacific Stabilisation Agrement (TSA) in 1989 -an artificial capping of capacity to improve on unrenumerative rate levels (Rimmer 1997). Mergers and acquisitions unquestionably led a key role in consolidating NYK's position in Japan (see Chapter 4 on International Concentration). NYK’s acquisitions, however, also provided it with the size and assets necessary to become a “total logistics mega-carrier.” During the 1990s NYK moved into landside operations (transport, forwarding, storage and distribution, and railway network arrangements)” (Rimmer 1997:95). It accumulated thirteen major logistical centers for handling cargo in North America, Asia, Europe. J.P. Morgan Trust Bank Limited is among its shareholders4. NYK’s only U.S. center is located in Los Angeles where it has developed a container facility, established a double-stack train network (begun in 1985) linking fourteen major cities, invested in Rio Grande Industries (parent of Southern Pacific Rail), and 4 J.P. Morgan is among the most international o f financial service MNCs. Its own Board of Director includes chairs, past and present, o f multinational corporations such as Bechtel and Exxon. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 78 bought a freight-forwarding company (GST Corp). It also operates a sea-air service, using Vancouver as transfer point to Europe where it owns sea and land transport companies. This does not mean it employs a great number of people. The total number of NYK employees is less than 1959 landside and 588 at sea. The following information from NYK’s web site indicates their own understanding of their global transformation. After years of planning and development, NYK is totally changing the emphasis on its traditional role as an ocean carrier with its "Pegasus project," an advanced new E-commerce system that will enable NYK customers to monitor and interactively manage on line all the logistics of their cargo shipments-anytime, anywhere in the world. With the completion of its new E-Commerce system, NYK will have evolved from its long-time business strategy as primarily an ocean carrier and will continue to provide the most efficient total logistic services worldwide through on-going and aggressive IT development (NYK website). NYK’s reorganization strategy emulated the support networks set up by independent logistical integrators. A.J. Fritz Corp., for example, provides shippers with a choice of mode of transportation, a grid of international warehouses to store and transship cargo, and complete documentation services. Although shipping lines increasingly compete as total logistics mega carriers, they are motivated to cooperate in producing base technology. The most basic logistical systems used in transportation networks can pinpoint the position and status of containers in transit between Japan and the U.S. by using WINS (Worldwide Info Network Services) and LANS (Local Access Network Services). This transport features interactive EDI (Electronic Data Information) connections which enable the various links in the transport chain to be converted into flexible Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 79 forms of intermodal cooperation. In addition, these systems are relied on to prevent empty capacity, idle equipment, and ensure that information between the shipper (importer/exporter), producer, intermediate suppliers, and transporters within the logistical chain is coordinated. Interactive EDI connections enable the various links in the transport chain to be converted into flexible forms of intermodal cooperation. In 1991 nine shipping lines, motivated in large part by the loosening of restrictions on ocean carriers due to The Shipping Act of 1984 and its Reform Act of 1998, pooled resources to launch the Information System Agreement (ISA) in order to create a common platform. The developer, TSI International created Ocean Carriers’ Electronic Access Network (OCEAN), for documentation exchange and shipment tracking between shippers and all member carriers. Carriers have determined that this IT application represent base technology, which is both expensive enough and standardized enough to warrant collaboration. “The carriers ... expect the move to boost their own productivity and save money on system- development costs” according to ISA Chairman William J. Kenwell (Toby B. Gooley, Ocean carriers get “user-friendly, ” International Shipping). The original group of carriers, American President Lines, Crowley American Transport (since merged with Senator Lines), Hapag-Lloyd, Lykes Lines, Maersk Line and Sea-Land Service (since merged), Nedlloyd Lines, Orient Overseas Container Line (OOCL), and P&O Containers (the one time imperial flagship of Britain), has since been consolidated by mergers and alliances. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 80 Mega-shipping lines housed at mega-port terminals require extraordinary through-put efficiency and shipping lines prefer ports to shoulder the heavy cost of land-side logistical systems. Ports are receptive to incorporating logistical systems into their own operations in order to keep up with the astronomical growth in trade. Port landside expansion opportunities are nearly exhausted at most established ports which means port maximization can only be achieved through the adoption of EDI and IT systems. The U.S. West Coast has lagged behind other port hubs in implementing EDI and IT systems. In 1990 one San Pedro terminal acre was required to accommodate 3000 TEUS; In 2000 one acre must accommodate 5500 containers. In comparison, the hubs of Hong Kong and Singapore which have sophisticated logistical systems, move 15,000 or more.5 These would provide local efficiencies by incorporating electronic documentation services, electronic appointment systems for truckers, virtual warehouse planning, and port-wide electronic identification systems. Currently, intermodal and logistical control rest primarily in the hands of dominant shipping conglomerates which rely heavily on port infrastructure for the infrastructure and efficiency to reliably facilitate supply linkages. Singapore, for example, arguably the world’s busiest transshipment hub, hosts 100,000 vessel calls a year, which add up to 700 million gross tons a year. It links 300 shipping lines and 500 ports! This facility can accommodate 86 containers per second (among the fastest in the world) and at any one terminal 800 ships can be serviced at any one 5 Flexibility drives the fifth phase o f Dickens schematic o f historical stages o f information technologies (Dicken) Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 81 time. Singapore’s web sites boosts of a “seamless and transparent interface,” and of all the ports aspiring to this perhaps hyperbolic claim, Singapore may come closest. However, carriers can decide to abandon even infrastructure as impressive as this and shift to a new transshipment hub, as Maersk-Sealand did this year when it abandoned its South Korean hub. These distributive networks are highly sophisticated and capital intensive. They must be "capable of offering the same standard of service quality to a wide range of customers regardless of the time or place ... (and) require perfect coordination between the various links in the chain. Only an organization with a dense network of support points, all equipped with specialized tools and highly sophisticated computer and telematics equipment, can take up such a challenge" (Bologna 1995:16). A few large international integrators, such as Expeditors Inc. and A.J. Fritz, contract a large proportion of multi-mode cargo (by sea, air, and on land) (see Chapter 5), but do not feature a market share in volumes at specific ports, for specific commodities or points of origin or destination, comparable to those wielded by shipping lines. The logical trajectory of development of this point-to-point transportation mission, then, would be a seamless supply chain. It would offer intermodal substitution along horizontal as well as vertical chains. In this case, different modes of transportation would be utilized based on immediate circumstances and externalities such as congestion, weather conditions, emergency conditions etc. (De Wit 1993 quoted in Simons 1994:61). Governance over the global commodity Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 82 network would then be likely to reside with the logistics operator who owns and controls the logistical systems which coordinate the actual linkages of the transport chain. In this way, other segments in the transport chain would be linked together and integrated into the chain through the logistical operator. Such a seamless and borderless transport system has yet to be achieved. Currently, the global ocean freight network is organized around twenty-five shipping routes featuring the largest two-way traffic in volume which links together three core areas of the world: Asia, Europe, and North America (Rimmer 1998:451) The corresponding top twenty-five container ports which anchor them have emerged as global hubs for the three major continents, relaying commodities far within and beyond their harbor borders. Together these shipping lines and port nodes integrate the transportation needs of an increasingly globalized economy, and, have forged “a patchwork o f ‘dominant transport’ zones” (Williams 1992:258) into what Rimmer describes as a single transportation axis. The Port Site in the Global Port Network Every coastal town did not become a city, nor did communities exist wherever there was a good harbor, nor did every port city have a good harbor... 6 Most port sites have ancient roots. The limiting set of natural endowments has, in a sense, been identified long ago. Historically, the initial stimulus to the growth of port is associated with the physical conditions of the harbor or estuary, the water site, and a complementary, economic land site, meaning economic 6 Konvitz (1978) quoted in Hoyle and Pinder 1992:4. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 83 development in the tributary area and, depending on the extent of regional development, a serviceable transport network linking the port to the hinterland. Without these no port will flourish. However, ports are less a natural phenomenon than a “dynamic phenomena, constantly changing in response to a wide variety of factors from the landward and seaward sides and in many different dimensions” (Hoyle and Pinder 1992:17). Given a set of natural endowments, such as a harbor and channel, the site location of ports is determined by an evolving set of economic and political factors. ... [TJhere is no very close geographical coincidence between the distribution of fine harbors or other first-class water sites and the pattern of port development, for ports originate and grow where trade demands their facilities rather than where nature provides an appropriate local framework” (Hoyle and Pinder 1992:4). Today, port location is increasingly based on technological, organizational, and systemic microeconomic requirements on one hand, and the port’s regional niche in the global macroeconomy on the other. Preeminently, the fortunes of the ports have ever been tied to the fortunes of the regional economies nesting them. At its simplest, this relationship is based on the economic trade attracted to a region which grows a port, and in reciprocal fashion, on the existence of a capable port which makes the economic trade viable. “(A) modem seaport, just like sea-ports in the past, survives and flourishes by attracting traffic. If it fails to do so, to a sufficient degree, it is doomed to decline and decay or, at best, to marginalization” (Hoyle and Pinder 1992: 17). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 84 Containerization is perhaps the most profound example of how the trajectory of technological and economic factors have influenced the geography of port location (Hugill 1993:98). The port network is based on sophisticated complementary port technology. In order to be a member of the network and compete for shipping line traffic, individual container ports must bear the staggering costs of building a massive port infrastructure. Ports are engaged in relentless development which depends on transformative technology capable of dredging channels to today’s 50’ standard, widening berths, land-filling, and otherwise constructing harbors with sufficient capability to attract carrier business. Containerization led to economies of scale which revolutionized carriers. Panama-size vessels were superceded by Post-Panamax “very-large-ocean-cargo- carriers,” which gave way to even larger super-ships in both the bulk and container trades. These cellular or not self-standing vessels drive the production of compulsoiy complementary technology at the ports they call at. Ports are currently deploying gantry cranes for ships which reach 18 and 20 container rows across and have the capability to expand to 22 rows when, not if, necessary (Ports of Oakland, Tacoma, Seattle websites). Hub ports have consolidated terminals into mega-terminals which will not only accommodate the larger vessels, but also the consolidation restructuring the industry. Mega-terminals host mega-TNCs which operate in mega-(global)- alliances. Carriers peddle a seamless supply chain, which requires ports to also provide expensive dock-side intermodal connections. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 85 The San Pedro ports have already invested $200 million each towards the $4 billion Alameda Corridor project. Environmental pressures from local communities and state regulators add to port burdens. Inefficient ports are inevitably squeezed out of the network as shares of trade are concentrated among fewer shipping lines and fewer ports. In the case of the U.S., 1999 capital expenditures by public port agencies, which topped one billion dollars for the fifth year in a row, is concentrated among a handful of ports. According to the U.S. Maritime Administration, the top ten ports account for 75% of total U.S. port capital expenditures7 and the the top three ports account for over 40% (see Appendix 2). By the end of the twentieth century, containerization had introduced a host of complementary technologies which led to the demise of the local port. The worldwide port network was rationalized into a globalized one. According to Brian Hoyle, who has studied the port-city interface extensively, containerization, which has so successfully connected the complex of local, national, and international hinterlands beyond the ports and forelands across the oceans, has also undermined the port-city interface. Ports around the world once were built out of urban functions. Now, in developing and developed countries alike, “new inland intermodal transport nodes, variously described or categorized as inland container depots (ICDs), freight line terminals or freight villages” have been built as a rational outcome of intermodalism (Hoyle and Pinder 1992:2). “The flexibility of the new transport 7 It is relevant to the West Coast case study (Chapter 5) that fully one-half of these ports are on the West Coast. Cumulatively they represent over 50% o f all expenditures; the San Pedro ports taken together represent nearly 30% o f total expenditures. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 8 6 systems is having the effect of reducing the relative significance of traditional ports within the overall transport complex of a country or region” (Hoyle 1996). Nonetheless, the microeconomy of the port industry cannot be typically sustained without a capable regional or national host macroeconomy.8 Ports are significantly, but not entirely, untethered from the economic fortunes of the geographically adjacent land sites they have traditionally relied. In general, according to Hoyle and others, ports of today rely primarily on the fortunes of regions within non-proximate global economies for both import and export trade. The success of a port is therefore a function less of natural endowments or even local economic health than of the planning decisions and treasuries of port authorities or, increasingly, of private capital (see Chapter 4). No longer the gateway to the economic region they are nested in, ports must compete in a zero-sum game for cargo that is increasingly discretionary, or on its way somewhere else. In the European Union, for example, the two North Seaports of Hamburg and Bremerhaven are just two among several ports struggling for the status of gateway to Europe, and without the ability to dredge much deeper it is already being predicted that they will be “replaced” by a new container mega-port in Lower Saxony9 . To sustain a mega port complex requires super-sized trade. Without it, ports are rendered obsolete 8 Few ports in the current shipping era are profitable. Only load centers such as San Pedro can claim the envy o f city treasurers who plot schemes to raid port revenues (Los Angeles City was sued by the State o f California for one such scheme and lost in 2001). 9 Carriers “want deeper transshipment harbors to handle the ever-increasing size o f their container ships... the two big container ports o f Hamburg and Bremerhaven may have trouble dredging their approach channels much deeper... "The debate is not so much over whether a new, deep-water container port will be needed within the next 10 years, but where that port should be located," says Michael Ahrens, director o f the German state o f Lower Saxony's port development agency” (Koenig 2000). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 87 despite infrastructural improvements. To the victors, of course, go super-sized profits. The economic dynamics attracting traffic to particular ports today, therefore, operate according to microeconomic and macroeconomic variables at two distinct levels. On the microeconomic level, meaning, at the industry level, the degree of success a port enjoys depends on the development of its intermodal technology and infrastructure, relative to competing ports, as discussed. Given technical capability and intermodal linkages, trade is then attracted and calibrated according to the macroeconomic niche the port inhabits in the global economy. Port Taxonomy Ports can be distinguished according to five outcomes based on the origin and the destination of its through-put1 0 . In general, exports are routed through ports most proximate to shippers (exporters) and imports are routed first to ports most proximate to market destinations. Competition among regionally proximate ports is for discretionary cargo, or cargo that is destined for hinterlands. (The case of the West Coast ports will empirically develop the issue of inter-port rivalry in Chapter 5). A. Load Centers: (1) Transshipment Hub: An entrepot port is a transshipment hub which serves a wide, but specific, trade region and attracts import and export through-put based on its technological superiority and 1 0 The idea o f a port taxonomy was inspired by unpublished work concerning global city regions based on Metropolitan Statistical Regions by Thomas Vest’s dissertation project at the University o f Southern California, 1998. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 8 8 efficiency within a fairly broad geographic region. Their through put is nearly entirely discretionary. For this reason, although transshipment hubs have enormous barriers to entry, they can be challenged. The two dominant hubs in the Pacific Rim, Singapore and Hong Kong, for example, have capital investments and efficiencies that dwarf those of other ports. However, these barriers can be breached by an economic agent, a state or private capital, within the geographic area. The recent transfer of Maersk- Sealand’s hub from Singapore to Malaysia may undermine Singapore’s hub status1 . (2) Global Gateway or GCR Hub: A global-port is located in a global city region and serves as a load-center for a larger economic, possibly national, territory based on the necessity of imports to reach the host GCR region (The twin San Pedro ports have assumed this function). These profitable hubs command the vast majority of discretionary cargo due to their status as first port of call (see West Coast Case Study in Chapter ##). These hubs also attract considerable exports, and transshipments depending on the geographic region, due to their technological sophistication and size, as well as spill-over benefits derived from the host GCR. These hubs serve markets which major carriers cannot abandon, ceteris paribus. B. Secondary Tier Ports: (3) Regional Hubs: These ports attract significant imports as local gateways to developed regions (which are not of GCR magnitude and not within the scope of a GCR gateway port). They may be import or export based, although funds carriers must expend to unload (imports) at a non-gateway port, are typically offset by exports to load. The developed container Ports of Seattle and Tacoma, for example, are both export-dependent on bulk materials routed from the region and other Northerly states, although they do attract import traffic in their own right. Intermodal cargo is accommodated through regional hubs, but carriers choose to route most discretionary cargo through load centers. 1 1 Buffalo, New Orleans, and Laredo are U.S. entrepot ports which host transshipment for large amounts o f exports that are not locally produced. They rank among the top ten customs districts in volume without possessing either a significant export manufacturing base or importing consumer base. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 89 C. Specialized Function Ports (4) Export-reliant Port1 2 : An industry-based port is sustained by the requirements of a local or regionally-connected industry (or set of industries), which is prominent in or dependent upon global trade, to have a port of exit for its exports. Whereas a transshipment hub, by definition, is big, there is no size corellation to export-reliant ports. They span the spectrum, from Iraq’s Port Mina A1 Bakr, from which oil is piped directly into waiting vessels, to developed container ports such as the Port of Portland. (5) Niche Port: A niche port is one that specializes in particular cargo. Both Southern California Ports of Hueneme and San Diego, specialize in non-containerized cargo (breakbulk). They provide purposive infrastructure to accommodate two cargo imports, in particular, Roll on/Roll off (vehicles), and Refrigerated containers, so-called Reefers with plug ins to keep fruits and vegetables cold. Niche ports are geographically proximate to a GCR port and therefore benefits from GCR spill-over effects. They do not compete with the hub port that indirectly sponsors them. Together, these ports integrate a global network of hubs and feeder ports which service the global economy. Carriers determine routes and port cargo volumes based on the macroeconomic regional factors discussed above factored in with microeconomic port costs, efficiencies, and convenience considerations. In order to achieve the massive economies of scale necessary for profitability, vessels must limit the number of ports of call (accomplished through large volumes), limit the amount of time in port (through mechanization), and speed ocean voyages. A Panamax ship can incur costs averaging $50,000 a day at port. Port costs incurred by post-Panamax 1 2 “Export” industry towns, such as Detroit and Seattle, which also serve as customs districts attract imports, typically greater than their exports. Two-thirds o f manufacturing exports and one-third o f overall exports o f both o f these ports are accounted for by a single sector: transportation equipment. It is also likely that export reliant ports “pull in” imports due to load balancing decisions carriers make, which affect their choice o f port of call. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 90 ships are absolutely greater, but relatively less. Containerships, the most costly and high-value added shipping sector, exhibit the following cost economies of ship size at sea: a 4,000 TEU ship has a 30 percent to 40 percent per TEU cost saving over a 2,500 TEU ship, and a super-Panamax containership yields an 18 percent to 24 percent per TEU cost saving over a 4,000 TEU vessel” (Talley 2000). In catch-22 fashion, the more carriers invest in vessels capable of achieving these economies of scale, the more they contribute to vessel over-capacity which pressures rates back down and port costs ever higher. This trajectory, here and abroad, continues as some of the most ambitious projects are still underway. As traditionally maritime developing nations and industry experts alike predicted in the early 1980s, the effects of the “global revolution in maritime technology over last 25 years” has bifurcated the traditional regional port into dominant regional hubs and load centers on one hand, and niche and secondary feeder ports, on the other. The resulting “concentration of activity and the relocation of port facilities” has intensified port competition and contributed to the utter decline of other, once thriving ports (Hayuth 1981; Hilling 1992). According to Hugill, the resulting technical revolutions in the transportation sector have also had the effect of transforming economic geography, the volume and content of goods transported, and the political economy of the ocean transport sector itself. Hugill maintains that every wave of technological advancement in the transportation arena has the effect of changing human geography. New forms of transportation, in essence, create new regional geographies (Hugill 1993:85). In the case of global transportation networks, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 91 several orders of networks have emerged, based on the extent (volume of cargo) and nature (type of cargo and enabling technology) of integration they feature through a corresponding set of port nodes, which in turn, are integrated in different degrees and ways into the global economy. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 92 Chapter 4. International Economic and Geographic Concentration in the Ocean Transport Global Commodity Network (GCN) This chapter uses a hybrid GCC-GCR approach, the GCN, to identify the economic and geographical linkages which comprise the ocean freight transport sector at an international level. Each major link of the GCC will be examined to (1) identify the geographic base or headquarters of various economic interests and (2) to suggest the degree of economic and geographic concentration characterizing the port nodes and industry linkages of the GCC-network. World Ports: A Concentrated Network of Port Nodes The expected economic effects of concentration of trade carried by fewer shipping lines through fewer ports as a result of the unitization were realized as soon as containerization was implemented. A 1972 conference held by UNCTAD (United Nations Committee on Trade and Development) indicated that the high “capital costs of the vessels and containers and of the requisite special terminal facilities, the need for modem management techniques involving the use of expensive data-processing equipment. . would result in less participation of LDCs at sea and dock-side If the container transport system is to yield the expected savings it is necessary that the capital-intensive cellular vessels spend the minimum possible time in ports, with the consequence that certain ports will be bypassed by container vessels servicing a particular geographical area. Cargos to and from the ports which are by-passed would then have to be transported by feeder services. In that case smaller container (but still expensive) ships may be necessary for these feeder services (UNCTAD 1972:10). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 93 Table 4.1 Container Throughput of World Ports (TEUs in Millions) Year TEUs Year TEUs 1980 36.4 1991 96.1 1986 61.0 1992 105.4 1987 67.2 1993 115.2 1988 74.0 1994 129.7 1989 80.9 1995 144.2 1990 87.1 1996 157.6 Source: Ocean Shipping Consultants: Global Container Port Demand and Prospects (Surrey, United Kingdom, 1997). UNCTAD’s statistics indicate that the overall share of developing countries in world seaborne trade remains limited. The UNCTAD Maritime annual report focuses on developments in maritime transport, particularly for developing countries. The 2000 year report looks closely at African trade and maritime transport and found that developing countries maintained a steady share in global cargo movements and boosted their share of the world merchant fleet, mainly due to increased deadweight tonnage in Asia; Trade in sub-Saharan Africa has risen, but the region’s total merchant fleet has declined; and in general, African shipping and trade are impeded by ageing fleets, the high costs of freight and inland transport. In addition, sub efficient container ports discourage carrier calls. The dilemma for these nations is stark. Pay out hard currency to utilize foreign carriers, or continue losing cheaper local currency by maintaining a national fleet. “Shipping is of vital importance to developing maritime countries because of its potential to save foreign exchange for Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 94 the country by carrying its own cargo, and also to earn foreign exchange for the country by carrying cargo of other countries” (New Delhi National Council of Applied Economic Research 1993).1 In effect, the port-shipping GCN, because it is globalized, has created both vicious cycles and virtuous circles. Sustained demand in the United States, and the recovery in Asia, were the main engines of global trade expansion in 1999, thus contributing to the continued growth in world seaborne trade (UNCTAD 2000). In 1999, according to the International Association of Ports and Harbors (Website) these countries combined accounted for 28% of goods unloaded and about half of goods loaded; the latter figure reflects the large volume of their oil exports. In Africa, seaborne exports hover at approximately 10% or less, and imports at 4.0%. For the developing countries of America, maritime trade in 1999 held steady at 14.1 % for loading and 4.3% for unloading. Asia commanded the largest share of total goods loaded and unloaded (26.1% and 18.8%, respectively). Most of this trade is of break-bulk cargo. The portion of containerized trade, which is more international relative to bulk trade, passing to and from the developing world with the exception of the NICs (newly industrialized countries of Asia), is dramatically small. In either case, the ranking of the top twenty world ports indicates that oceanbome trade is today highly 1 This debate reaches back at least to the mid twentieth century when developing nations attempted to band together, often with developed nations as joint investors, to form regional shipping lines. Three such lines no longer exist: the Eastern Africa National Shipping Line (established in 1966 by Kenya, Tanzania, Uganda, Zambia), the Flota Mercante Grancolombiana (established in 1946 by Columbia, Ecuador, Venezuela, and the West Indies Shipping Corp (established in 1962 by Jamaica, Trinidad and Tobago, Barbados, Dominica, St. Lucia, St Kitts/Nevis/Anguilla, St. Vincent, Grenada, Montserrat, Antigua). Set Multinational Shipping Enterprises, Report by the Secretariat o f UNCTAD/UN 1972). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 95 concentrated through the largest and most technologically sophisticated of gateway ports, which in turn are concentrated in a limited number of regions. The hierarchy of dominant ports currently in place has not changed significantly over the last decade, although these titans often switch places. Hong Kong, which moved an astonishing 16.1 TEUs last year, nosed out Singapore, which moved 15.9 TEUs, for the top spot in the year 20 002. These volumes, easily twice as much as those of their nearest competitors, represent the ports’ status as global transshipment hubs, coordinating the movement of cargo between six continents. Nonetheless, these world ports all reported growth: Taiwan’s Port of Kaoshsiung moved 7 million TEUs; South Korea’s Port of Busan moved 6.4 million TEUs, as did Holland’s Port of Rotterdam, long unequaled as the world’s greatest port in previous years, and the PRC’s Port of Shanghai moved 4.2 million TEUs, a 37.3% gain in cargo from 1999. Only the containerized ports of San Pedro on the West Coast, and New York-New Jersey on the East Coast rank among the largest world ports, and the volumes handled in Southern California dwarf those passing through Port Elizabeth. In contrast, cargo flows converge on the transshipment hubs due in large part to geographic location, but competition, given the enormous capital resources required, takes place at the microeconomic level. Successful ports compete on cost, service, and efficiency grounds. Quantities of cargo converging on transshipment 2 Containers are stacked 7 high at Singapore (in contrast with other large ports, such as Rotterdam, which also face space constraints, but double or triple stack containers). EDI facilitates these daunting logistics (see Paul Richardson’s Room for Growth, in Asian Review o f Business and Technology, August 1997, p23(2). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 96 hubs may outstrip those of GCR hubs, but only an insignificant proportion of cargo remains within national borders. The solitary new entrant into this port hierarchy is Malaysia’s Port Tanjung Pelepas3 . Tanjung Pelepas’s swift rise emanates from its newly won status as transshipment hub for Maersk-Sealand, the largest shipping line in the world. Maersk-Sealand’s move to Tanjung Pelepas from its previous Asian hub at the Port of Singapore was in large part prompted by the company’s vertical integration into Port Tanjung Pelepas. It has a 30% stake in the port and is building a new state-of-the-art terminal for itself (Hand 2000). Maersk’s move was not only high drama in the shipping world, but representative of the sea change globalization has prompted within the port-shipping GCC, as will be discussed below. The importance of ports have arguably increased rather than decreased with the advent of globalization. Oceanbome trade increases at an average pace consistent with the increase of world trade, hovering between 2-3% annual growth. World seaborne trade recorded its fourteenth consecutive annual increase in absolute terms in 1999, reaching a record high of 5.23 billion tons, according to UNCTAD’s 2000 Review of Maritime Transport. In his keynote address at the IAPH’s World Port Conference in Kuala Lumpur in May 1999, Dr. Mahathir, Prime Minister, Malaysia, encapsulated the critical importance of the ports, “No matter how information technology advances, the world trade cannot be materialized without ports. This is exactly why every country needs to develop much more advanced and efficient ports 3 Tanjung Pelepas Port, Johor, Malaysia, aims to attract 10% o f Singapore’s container traffic (New Straits Times (Malaysia), June 16, 1999). In addition, Tanjung Pelepas is being set up as part o f a Free Trade Zone (Tanjung Pelepas Port website). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 97 for its prosperity “ (Inoue 2001). The pressure to develop infrastructure capable of servicing the increasing economies of scale and sophisticated logistical requirements of this supply chain is intense. The possibility of large numbers of smaller ports entering the fray, particularly those without a specialized niche function or strong regional economic ties, is increasingly difficult, if not already diminished. (T)he cost of financing port superstructure, as well as infrastructure, is more likely to fall on the public sector, which many countries, especially in the developing world, can ill afford. In the Asia-Pacific region, for example, the United Nations has estimated that by the year 2000 the region will need to invest approximately US $1,500 billion to create port infrastructure commensurate with projected trade growth (Turnbull and Wass 1997:131- 132). According to imaritime Consultancy of India and Clarkson Research Studies, seaborne global trade makes its way through over 2000 ports ranging in size from single berth to multi-purpose facilities. In 1999 total global seaborne trade reached 5.36 billion tones. In 1998, global container traffic exceeded 175 million TEUs. Tables 4.2 and 4.3 based indicate the extent to which this trade is carried by the world’s leading ports. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Table 4.2 1998 Top Ten Cargo and Container Ports 98 350.000 300.000 250.000 200.000 150.000 100.000 50,000 0 1998 Total Cargo Volumes -tonnes □ Series 1 1998 Container Traffic (TEUs-000's) 16,000 14.000 12.000 10,000 8.000 4- 6.000 4.000 2.000 0 □ Series1 v V Source: Data derived from AAPA Website. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Table 4.3 The World’s Twenty Largest Container Ports - 1997 99 Rank Port TEU Throughput (1,000s) Country 1 Hong Kong 14,500 China 2 Singapore 14,120 Singapore Kaohsiung 5,693 Taiwan 4 Rotterdam 5,340 Netherlands 5 Busan 5,234 South Korea 6 Long Beach 3,505 United States 7 Hamburg 3,337 Germany 8 Antwerp 2,969 Belgium 9 Los Angeles 2,960 United States 10 Dubai 2,600 United Arab Emirates 11 Shanghai 2,520 China 12 New York/ N. Jersey 2,470 United States 13 Yokohama 2,330 Japan 14 Tokyo 2,322 Japan 15 Felixstowe 2,213 United Kingdom 16 Manila 2,115 Philippines 17 Kobe 2,100 Japan 18 Keelung 1,981 Taiwan 19 Tanjung Priok 1,900 Indonesia 20 Bremen/ Bremerhaven 1,700 Germany Source: Data based on a survey conducted by the American Association of Port Authorities. Port Construction and Port Niches A ship’s profitability depends on its efficiency. It must spend as little time as necessary at port and carry as much cargo as possible. With the nearly universal adoption of containerization by the close of the 1980s, profit is now achieved through staggering economies of scale. The present world fleet average vessel capacity may be under 2000 TEUs, but better than half of current ship orders are post-Panamax vessels over 3000 TEUS. In addition, the economies of scale at Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 100 dominant hub ports dictates that the majority of containers handled are 40’ units, which are double the original 20’ TEU. Gantry cranes supplied by ports at terminals, therefore, must be large enough to reach across ever wider decks and unload these mega-containers. The opportunity cost of these vessels is high. They require the most efficient labor force, especially at the port, the most sophisticated infrastructure, again especially at the port, and the latest IT tools available. Such vessels cannot, in terms of costs or their now basic sophisticated technology requirements, visit smaller or less efficient ports (discussed below). In the current phase of industry development, it can be argued that to be viable ports must be either international and very big or international and niche defined. The transformation of the ports to meet the market and complementary technology demands of a global economy requires extraordinary sums of capital investment to dredge waterways, build roads, railway, water and power supplies, and special purpose facilities and IT technology. Traditionally, the capital for port development has been anteed up by the narrowly circumscribed public or private interests running the port. This is because the port business, like shipping, has traditionally been a highly specialized and nationally-based industry that does not attract significant outside investment or vertical integration (Casson 1986). If public borrowing opportunities are depleted the only option is private capital. In fact, increasing participation of private interests in port construction is the only notable new trend in vertical or horizontal integration evident in the industry. Although, this is not a trend in the United States, particularly on the West Coast whose ports are Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 101 landlord ports managed for the states by the cities they’re located in, it is a trend at the global level. The traditional view of investors is that ports are inordinately volatile and risky investments. This view is well represented by a 1988 article in which the author observes that port success “depends on so many unknowns that only public enterprises are willing to form the capital to construct the necessary industrial infrastructure” (The Atlantic May v261 n5 p25(5)). Globalization, however, has contributed to the recent trend of vertical integration of carriers into ports, particularly of highly competitive niche ports in the developing world. Like transshipment hubs, niche ports are intensely competitive and must have a geographic location en route or near GCR hubs (The West Coast niche port examples are discussed in Chapter 5). Given port expenses, niche ports may capitalize on a local industry, such as oil, or build the equivalent of economic zones with local export processing plants. Port construction represents an upstream GCC linkage requiring considerable capital, research and development, and specialized services. A survey of five ports in the developing world initiating port expansion or renovation during the late 1990s reveals that all five rely on private capital investment (often linked with a carrier) and source out or joint venture the most high-value added linkages of port construction to legal and planning firms in European and American GCRs. Oman and SeaLand U.S.A. (since merged with Maersk) joined to build a new $26 million container terminal at Port Raysut (near Salalah on the Indian Ocean) in Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 102 1996 with the hope that “larger vessels and growing trade with the economies of the Far East mean that the Middle East will increasingly be a short stop on the way elsewhere” {MEED April 17, 1998). (Jebel Ali and Jeddeh container ports, and Yeman’s Port Aden also vie for this traffic). Port plans were commissioned to New York based Han-Padron Associates and SeaLand has a thirty year concession to manage the port. The Tianjin Port in North China linked “units of Bechtel and China International Trust and Investment Corporation in a fifty-fifty venture to speed development of a $3-6 billion superport gateway to central China” {Beijiang Review September 30, 1996). The port has plans for extensive landside development including including petroleum and chemical processing plants, storage, transshipment facilities as well as industrial, manufacturing, commercial, and residential sites. International Bechtel also won a consultancy contract with Abu Dhabi Awad for Taweelah Port. That team includes U.K. based Posford Duvivier and U.S. based Parsons-Brinckerhoff {MEED April 24, 1997). The case of the expansion of Isreal’s Port of Haifa demonstrates the extent of globalization of port construction. New York’s Han Pedron heads a team allocated $244 million for port design, engineering, and construction supervision services. The team consists of: CHZM of U.S.A. was hired for port planning, upland design and environmental consultation, Canada’s Baird and Associates for coastal engineering, and other team members include the Port of Los Angeles (which has no container Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 103 traffic with Haifa), Netherlands Delft Dredging, and U.K.’s Fugro. The objective of the port is to “serve the Arab hinterland” {MEED August 22,1997). It is interesting to note that the interest of the private sector in ports has not extended to the shipping lines themselves. Port privatization is driven in part by the interest of private investors in ports as evidenced above and also in a host of other ports being privatized in Taiwan, Turkey, South Africa, and South Korea (Talley 2000) and in twenty-seven other countries (Turnbull and Wass 1997:148-149). Investors, however, are reluctant to invest in carriers which remain hostile to take overs and often remain family owned. Financial institutions wanting to benefit from world trade growth through maritime investments are more likely to buy shares in a ports operator than liner shipping equity, writes Janet Porter. “At a time when a number of ocean carriers are preparing stock market flotations, Dan Clague of SG Hambro warned that the ports business is a far more attractive investment proposition than most container shipping lines. ‘Investors like exposure to world trade growth,’ said Mr Clague. ‘But they prefer ports which produce better returns for shareholders than liner shipping ’ {Lloyd's List March 28, 2001). International Carriers: the Coordinator of the Port-Shipping GCN Recently, regulators from the OECD and USA have joined together to investigate the flurry of alliance and consortium activity by carriers. Their finding is that the current concentration of shipping lines is potentially threatening to competition, but currently less than the concentration found in other industries. The largest shipping line in the world, Maersk-Sealand, for example, handles 12% of world carrier trade. Maersk-Sealand, in other words, is only one of a handful of dominant carriers which account for the oligopolistic structure of the shipping industry. Nonetheless, recent trends have qualitatively intensified the degree of Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 104 concentration characterizing the industry, and is evident if economic concentration is also analyzed in light of geographic concentration. These large carriers are highly concentrated in the most trafficked and high- value added hubs in the world. The West Coast port hubs provide a strong case example. The largest carriers serving the West Cost are also the largest carriers serving hub ports around the world. The two largest carriers serving the West Coast ports handle nearly 25% of all West Coast trade4 , the top ten account for over 70% of all carrier trade, and a total of twenty provide over 90% of West Coast carrier trade. The largest of global carriers are also concentrated in the lucrative container trade. According to one detailed study, in 1980, the twenty largest container shipping lines, ranked by ship TEU (twenty-foot equivalent unit) transporting capacity, controlled 26 percent of the world's capacity. By 1995, the twenty largest lines controlled almost 50 percent of this capacity (International Maritime Organization 1996). Between 1980 and 1991, the combined container capacity of the top fifteen carriers increased from 51% to 59%. Two factors, in particular, have contributed to this marked consolidation in the industry. The first was the costs and effects of new mega-technology adopted by shipping lines in the 1980s (see Chapter 3) and the second was the gradual rise of Asian shipping conglomerates (see section on global alliances below). Six of the shipping companies present in the top twenty of 1980 were unranked in 1991 due, in most cases, to restructuring and a loss of container interest. The once towering US 4 Port trade is measured in terms o f tonnage for Bulk cargo (liquid, dry, or break bulk) and container units (TEUs) for the container trade. This is discussed in detail in Chapter 5. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 105 Line went bankrupt in 1986 due to excessive investment in large container vessels. Six others were replaced by today’s dominant carriers based in the Pacific Rim: China Ocean Shipping (Group) Corporation (COSCO), Korea's Hanjin Line, Japan's K-Line, Taiwan's Yang Ming Line and Evergreeen Group. These Asian conglomerates offer eastbound and westbound round-the-world services. Of the twenty top shipping lines today, 49 percent belong to Asian operators and 33 percent to European operators, followed by the United States with 14 percent and others accounting for the remaining 4 percent. In 1997, the twenty largest container shipping lines ranked by TEUs transported (see table below) accounted for 78.2 percent of the TEUs transported by the hundred largest lines (Dow 1998). At the time, the top three of these were Sea- Land, Evergreen, and Maersk, which account for 33.2 percent of the TEUs transported. While many of the ten top-ranked lines serve the transpacific trades, Sea-Land, Evergreen, and Maersk serve global networks, including the transpacific, transatlantic, and Mediterranean and Middle East trades (Talley 2000). Maersk has since merged with Sealand to become the largest ocean cargo carrier in the world. Dominant shipping lines are now global carriers. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 106 Table 4.4 The Twenty Largest Container Shipping Lines -1997 Rank C arrier TEUs Transported (1,000s) World Headquarters 1 Sea-Land Service 1,355 Charlotte, NC, USA 2 Evergreen Line 1,245 Taipei, Taiwan 3 Maersk Line 1,081 Copenhagen, Denmark 4 Hanjin Shipping Co. 828 Seoul, South Korea 5 Hyundai Merchant Marine 677 Seoul, South Korea 6 American President Line 656 Oakland, Calif., USA 7 Orient Overseas Container 519 Wanchai, Hong Kong 8 China Ocean Shipping 514 Beijing, China 9 Yang Ming Marine Line 491 Taipei, Taiwan 10 Nippon Yusen Kaisha 470 Tokyo, Japan 11 Kawasaki Kisen Kaisha (K Line) 467 Tokyo,Japan 12 Mitsui OSK Line 430 Tokyo,Japan 13 Crowley American Transport 343 Oakland, Calif., USA 14 Hapag Lloyd 314 Hamburg, Germany 15 P&O Nedlloyd 313 London, UK 16 Zim Container 311 Haifa, Israel 17 DSR Senator Line 308 Hamburg, Gennany 18 Mediterranean Shipping 285 Geneva, Switzerland 19 Neptune Orient Lines 269 Singapore 20 Cho Yang Line 215 Seoul, South Korea Source: Data from J. Dow, “Top 100 Container Carriers,” Journal of Commerce, September 23, 1998. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 107 The top ten carriers now handle over one-third (34%) of containerized trade. Maersk-Sealand, the largest single carrier in the world as well as in the U.S.A., handles nearly 10% alone and controls a fleet 66% larger than its closest competitor, Evergreen of Taiwan, followed by APL (American President Shipping Line, headquartered in Singapore), a close third. Table 4.5 World Containership Capacity (as of February 20001 Current Fleet Capacity (000 TEU) Market Share Vessels on Order (000 TEU) Combined Market Share World Fleet 6,240 100% 659 100% Maersk Sealand 547 9% 91 9% P&O Nedlloyd 264 4% 92 5% Evergreen 248 4% 66 5% MSC 231 4% 8 3% APL 182 3% 15 3% Cosco 173 3% 60 3% NYK 127 2% - 2% Hanjin 125 2% 17 2% Zim 123 2% - 2% MOL 120 2% 17 2% Top 10 2,141 34% 366 36% AH Others 4,099 66% 294 64% Source: Data from Containerisation International, Mercer 2000 Update. All of these carriers were among the top twenty containerized servers in 1997, although, there are frequent reshufflings within the hierarchy. Among the year 2000 top three, Maersk-Sealand, once third and first respectively, now dominant as mentioned, and Evergreen dropped from second to third place. The merger of P&O Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 108 Nedlloyd and Hapag Lloyd moved the conglomerate to second, and the entry of MSC into the competitive and lucrative Pacific trade helped catapult it from eighteenth to fourth position. APL remained relatively steady, from a previous sixth place to fifth. What is remarkable is the gain in fleet capacity due to the acquisition of mega-ships, despite the overall drop in fleet tonnage (or number of ships). The degree of concentration among the dominant carriers has apparently heightened as a result. Market concentration among carriers has been further intensified by the emergence of global alliances (see below). International Concentration of Beneficial Ship Ownership A tradition that hails back into the 16th century in shipping is the foreign flagging of vessels, or so-called Flags o f Convenience (Boczek 1962 cited in McConville 1997). A flagged ship is one registered in a national registry and therefore theoretically belongs to that nation’s merchant fleet. Registration generates revenues for the host country and allows the carrier to avoid incurring labor and tax expenses related to national law. The following summary of FOC history and functions is culled from a notable review of the subject by James McConville (McConville 1997) Operating and registering tonnage under a foreign flag had been a device used in one form or another at least from the sixteenth century, particularly by the USA since the First World War. Its spectacular growth in the decades following the Second World War ... was based on the purchase of low price, war-surplus, US merchant vessels, ‘Liberty ships’, which were general dry cargo vessels and T2 tankers, in the immediate post-war period. In the USA a powerful and well- connected pressure group effectively secured the continued support of US administrations for this innovation (McConville 1997:86-87). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 109 The acquisition of liberty ships resuscitated the Greek fleet5 and also began the career of Aristotle Oneissis as a shipping magnate (Hellenic Ministry of Mercantile Marine). The Hellenic merchant fleet now represents 50% of the total European Union fleet (Hellenic Ministry of Mercantile Marine). In 1950 flags accounted for 5% of the world fleet, by 1995 37% of the world fleet was FOC. Flag registers essentially set up regimes of immunity and their continuing popularity has resulted in the de facto deregulation of the maritime industry. A flag state does not commercially require a substantial fleet, but offers a legal basis in return for fees to non-nationals and companies that register the tonnage which they own or control. The five most common features of ‘free-flagged’ registers are: 1. Country of registry allows ownership and/or control of its merchant vessels by non-citizens. 2. Access to the registry is easy. A ship can be registered at a consul office abroad and transferred easily. 3. Taxes on the income of the ship is low. A registry fee, and an annual fee, based on tonnage, are normally the only charges made. 4. The country of registry is a small power without the wherewithal to impose any government or international regulation, and the proceeds from the registry have a substantial effect on it national income and balance of payments. 5. Manning of the ships by non-nationals is freely permitted. 5 U .S. and Greek ship owners w ere am ong the m ost active participants in flagging after World War II. The latter were m otivated by fears o f nationalization due to post-war instability, although eventually, the Greek governm ent regained its merchant fleet by adopting FOC p olicies by offering ship owners “tax holidays.” A steady renewal o f the H ellenic merchant fleet has taken place over the last few years and the average age o f ships registering in the H ellenic Registry is nine years, w hile those withdrawn is 20 years, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission 110 Table 4.6 Top Ten Merchant Fleets by Flag (in tonnage) 1965 1975 1985 1995 UK Liberia Liberia Panama Liberia Japan Panama Liberia Norway UK Japan Greece US Norway Greece Cyprus Italy Greece USSR* Bahamas USSR Panama US Japan Greece USSR UK Norway Germany US China Malta France France Norway China — Italy Cyprus US Source: Wijnolst and Wergeland (data derived from Lloyd’ s Register) *The USSR fleet ranked second in the late 1980s (Lexicon Universal Encyclopedia. Seventh Edition (1989), s.v. “Soviet Union”). The effect of the rise of FOC merchant fleets is evident in Table 4.6. Liberia has reigned as a top FOC country since 1965 at least. However, the UK has fallen from first ranked to unranked and the US from fourth place in 1965 to 10th in 1995 and 11th by 19986. Cyprus, the Bahamas and Malta have only recently made gains as flags of convenience. Greece has remained active and even made gains since 1985 such that it now ranks 3rd and Panama, had made its way to top of the heap by 1995. The USSR fleet has been in disarray since the 1980s. Japan arrived on the world merchant fleet world scene in the 1970s and has since been joined by China and Singapore (see below). Finally, the historically seafaring nation of Norway, has retained its status among the top ten. Interestingly, South Korean and Taiwanese ship 6 Som e o f the U SA decline is also attributable to the state sponsorship o f shipping fleets, first under the East B loc and then by Asian competitors. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. I l l owners have joined the FOC exodus led by Japan, Europe, and the U.S.A., beginning in 1996 (McConville 1997:98). Panama has long dominated flags-of-convenience and continues to increase its lead as the world's largest shipping register. Last year its fleet grew by almost 8% to 98.2 million gross tonnage, although in terms of numbers it fell by 45 ships to 6,143 ships due to the mega-size of new ships. Panama now has 18.5 per cent of the total world fleet, leading the next flag state, Liberia, whose share growth has been flat. The next several flag national bases, Bahamas, Malta, and Cyprus are similarly positioned, although Malta’s share has grown the fastest. The significant growth of the Singaporean registered fleet by nearly 8 per cent, to 20.4 million gross tons (1,677 ships) is especially striking. Singapore is currently unique among all nations, including Asian, for its successful fostering of a wide array of GCC linkages, including port and carrier industries, as well as both merchant fleet and beneficial ship ownership. The fact that these registries possess slightly younger fleets than the world average indicates that new ships are increasingly being flagged. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 112 r - a s 0 3 H 0 ) > O - a c C O 4 0 c o H 2 C O 10 1 8 > C J £ O » • c j — O ° T - ^ C O w © o JD JO L L < D — C O C 2 m O © c 2 & O g > c v a * o © o a! * 5 o tOnP}KC©SS.VKN.ln0)O3»*^,®«3^P) oNrofioiomojinwwowtoooNN®^ 0 3 » o n q » o cm i n N ; r v cm cm os_ r* ^ t v r . ^ c o rrDif>psTsrcvNr«oioinoo>aro>o5'ooeo — CO CO CM CM ■*- * - . ’ • * - * - ■ a s h*. CD 1 © * D £ £ — C D O o C N I C l < 3 4 0 < I 5 ° u - E © D J a *D V ' ® S © £ D a.© E D w © f f i Q % O N o o o c D N o v v v ^ t- v o ^ ttv o n n 0^nNDNOD'tfP)N®T(NVNVi-m'0- CO^NtfllONNONvOCDCnT'inOSON*' NffiNNrNCNtDOSUOVinnMOnO o ® o o k ^ ^ u C 3 4 n « m « « tf n < q m n w q in in cv co in to ■ * - co « r-' O O W l f ) i n N N ( O N ' f f W N f « 7 ( O t - » - C O — O •ffD^-OnNMOlOJn-rOODN'-'-nS*- — -04 -r in N C M C M T-ffin-r-SnSNr-lOf'J— CVCVCOW W OJfO^ m t- in < d l O ^ r - o f f i i n i n o j M o o o M f i ' - ’* n id d o in q o »* n ffi o ffi o »- ro ^ v n » V K C M * C M * M-* «r-* cO ‘ ffonointttftnNvojnoo'fcofflCD^© o ^ - i n m i n c v i D o i n cm cm a s cm cm •*- cm r r ID ( 4 * - « r- — Of f i c n o n o i f i r j n f f l o i n n t - f f l - Di f j o K S JE “ . «nwOvNNOJMflOCON(NOO)tt5 ^ N. N. ^ N. co ra © 03 03 in © -c 03 m n m io o n n o © a o o o ’ n n w ^ n v k n t o o NNKNlOnOinK*--'tfin«WO^ODS ©ffln©,ffinpj«CNONW^»"^,nfflN^,D P 3 P ) C 4 > r ^ T - CO CM — — « r- •* - * - » * ^<CN(ON(DOO)^OONN<'0 8 ? f5 8 & ^ t tf ” r ® N - ’ ^ ■ » ■ ■ -‘ ffltocnintnino’-oO'ecvromminfvnto cD©»jm40.NDOio< TfOior)03»-03©NO)rv o w n c v c x r - n n r v —* c m •* - c m — B i tS 0 3 i r 0 3 i n I c d i n I — CM 1 o ' CO I — CM co ■ * « ■ o r v < — i n c o < d CO OS r f - r* . o o CM O u d rv £ 2 co in I os co c o o s os m c o C D CO CM O s **r rv co CO CO CM * W C D C O C O OS CO — ■ CO co rr C - CM CD CO in rv CO CM OS w - to > * - o ^ u s f 3 o C O D S JS ID I •J-E rofi 5 S o >••- o-c o a S'’ c:P'S o j: o Q._/20£DOW2 0 X 2 “ Z>S=:WD.£D © ® ~ — I J C ® D D Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 113 Flag status does not confer the benefits of ship ownership. Open registry countries such as Panama and Liberia, which together account for nearly half of world tonnage, up from 34 per cent a decade ago (Williams, F. 2000), have an insignificant share of beneficial ownership. Currently, only Greece has a presence in the top five of both categories based on gross tonnage. The extent to which dominance in the shipping-GCC has been divorced from dominance as a sea power is epitomized by the Greek merchant fleet success. Flagging, however economically advantageous at the microeconomic level for the shipping firm, is not without national political consequences, particularly given the importance of international institutions in a global economy. By 1970 U.S.- flag vessels carried only 5.3% of U.S. waterborne foreign trade and approximately 3.9 percent in 1994 (U.S. Dept Transportation 1995:234). In 1995, “[t]he US-flag fleet of commercial size (1,000 gross tons+) contained: 367 privately-owned ships in 1994, 183 tankers, 21 bulk carriers, 161 freighters, 2 combo-freight/passenger ships” (International Statistical Institute 1995). In 1994 this represented 11.8 million gross tons (MGT) or 17.3m deadweight tons, a mere 3% of world’s 404.3 tons that year. The U.S. The government owns approximately 190 merchant ships (mainly freighters, mostly inactive and stationed at national defense reserve fleet sites). According to the U.S. Marine Administration (MARAD website), the U.S. in 2001 is ranked 11th by flag and 3rd by ownership in the merchant fleet of world. “Ninety-five percent of all international trading vessel calls in the US are foreign Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 114 flag” (Hollingsworth 2000). According to the U.S. Dept, on Transportation, “without a new program that provides adequate support levels,” U.S. companies will continue to register or transfer vessels under foreign flags (1995:258). This implies important political ramifications, for without a national fleet or flag status a nation is excluded from the International Maritime Organization (1MO)7, which sets worldwide shipping standards, including environmental, safety, and labor practices. This is of particular importance at the local level as well. “International conventions are an important way to control the quality of vessels entering US waters. Existing conventions and codes provide broad coverage of vessel pollution-prevention issues” (Hollingsworth 2000). 7 The IMO is the m ain political infrastructure for regulation o f international shipping. IMO is a flag state organization, where the member have voting power according to their significance in the world fleet. The IMO has no policing powers and individual states must voluntarily ratify and implem ent IMO standards and regulations. After the Exxon Valdez accident the U.S. introduced the Oil Pollution Act (O PA) which firmly places liability with the ship operator. In 2015 oil tankers w ill be required to be double-hulled to operate in U.S. waters. The current trend according to W ijnolst and W ergeland is the setting up o f guidelines by individual port states. They remark that this trend w ill make transportation more expensive and less efficient. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. T able 4.8 Top 20 World Merchant Fleets by Country of Ownership* Self-Propelled Oceangoing V essels of 1,000 Gross Tons and Over As of April 1, 2001 (Tonnage in Thousands) Tanker Dry Bulk Full Container Other". Total Country_______________Number Deadweight Number. Deadweight Number Deadweight Number Deadweight Number Deadweight G reece 791 63,588 1,352 68,121 139 4,048 791 8,442 3,073 144,200 Japan 731 37,150 807 45.393 193 5,371 919 8.645 2,650 96,560 Norway 497 37,643 183 11,726 24 775 532 6,796 1,236 56,940 United S lates 402 31,208 122 6,094 64 1,973 387 5,104 975 44,459 China 294 6,326 562 22.914 186 3,722 924 7,607 1,966 40,569 Hong Kong 131 15,965 233 17,529 48 1,510 115 1,582 527 36,587 Germany 162 5,005 113 4.994 670 17,167 878 6,230 1,823 33,476 Korea 204 7,271 198 14,396 104 2,585 311 1,836 817 26.0B9 Singapore 312 11.715 92 3,379 128 2,903 158 1,416 690 19.414 Taiwan 34 2.483 149 8,714 197 6,721 129 1.039 509 18,958 United Kingdom 154 7.948 . 65 4,756 91 3,376 232 1,741 542 17,820 Denmark 163 7,882 33 2,234 139 5,941 . 285 1,668 620 17,725 Russia 346 6,284 125 2,663 34 800 1,136 4,476 1,641 14,223 Italy 239 5.073 68 5,066 11 269 144 1,738 462 12,146 India 111 5,508 124 5,284 3 87 ' 56 521 294 11,400 Saudi Arabia 72 9.772 1 2 5 248 26 460 104 10.483 Sw eden 127 7,217 12 484 1 11 172 1,743 312 9,456 Turkey 85 939 149 5,556 26 257 251 1,608 511 8,360 Iran 33 4,130 45 1,866 7 179 53 899 138 7,074 Switzerland 46 1.379 42 1,985 76 2.379 72 878 236 6,621 All Olher Counlries 2,135 53,601 1,211 50,270 447 9,194 5,336 32,093 9,129 145.151 All Countries 7,069 328,248 5,686 283,428 2,593 69,516 12,907 96,524 28,255 777,710 116 Finally, flagging has profound effects on the labor sector. European and Japanese seafarers who were previously employed in nationally based and highly organized labor markets, for example, have been especially hard-hit by the spread of flagging (McConville 1997:98) (see below). Shipping firms managing FOC carriers “are practically free to maintain their own standards so far as the numbers, qualifications and terms of employment of officers and crew members are concerned” (101 McConville 1997:101). The globalization of labor is addressed separately below. Ship Building Over the past three decades the geographic center of shipbuilding has shifted from Europe and North America to Asia. This was spurred by a combination of liberalized policy reforms and the rise of manufacturing niches in the NICs, particularly their competitive steel industry and skilled but cheaper labor markets. China has emerged as a major shipbuilding nation based on these advantages (imaritime website). Interestingly, the rise of Southeast Asian shipyards is suggestive of Michael Storper’s thesis on economic territoriality in which regional agglomerations related to an industiy attract global capital8 . Shipbuilding is a $20 Q Local factors also figured prominently in global outcom es over two centuries ago. The fact that by 1776 one-third o f the British registry o f merchant fleet was m ade in N ew England w as an outcom e o f a combination o f local conditions. Early settlers were not shipwrights, but carpenters. N ew Englanders therefore w ere both free to and forced to innovate in ship construction. "They preferred quick construction with iron nails and often green lumber to the laborious dwelling o f w ell-seasoned w ood. English ship construction techniques were Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 117 billion industry and highly concentrated due to the costly and specialized ships currently on order (Storper 1997). New shipbuilding is running at record levels, with deliveries of 40.5 million deadweight tones in 1999, nearly twice 1990 levels (Williams, F. 2000). According to Lloyd’s Journal of Commerce four yards dominate current orders from major shipping lines: CSBC (China Shipbuilding Corporation), HHI (Hyundai Heavy Indsutries Colk Ltd.), MHI (Mitsubishi Heavy Industry, Kobe, Japan), Odense-Lindo (Odense Steel Shipyard, Norway). Vertical integration by carriers into ship building is not new to shipping. A.P. Moller Lindo-Odense yards, for example, are owned by the shipping conglomerate that’s centered around its Maersk-Sealand shipping line. conditioned by a lumber shortage and a need to m ake ships last...New Englanders conserved labor rather than raw m aterials...New Englanders also used water-powered saws, whereas the sawyers' guild prevented such labor-saving devices in English shipyards. The result o f all this was that vessel construction costs w ere 30-50% less than in England (Whitehurst 1986)" (Hugill 1993:120). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 118 Table 4.9 National Share of Shipbuilding 45% - 40% - 35%- 30%- 25% - 20% 15% - 10% - 5%- 0% - Japan Korea China Italy Germany Poland Other 1998 Data based on Eastward Ho! Webpage (2001). In the 1990s severe over-capacity in the carrier trade and a competitive frenzy to achieve economies of scale through mega-vessels solidified Asia’s hold over shipbuilding.9 By 1995 Japan had secured 33.6% of shipbuilding orders and South Korea another 30.2%. Approximately one-third of all new orders were shared by all other countries and the largest of these was Mainland China, which ranked third with 4.7% (Lloyd’ s Register January 1, 1995). All three countries have since strengthened their lead. Many others, such as Romania, ranked fourth with a 3.5% share in 1995, and Taiwan with a 3.1% share, have since lost ground or remained 9 B y 1995 the average size o f vessels on order was 43,596 DW T or 60% greater than the average o f then existing world fleet. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. static. At that time the U.S. ranked 26 according to Lloyd’s Register with 0.2% of all new orders.1 0 According to Lloyd’s List for 2001, nearly 80% of new orders according to volume is concentrated in Asia, most specifically Japan, China, and Korea1 1 . The Korean share of the world market for containerships has risen from 15.5% in 1997 (in compensated gross tonnage terms), to 44.10% by 1998 and 68.25% by the end of the first half of this year. Two particularly “local resources,” cheap labor and fabricated steel, are both readily available in Korea and China, as well as other productivity efficiencies. Ship building in Korea represents a vertical integration of shipping corporations such as Hyundai, Samsung, Halla, and Hanjin. Hyundai also manufactures steel. According to the Sales Head of Hyundai Heavy Industries, “Korean yards and European yards are completely different. They are producing just five or ten ships a year. We are producing around sixty” {Eastward Ho 2001). Korean success, however, is also a product of strategic international competition by Korean choebels. Korea chose shipbuilding as a niche just before “the shipbuilding and especially the tanker market virtually collapsed in the 1970s” (Stopford and Strange 1 0 The Department o f Transportation attributed the U.S. steady loss o f share since the 1970s to “the suspension o f Federal construction assistance (U.S. Congress H ouse Committee on Transportation and Infrastructure 1996:244). A lso affecting U.S. orders is the decline o f Navy construction programs since the huge surge in the 1980s. D om estic policy changes and reenacted subsidies have resulted in the first order (two tankers) for U .S.-built ocean-going commercial ships for export since 1957 in 1994 since the enactment o f the National Shipbuilding and Shipyard Conversion Act o f 1993 (245). 1 1 Recently, Hyundai H eavy Industries (HHI) o f Korea w on a $300 m illion order to build five 5,600 TEU container vessels for Japan's Kawasaki. “It is thought to be the first tim e a major Japanese liner operator has ordered Korean-built ships” (w w w .m a r in elo g .co m ). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 120 1991:135). Since that time, Korean yards have moved aggressively into the sector. According to a recent European Commission report on world shipbuilding, since Korea’s entrance into the containership market, the average price of a Panamax containership has fallen from $53 million in 1997, to $42 million in 1998 and $37.5 million in March of this year. One containership order studied by the European Commission was a 6,800 TEU vessel from Hyundai for which the reported order price was $73.5 million while the calculated building price was $86.9 million, indicating a loss of 15.42% of the calculated building price {Transport News 1999). This has prompted a WTO lawsuit by European and American shipyards alleging that Korean dumping was shored up by public subsidies. An examination of this link from the vantage point of GCC analysis yields a particularly conspicuous finding. Although the actual ship construction takes place within these national yards, shipbuilding is dependent on specialized functions performed or procured elsewhere in the chain. Ship orders come from ocean carriers rooted in international conglomerates, and the most high-value added components of architectural and engineering know-how as well as technologically sophisticated machinery, is contracted from firms outside these regions. The dominance of Korean shipbuilding, for example is tempered by the fact that most of the cutting edge research in ship-design, propulsion stems and naval architecture is still ordered from “the domain of the American and European establishments and universities” {Eastward Ho, imaritime website). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 121 Ship Breaking by Region The end of the line for ships and the last link in the shipping GCC is the recycling of aged vessels or ship breaking. Reclaiming metal and parts from ships is a multi-billion dollar business and like shipbuilding, is currently running record levels. It is not, however, a preferred linkage of dominant economic actors in the port-shipping GCC. According to UNCTAD, due to pressure from environmental and regulatory agencies, total tonnage sold for demolition jumped by a fifth last year, “equivalent to nearly four percent of the existing fleet” (Williams F. 2000). This increased rate of scrapping has reduced the average age of the world shipping fleet to about fourteen years in 1999, although nearly half of all vessels are still fifteen years or over (Williams, F. 2000). Table 4.10 Global Volume (2000): 29.2 mn dwt Asian Share: More than 95% Shipbreaking Nations □ 1999 @ 2000 0%J India Bangladesh Pakistan China Taiwan Data Source: imaritime Consulting. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 122 The rate of scrapping has doubled since 1990 according to UNCTAD. Total tonnage sold for demolition jumped by 20% in 1999, which represents nearly 4 per cent of the existing fleet. UNCTAD stated that “(t)hese sales were strongly influenced by the increasing pressure from law-enforcing governmental agents and environmental groups.” As a consequence, the average age of the world shipping fleet fell to about 14 years in 1999, although nearly half of all vessels are still aged 15 years or over (Williams F. 2000). Odd man out: International Sailors. Dockers, and Longshoremen Labor intersects every linkage the GCC. The two most prominent sectors of maritime labor which have an international dimension are sailors and officers on vessels and dockers (longshoremen and warehouse workers) at ports. The first group is already highly internationalized, and one survey by one OECD group has recognized the problems ship crews encounter due to the several cultures and languages which now typically characterize a single crew. Dockside workers are typically drawn from local portside communities, but in the face the industry’s globalization have undertaken increasingly international action. A full discussion of this important dimension of the GCC is not possible within the scope of this project, but mention of the more significant characteristics of the labor force and trends shaping maritime labor at the international level are highly relevant. Ocean voyages utilize a highly segmented labor market which is clearly demarcated by skill level and nationality .The majority of officers are still drawn Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 123 from Europe and the overwhelming number of sailors are drawn from Southeast Asia and other parts of the developing world. The pay, benefits, and conditions for the average sailor today has worsened according to the International Labor Organization, which sent a vessel showcasing these conditions to hub ports around the world in 1999. FOC vessels have been known to abandon crews at foreign ports if the owner runs out of operating funds, and piracy remains a threat in international waters. Dockside workers typically enjoy greater protection, although it varies considerably depending on the strength of local labor. The importance of this sector to particular national economies is quite variable. For some, such as traditional seafaring nations like Greece, maritime industries represent a significant employer, as does for all communities hosting a port. Table 4.11 Nationality of Ship Officers India 7% OECD / ^ ~ 7 \ 37% / / \ Far East w K y% East Europe Africa/Latin 16% 7% Source: Percentage estimates based on imaritime Consulting data (webpage). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 124 FOC flagging changed the composition of seafarers by the late 1980s. According to ILO (International Labor Organization) 1990 estimates, Filipino crews, which had been nearly unheard of in the 1970s, numbered 90,000, South Korea 50,000 and India, whose sailors have been employed by the British for three centuries, 20,000 (McConville 1997:102). A serious shortage of well-trained officers was abated by the entrance at the same time of highly-respected Eastern European officers into the global shipping labor pool. Today, there are several hundred globally operating firms “who recruit crews for ships, most of them through sub contractors, based in the countries of origin. ‘Crew Managers’ as they often call themselves, arrange transport and accommodation in transit and payment of wages” (McConville 1997:102). An International Ship Managers Association (ISMA) advertises that “its members manage a total of 1,840 ships of 60m dwt of which approximately 1,500 fly Flags of Convenience” and that its 50,000 crew population is drawn from more than 28 countries (Lloyd’s List, 19 September 1994). This has raised serious concerns about both safety and labor safety standards. According to McConville, “little is actually known in detail about any aspect of the global shipping industry’s labour force” (McConville 1997:104). He attributes this to deregulation and the consequential reduction in public information. He observes, however, that Filipino, Croatian, Indian, Polish, Korean and other Eastern European and crews are preferred by the main users of FOC s: namely North European, North American and Hong Kong shipping owners. These ship owners, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 125 however, prefer officers that are “culturally cogent, ” the main ingredient of which is “English speaking” (McConville 1997:105-115). There are two significant international trends which are currently reshaping maritime labor today. The first is the united effort of shipping lines, shippers and ports to casualize and downsize maritime labor and make it conform to flexible, TQM (Time Quality Management), J-I-T and other post-Fordist labor practices currently characterizing much of the global economy. The second is the remarkable international unity of dockside maritime labor in resisting these pressures of global capital (Allen 1997). Longshore workers are facing what they have identified as a coordinated, concerted, and international attack by shipping companies against their traditional union rights (Baker 2001). The turn of fortunes for dockworkers in industrialized countries is starkly reminiscent of the struggles of the 1930s which, once won, turned these blue collar workers into the “blue bloods” of the labor force. In 1934 one writer reported that, “The tragedy of the dock labor is the creation of the casual worker, since the casual system carriers with it a whole train of evils which demoralize the worker and ruin his domestic life” (Hamilton-White 1934 quoted in Turnbull and Wass 1997:128). Ironically, the permanent technologically sophisticated labor force which replaced the 1930s casual worker is now being upended by a new regime of globalized, flexible production that once again requires a casual workforce. Labor’s current struggle is posted on union websites linked worldwide, educating labor about post-Fordist labor practice and organizing international Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 126 strategies for resistance. The most organized maritime labor is dock-side labor in the most industrialized Western nations, although the following analysis applies to the entire globalized transportation supply chain. If goods are produced somewhat irregularly, in smaller batches, on an as needed, just-in-time basis then the transportation needed for these goods must be similarly organized if it is to be efficient and cost-effective. In short, flexible production requires flexible delivery. If transportation workers are not hired on call, on short notice, as needed, then there is a tendency to have a surplus of labour at some times and a shortage of labour at others. This problem can only be overcome by rationalizing the transportation sector, the so-called ‘Liverpool solution’ what the dockers call casualisation (Baker 2001). What is most striking about dockside labor’s analysis of this aspect of globalization is their understanding that J-I-T labor practice heightens the importance of transportation in a globalized economy, and therefore the leverage of labor over capital. Thus, The lean firm produces and delivers just-in-time and therefore maintains minimal inventories. As a result it depends on transportation to an unprecedented degree. This dependence takes two forms. First, strikes and other forms of service disruption have a profound negative impact on lean production. Inventories are quickly depleted, just-in-deliveries are no longer just-in-time and the entire manufacturing matrix is thrown offline (Baker 2001). This fact is well understood by capital as evidenced by an article in an industry journal. Shipping companies, shippers and ports were yesterday warned that they should regularly check Internet sites used by trade unions to find out whether they could become the target of secondary strike action. U.S. lawyer Paul Heylmann of Schmeltzer, Aptaker & Shepard told more than 300 delegates [at the 6th International Symposium on Liner Shipping, held in Hamburg] that the unions had gone transnational, partly to circumvent national labour legislation banning secondary action. ‘The volume of union rhetoric on the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 127 need to act transnationally has increased dramatically in the past couple of years,’ he said. ‘It seems highly likely that labour's battles with management will be increasingly transnational,’ he said. (Check Internet for strike plans, warns lawyer. Lloyds List, March 23,1997). Heylmann was referring to the case of the International Longshoremen's Association, fighting non-unionized ports in Florida in 1990-91. Association representatives had gone to Japan and met Japanese union counterparts, requesting help in their dispute with non-union companies. As a result, the full citrus cargo to Japan was transferred to an unionized port. In 1997 several international labor actions took place in solidarity with fired Liverpool dockworkers. Dockworkers in twenty-seven countries and in over one hundred ports and cities worldwide staged solidarity actions, including illegal work stoppages. U.S. West Coast ports were shut down during the protests, as they did during the WTO protest in Seattle in 1998. The 1997 action initiated a string of conferences concerning globalization and the transportation industry, the first of which took place in Montreal and gathered dockworkers and their leaders from 17 countries and five continents (Price 1997). In dialectical fashion, however, this new-found labor leverage further motivates shipping lines to pressure labor unions at highly industrialized ports into concession bargaining. Currently, they are succeeding, as evidenced by the recent agreement ratified by the East Coast International Labor Association (ILA), and are likely to in the current negotiations underway between the Pacific Maritime Association (PMA) and the ILWU on the West Coast. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 128 International Seas and Globalized Transportation The extent of globalization experienced by the port-shipping industry can be deduced from the growth of cross-border economic activities of ocean carriers beyond transport’s original network function of currying goods to and fro internationally. Although shipping lines continue to be largely nationally based and even family owned (Lloyd’ s List, March 28,2001), there are two trends in particular which evidence globalization of the industry along the lines of (geographic) decentralization and (economic) concentration suggested by Sassen. Carriers have channeled capital through vertical integration into the ports anchoring their international operations (discussed above). The industry has also become more concentrated among fewer dominant shipping lines through mergers and global strategic alliances. International acquisitions and mergers among carriers have accelerated over the last decade and contributed to the transformation of a historically international industry into a globalized one. The single largest merger of shipping lines o date was achieved when Maersk Shipping, the core industry of the Norway based A.P. Moller conglomerate, acquired the U.S. shipping line founded by McLean, Sea-Land, to form Maersk-Sea-Land. American President Lines (APL), a USA line based in Oakland, merged with NOL of Singapore, in order to create a larger container business to compete effectively. P&O merged its container division with Nedlloyd, thereby creating P&O Nedlloyd. Wallenius, a Danish line, and Wilhelmsen, a Swedish line, merged to form Wallenius Wilhelmsen shipping lines in order to better Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 129 concentrate their Roll on/Roll off (Ro/Ro) services. This niche operator transports approximately 1.5 million cars and 300,000 Ro/Ro units per year worldwide, including to the Ports of Hueneme and Long Beach, with a fleet of about 70 vessels (Wallenius Wilhemsen website). Across the Pacific, Japan’s NYK acquired three Japanese container companies (Showa, Japan Line, Y.S.Line) in the 1980s and South Korean Hanjin Shipping Line acquired Korean Shipping line (Rimmer 1997a: 89). Mergers are motivated by the desire to acquire market share and strengthen core activities. Containerization and the great economies of scale it generated contributed to a long period of over-capacity in the industry. As carriers competed for economic growth that grew at a slower clip than the growth of the shipping industry, transport costs fell dramatically. In response, carriers invest even more in economies of scale to cut costs. These in turn return conditions of over-capacity. Although difficult to verify, one estimate suggests that ocean transport costs dropped to only an average one percent of the total cost of a product and profit margins as low as 5 percent, “roughly one-third that of the average company in the benchmark Standard & Poor’s 500” (Taggart 1999b). This is a key factor underlying the burst of mergers over the decade, which, according to the International Maritime Administration numbered eighteen in ten years. Alliances, mergers, and acquisitions are attempts to pool resources and spread the costs incurred by these floating behemoths. The restructuring of the industry has resulted in fewer and more dominant carriers as well as a greater variety of joint global operations which are significantly Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 130 globalized. Global alliances achieve boosted economies of scope through cooperative organizational networks which require little capital investment. Shipping lines pool resources by sharing container slots or cargo space at sea as well as terminal space at port. The standardization of oceangoing containers and handling equipment allows one ocean carrier’s containers to travel on another carrier’s vessels without operating penalties.. . By sharing capacity, one carrier can still serve a market even if it is not using its own ships (or supplement its own vessels) while the other can offset the cost of excess capacity” (Mercer Management Consulting 2001). Alliances allow more of each carrier’s cargo to reach more ports and therefore increase economies of scope for each carrier. The long tradition of carrier anti-trust immunity has been maintained throughout the present era of liberalization and “facilitated these arrangements by allowing the carriers to engage in wide- ranging discussions on operating matters” (Mercer Management Consulting 2001). (regulators unite article). This arrangement is an example of the flexible organizational structures facilitated by the great gains of information technology by the end of the twentieth century (Dicken 1992). It is often argued that these alliances are essential for smaller, often struggling lines based in developing nations, to operate on international routes. The sole international carrier in India, for example, The Shipping Corporation of India, can venture beyond domestic seas only because of its participation in a slot agreement with Zim Navigation of Israel and Yang Ming Line of Taiwan. Economic liberalization has resulted in more foreign ships calling on Indian ports and more branch offices of foreign lines in India, but not an increase in shipping trade for Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 131 Indian lines. In fact, the reverse seems likely. Segments of the industry once dominated by private or public Indian companies, from dredging to ship scrapping, are now challenged by foreign competition (see below). The demise of the Nigerian national shipping line has followed a similar trajectory, as has countless other national shipping lines. Merchant fleets in the industrialized world have experienced decline for starkly different reasons, beginning with high labor costs and benefits. Global alliances operating primarily out of the Pacific Rim are among the largest and most concentrated (see carrier market share above). United Alliance is all Korean, but Grand Alliance and The New World Alliance (TNWA) cross national borders. In addition, the TNWA operates three services with the largest container shipping line in the world, Danish Maersk-SeaLand, all within North American port range. The vast majority of top earners also continue to contract slot spaces or strings with other top carriers. These are quite numerous and represent a great variety of overlapping patterns. One of the largest unites American President Lines (APL of Singapore) east-bound Pacific Rim service with London based P&O Nedlloyd. Table 4.12 Global Alliances Grand Alliance United Alliance New World Alliance Hapag-Lloyd (German) Hanjin (Korean) American President (Singapore)* Orient-Overseas (H.K.-China) Cho Yang (Korean) Hyundai (Korea) NYK (Japan) Senator**(Korean) Mitsui O.S.K. (Japan) *(Container Subsidiary of Singapore’s Neptune Orient Group) **(Hanjin Subsidairy) Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 132 These strategic alliances are unstable and often shift due to the weak form of cooperative organization they are based on. Thus a number of smaller members of the Grand Alliance, for example, exited after 1998, and the Global Alliance was destabilized by mergers among its members. Alliances rationalize carrier services through the agreement to share slots (container space) on competitor’s vessels. According to the Mercer Group Report of 2001, “[i]n January of 2000, “four global alliances plus Evergreen and Maersk Sealand together provided an estimated 87 percent of the total eastbound trade capacity.” (The Mercer Group indicates that this share had dropped by 4% within the same year, due to the entrance of smaller non alliance carriers who took advantage of the crowded west-bound lanes and high rates.) The consolidation of shipping lines and their alliances have also had the important effect of “increasing the degree of concentration in the port system and led to the rise of load-centers (or super) ports in the Pacific Rim (Rimmerl997:89). According to the Mercer Report, however, “Alliance strategies may influence choices of port within a region, but not the choice of region” (Mercer Management Consulting 1998). The latter is still tied to regional and global economic factors (see Chapter 3 for a port taxonomy). Macroeconomic View of Regional Centers of the Shipping-Port GCC In general, each linkage of the port-shipping GCC is clearly based in a particular national region and is economically concentrated, meaning a relatively few Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 133 economic actors command a significant market share of the global business. Storper’s finding that local geographic agglomerations are necessary for competitive sectors of industry seems to be germane for high-value industrial links, such as shipbuilding. High-value service linkages, however, appear to be less geographically contained, particularly among carriers as evidenced by alliances, and also in terms of the teams pulled from the most advanced regions of the world to provide a service package in complex linkages such as port construction. A macroeconomic overview of the geographic niches of the primary linkages of the port-shipping GCC clearly demonstrates the dominance of TNCs, whether nationally supported or not, based in the United States, Europe, and Asia. The globalization of the port-shipping GCC is characterized by the geographic dispersal of operations (only considered according to continent in the chart below) and markets on one hand and the economic concentration of capital in particular industry linkages situated in regional bases on the other. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 134 Table 4.13 Shipping Line Commodity Chain by Dominant Region Infrastructure and Operations Shipping Tonnage: Seafarers: Broking and Chartering Ports Shipyards Shipbuilding Shipbreaking Marine Equipment Dredging Services Sector Shipping finance Insurance and Legal services Information and Research IT and Internet Asia Asia Europe Asia Asia Asia Europe Europe Europe Europe Europe USA, Europe, and Asia (in same order) Data Source: imaritime Consulting (Website). Hugo Radice suggests that, “the whole history of world capitalism” be viewed as a complex combination of tendencies towards 'globalism' and 'nation- statism.' In this view, both the political and geographic boundaries of the nation-state are not impermeable barriers but fluid points of articulation between the international and the domestic sphere (Radice quoting Picciotto 1996:7). From this perspective, the phenomena defined as 'globalization' by both its advocates and its critics, can be viewed as "a process of breakdown and restructuring of the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 135 articulation between the national and the international" (ibid.) What Radice observes at the global level of capital is consistent with the findings of this international overview of the port-shipping GCC. Each segment of the GCC is strongly regionally-clustered, and strengthened rather than weakened by partnerships with each other as well as with smaller state capital or firms. “The growth of the largest firms, supported by their home states, centers on the oligopolistic exploitation of home-based advantages in largely separate national or regional markets.” In addition, investment stocks and flows are “overwhelmingly sourced from and directed to the 'triad1 of North America, Europe and Japan, each with privileged access to a 'client' region.”1 2 (Radice 1996). 1 2 One industry website tracks the myriad o f multi-national deals cut within this triad, as just a two examples will indicate: (1) “A. P. Moller, Euronav, Frontline, Overseas Shipholding Group, Inc., Osprey Maritime and Reederei "Nord” Klaus E. OldendorfFhave agreed to establish "Tankers International LLC" ("Tankers") to pool their VLCC fleets. Chartering negotiations will be conducted through London with a chartering representative in New York and Tokyo. E. Michael Steimler, currently President o f Euronav, will be the new company's CEO” (February 15, 2000, www.marinelog.com/), and (2) Submarine cable installation and maintenance specialist Global Marine Systems Limited o f the U.K. has concluded an eight year agreement with the Msersk Supply Service, part o f the A.P. Moller group. It covers for the long term provision o f four new cable ships currently being built by Volkswerft Stralsund, Germany. The yard is a subsidiary o f the A.P. Moller group. Global Marine Systems will provide the cable working expertise... and A.P. Moller will provide the marine crew and vessel management” (December 14, 1999 www.marinelog.com/). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 136 Chapter 5. The West Coast Port Nexus in the Ocean Transport Global Commodity Network (GCN) The National and Regional Macroeconomic Context of the GCN Although different regions of the world may be linked together by a variety of transportation modes and routes, U.S. foreign trade is concentrated through the gateways of U.S airports and seaports. “The United States is the world’s most active trading nation, accounting for one billion metric tons or nearly 20% of the annual world ocean borne overseas trade” (MARAD website 2001). International trade activity has accounted for approximately one-fifth of the USA $7-9 trillion gross domestic product (GDP) for at least a decade. Certainly, the most time-sensitive and valuable commodities are transported by air, but in general, U.S. foreign trade travels by sea.1 Ocean going vessels move greater than 95% of U.S.A. overseas trade by weight and 75% by value (AAPAports.org - 2001)2 . This reliance of U.S. international trade on the maritime industry is long-standing due to the country’s continental location and the strength of its economic ties to overseas trading 1 According to the Mercer report, “seaborne tonnage o f U.S. domestically produced goods into and out o f West Coast ports exceeded that for internationally traded goods in 1996” by 8,2%. However, “(t)otal tonnage gains for both inbound and outbound shipments will come almost entirely from foreign trade...” (Mercer Consulting 1998). 2 The American Association o f Port Authorities (AAPA) represents greater than 150 public port authorities in the Western Hemisphere spread across the U.S., Canada, Latin America, and tire Caribbean. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 137 partners3 . U.S. waterborne trade growth rates have continued to keep abreast of or outpace U.S and world economic growth into the new millennium4. In general, the transportation sector is driven by trends established in the larger macroeconomy. Evidence for the United States indicates the positive relationship between these growth rates and the growth of the international sector of U.S. GNP. Table 5.1 US GDP Components 10,000 > , 0 0 0 > ,0 0 0 7,000 C 9 Trade In Goods & Services > . 0 0 0 o o K Ot a o M C o 4,000 a 3,000 2,000 1,000 1970 1975 1980 1985 1990 1995 1999 Source: Mercer Consulting 2001 3 In 1988, for example, 95% by weight o f U.S. foreign trade was also carried by the maritime trade {The Atlantic May 1988 v261 n5 p25(5). 4 “U.S. oceanbome foreign trade grew from 674 million long tons to 897 million long tons between 1985 and 1994, or at an average annual rate o f 3.7%.” World economic growth over the last decade has averaged 2.7%-3.5% (United States House Committee on Transportation and Infrastructure. 1996:261). From 1992-2001 the world economy has grown at an average of 3.4% and the USA at 3.6% (Biter 2001). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 138 Over the past 30 years, international trade has grown more quickly than the economy as a whole. In 1970 the U.S. international sector accounted for 11% of GDP. By 1997, it’s share of GDP rose to 25% (Mercer 2001). The contribution of international trade to U.S. economic activity has risen especially rapidly during the past decade3 . According to a recent monthly report of the FDIC, the value of goods and services traded on international markets has more than doubled during the past decade, as “more goods and services than ever are being shipped abroad and imported from all parts of the globe” (Website). As a consequence, U.S. economic activity is increasingly influenced by the flow of goods, services, and capital across national borders. Table 5.2 Trade as a Share of GDP 25.0 20.0 15.0 c « I 10.0 5.0 1970 1975 1980 1985 1990 1995 1999 Source: Mercer Consulting 2001, Exhibit III-4. 5 The following information is gleaned from the FDIC San Francisco Regional website. E J Imports B Exports Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 139 It is relevant to the present study on ocean cargo transport to note that trade in goods still dominates U.S. foreign trade, despite the impressive gains in trade in services. The import share of goods imported to goods exported is 3:1 over the last decade. Merchandise accounts for about 73% of total exports and includes manufactured goods, agricultural products, and raw materials such as metals and oil. The services component of exports, which includes actual freight and port services, as well as travel services, passenger fares, royalties, and a number of smaller sectors such as financial and educational services, accounts for about 28% of total exports. Merchandise is the largest component of imports, accounting for 83%, while services account for 17%.6 However, imports dipped from double-digit growth rates during 1990-2000, while exports have been up since 19987 (Magaddino and Gruber 2001), although both are slowing considerably since the onset of current recessionary economic conditions. International Trade is Concentrated Regionally and by Industry Several key regional and industrial factors figure tremendously in the microeconomic configuration the West Coast port trade. A brief overview of them will provide some of the macroeconomic context necessary to understand the West Coast nexus in the larger shipping global commodity network. 0 Imports also account for a growing share o f U.S. consumption o f goods and services, exceeding 15% o f U.S. GCP in 1999, up from 6% in 1970. 7 Exports, which include both merchandise and services, have risen from less than 5 percent o f U.S. gross domestic product (G D P) in 1970 to approximately 12 percent today. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 140 The largest share of U.S. trade is concentrated among a small number of countries: Canada, Mexico, and Japan account for more than 40% of merchandise exports and imports8 . Asia (excluding Japan) and Western Europe each account for just over 20% of U.S. exports and a broadly similar share of imports. Central and South America, despite proximity to the U.S., account for less than 10 percent of exports and only 5 percent of imports (FDIC website). Clearly, the explosive growth of U.S. trade with Pacific Rim countries over the last two decades is responsible for the great significance of the West Coast port hubs to U.S. foreign trade as a whole. In 1970, North American (the U.S. and Canada) trade volume with the European Community (EC) was almost twice as large as its trade with five leading Asian nations (Japan and the Four Tigers of South Korea, Taiwan, Hong Kong, and Singapore)9 . While North America's trade with the EC increased almost nine-fold, from $27.5 billion in 1970 to $229 billion in 1995, its trade with Japan surged thirteenfold, from $13 billion to $186 billion, and its trade with the four Asian Tigers shot up almost 70 times, from a meager $1.8 billion to $125 billion during the same period. As a result, North America's trade with these five Asian countries alone today exceeds its trade with the EC by more than 20 percent. Pacific Rim port traffic was also spurred by Japan's trade with the Asian Tigers which experienced a thirty threefold increase, from $3.3 billion to $109 billion, during the 1970-1995 period. 8 According to the U.S. Department o f Census Website(5/20/01), the bulk o f the U.S. international deficit o f $31.2 billion was derived from four o f these leading trade partners: Japan (with a goods deficit o f $6.2 billion, March ’01), China ($5.7 billion), and Mexico ($2.8 billion). 9 This portion o f data is culled from Kotabe, Masaaki, 198:109). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 141 U.S. trade with Asia is highly concentrated between particular Asian countries and U.S. regions. In 1997 30% of all U.S. merchandise exports to Asia ($183 billion of the $617 billion total) were sold to 11 Asian countries: China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, and Thailand. These accounted for 7.6% of GSP in the Pacific Northwest and 4.3% of GSP in the Pacific Southwest, compared with only 2.4% nationally” (Mercer Update 1998:V-2). Nearly three-fifths of the Pacific Northwest’s exports and half of the Pacific Southwest’s exports are sold to Asian markets (Mercer Update 1998:V-4). Within regions, trading relationships with Asian countries vary widely. In the Pacific Northwest Asian exports range from about 1% of GSP in Wyoming and Montana to 10-11% in Washington and Alaska. Washington’s major export is Boeing aircraft, while Alaska’s is fish, petroleum, lumber, and metals. Oregon, California, Arizona, Idaho, and Utah have a strong trading relationship with Asia in exports of electronics, computers, and industrial equipment, as well as some lumber and metals. Other regions have weaker trading ties exist for other U.S. regions. Merchandise exports to Asia from the Middle Atlantic, South Atlantic, and East South Central regions represented just 1.2-1.3% of GSP in 1997. These regions rely on air, the U.S. mini-land-bridge (intermodal rail across the continental United States) or an all-water route through the Panama Canal for trade with Asia. This would indicate that relative geographic proximity which is facilitated by efficient transportation facilities are a paramount factor in international trade linkages for Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 142 commodities lacking import or export economies of scale. (Other critical factors, such as immigration and cultural linkages, are certainly relevant as well). California is the largest exporter to Asia, selling $53.6 billion of merchandise in 1996, the equivalent of 5.5% of the state’s gross state product (GSP). Californian high-tech industries are “highly integrated with Asian buyers and suppliers.” (Mercer Update 1998:V-5) Electronics, computers, and machinery account for more than half of the state’s exports. Exports of high-tech products such as these are especially vulnerable to Asian economic problems (Mercer Update 1998 V-4). Data utilizing metropolitan statistical areas indicates the degree to which particular industries, such as North California Bay high value electronics, are tied to Asian economies (MSAs). In comparison, Washington and Texas are the next largest exporters to Asia with respective sales of $17.0 billion and $14.5 billion. Major exports from Texas include electronics, industrial machinery, and chemicals. The Asian market is In 1995, when the collapse of the Mexican economy cost Texas 8% in exports, it boosted its exports to Asia by 43% and they have remained steady. California, Washington, Oregon, and Arizona are among the top ten states that export to East Asia. California exports to Asia, i.e. of DRAM chips, fell precipitously (11.7% in the first quarter compared to previous year). Washington’s exports of aerospace products to Asia were limited to fulfilling contracts already in the pipeline.1 0 1 0 Western companies reacted to Asian crisis by looking toward Mexico, Canada, and EC. Sales to Mexico (up $1.82 billion or 25.6%) and the EC ( up $1.04 or 21.2%)) “more than compensated for declines in exports to East Asia” (Mercer 1998:V-6). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 143 Southern California’s top trading partners are unequivocally in the Pacific Rim. According to one Los Angeles Economic Development Commission report, “the ‘new’ Los Angeles’ economy is more globally centered (than) U.S. centered” (Kyser, 1997). Californian international trade is concentrated on Southern California, which keeps approximately half of all the trade it hauls in by sea for use in the five county Southern California region1 1 . If ranked as a country, this region would be eleventh on the world scale of GDPs. Although banking and corporate headquarters tend to flock further north, Southern California attracts substantial FDI and foreign trade activities due, to a significant degree, to its extensive and world-class transport infrastructure. The region’s only fully international airport, LAX, is the world’s fourth busiest passenger and second busiest (by tonnage) cargo airport.1 2 Three transcontinental rail lines, operated by two Class 1 Rail Roads (the recently merged Burlington Northern Santa Fe (BNSF) and Union Pacific/Southern Pacific systems), and three major freeways link the region to the rest of North America (Eerie and Rodrigues 1996:14). The mammouth ports enable Panamax and post-Panamax cargo ships to distribute their massive cargoes via the recently opened Alameda Corridor, which sets a new standard for intermodal linkages. The global city region hub ports 1 1 According to research conducted by Thomas Vest for SC AG, the five counties o f Los Angeles, San Bernardino, Riverside, Ventura, and Orange cover 34,000 square miles, bigger than 4/5 o f all states, and is home to more of the U.S. population than any state, including the rest o f California, except for New York and Texas. Together they make up four metropolitan statistical regions (MSR) o f Southern California. The MSR index is used by in federal economic reports such as the Export Locater Series (unpublished paper). 1 2 According to LAX website (2001), LAX is the nation’s leading Pacific Rim air gateway, handling 32% o f all Asian inbound and outbound passengers, and 26% o f the West Coast cargo market by weight and 44% by value. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 144 of San Pedro serve as the Pacific Rim’s leading transshipment center, particularly for imports. The specific profile of this trade in terms of cargo content and foreign country partners will be examined in the case study of the West Coast ports presented later in this chapter. International trade through the West Coast ports is clearly concentrated within the Pacific Rim by shipping lines, cargo and commodity type, and import origins and export destinations. It is also profoundly lopsided: import tonnage is triple the size of export tonnage. The details of these trade flows and sources of concentration are discussed in the next portions of this chapter. The West Coast Port Global Interface: The Regional Macroeconomic Context of the West Coast Ports The U.S. has an extensive water transport system which includes 400 ports and 4000 marine terminals situated on over 25,000 miles of navigation channels1 3 . Most cargo channeled through this vast water network is concentrated through a small percentage of seaports. The rest of the system serves predominantly local and recreational needs. In 1998,150 commercial port authorities handled over 99% of all cargo tonnage (Pouch 1998). According to the Census, $1 trillion representing 1 trillion tons of international cargo is carried on these oceanic waters (Department of the Census website). Currently, 44% of the world’s merchant fleet calls at U.S. ports 1 3 According to a report published by Gateway Cities Partnership, Inc our scientific knowledge about our coastal waters is miniscule. NOAA (National Oceanic and Atmospheric Administration) is responsible for mapping 95,000 miles o f coastline and 3.5 million square nautical miles o f ocean. One-half o f ail water depths calculated for most critical 43,000 sq miles based on pre-WWII data. One-third o f the US shoreline has never been mapped by NOAA and one-fourth o f the rest was mapped prior to 1970. Only 10% of shoreline data has been produced digitally. (Richard Hollingsworth 2000). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 145 and 99% of them fly foreign flags (MARAD website 2001). They frequent the top twenty ports which received approximately 75% or more of the vessel calls to all U.S. ports in 1994 (U.S. Dept, of Transportation 1996:243). The workhorses of the transport system are a mere dozen coastal ports who send or receive the voluminous trade accountable for the U.S. title as the world’s most active sea-trading nation. Container traffic is the fastest growing and most valuable cargo of all port trade. Container ports represent the most concentrated sites of international cargo through-put. This is attributable to the steep capital investment containerization requires in complementary technology, port infrastructure, as well as conducive macroeconomic conditions which erect high barriers of entry to the containerized port market (see port taxonomy). In 1994 twenty-five of the country’s container ports handled 97.5% of all foreign container traffic. The top ten handled 79% of this traffic, and, most notable for the present study, four of the top five U.S. container ports are located on the West Coast (U.S. Dept, of Transportation 1996:242).1 4 West Coast Ports: Comparison and Competition The West Coast ports are preeminent international nexuses in the greater global commodity networks they serve, especially those crisscrossing the Pacific Rim. Two-thirds of all West Coast international tonnage travels along trans-Paciflc trade routes. The voluminous growth of valuable Pacific Rim trade since the 1980s has catapulted the West Coast ports, and in particular the GCR-hub ports of Southern California, into critical platforms for globalized production and trade. 1 4 49% of all U.S. container traffic moved through the West Coast (Mercer Management 1998). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 146 International growth rates through the West Coast outstrip domestic growth rates by 3:1. Interestingly, the West Coast “has historically been an export market” (POLA Report 1995). Due to the growth in containerized trade, however, the value of West Coast imports now dwarf export values. Import value is over 2.5 times that of export values. U.S. containerized trade is especially concentrated through the West Coast ports. Together they handle one-half (49.1% in 1996) of all U.S. domestic and foreign container traffic. It should be noted that although approximately half (52%) of the total volume of trade passing through the West Coast ports is domestic, it is limited to a few bulk cargoes.1 3 In contrast, only 9.7% of total TEUs (containers) passing through these ports represent domestic trade, most enroute to Alaska or Hawaii. In addition, container traffic amounts to approximately one-third of all foreign tonnage moving in and out of West Coast ports in 1996 compared with only 11.5% for the U.S. as a whole (Mercer Update 1998:V-11). Container imports are projected to increase exponentially over the next two decades, although all other cargo traffic growth is projected to remain under 4%. The highest international volume and value share of all U.S. ports is moved through the Southern California San Pedro hub. The Pacific Rim’s Gateway to the U.S.: The San Pedro GCR-Hub Ports Two ports, the twin ports of Los Angeles and Long Beach, share the San Pedro peninsula and combine to form the international gateway to the U.S. from the 1 5 A SCAG study conducted in 1995 found that fully one-half of the region’s international trade activity involved imports to and export from other states. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 147 Pacific Rim. These ports, like most U.S. ports, operate as land-lords to shipping lines which lease terminals and facilities.1 6 Taken together the San Pedro Bay ports are ranked third in the world in terms of both tonnage and value and are the busiest in the United States (see Chapter 3). The San Pedro ports handle approximately one- third of all U.S. import cargo value and nearly one-half of total U.S. cargo value. In 2000 just under $100 billion worth of merchandise passed through the Long Beach docks alone (POLB web site). According to Containerization International magazine it was the world’s sixth busiest container port in 1999, handling 4 million TEUs (twenty foot equivalent container units). That year, the San Pedro ports combined moved over 8 million (8,237,300) TEUs in 1999. In comparison, the reigning giants of container trade are the transshipment hubs of Hong Kong and Singapore, which each easily move nearly four times as much (over 15 million TEUs) annually. The San Pedro ports dominate the West Coast ports by nearly any standard.1 7 They account for 51 % of all West Coast imports and 32% of West Coast exports, up from 50% and 30% respectively in 1995. Transshipped imports, dependent largely on the San Pedro ports, represented two-thirds of the total value of the Los Angeles Customs District trade in 1995. In 1997 total two-way trade value through 1 6 Both Wilmington and San Pedro were separate cities until annexed by Los Angeles in 1909 (For more historical information see Queenan 1986 and The American Association o f Port Authorities many Seaport Histories including Ports o f the Americas 1961). 1 7 With the exception o f drybulk export tonnage. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 148 the district amounted to $170.1 billion (Kyser 1997)1 8 . This represents the largest import share in the nation (Erie and Rodriguez 1996:46). As expected, San Pedro dominates West Coast trans-Pacific trades. The San Pedro ports capture 59% of imports and 30% of exports to Asia. The linkage between San Pedro and Asian containerized trade is dramatic: over 80% of the port’s container volume moves to or from Asia. A full quarter of the value of all U.S.-Sino trade is contributed by San Pedro traffic and continues to grow. The overall container trade at San Pedro is growing at 14% per annum, in comparison to the average world container growth rate of 8% (Mercer Management 1998). 1 8 The second largest district was New York, with $155.8 billion. This was followed by Detroit ($129.6 billion), San Francisco ($105.5 billion) and New Orleans ($87.1 billion) according to the report. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 149 S 1~ 2 C#» C C 5 L © o O c c cd n £ n x. a O c O £ o. o o o w Eta n tE ts p s ^ ■ c o “■ u «M . . W tt < o 2 w > o H S to a 3 Q > C .S»5« I t + J o c • * - ■ o o O Q . t O ^ i . ^ , C L . c£*x: |^ ,t k % , ! A Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 150 Overall growth rates at San Pedro over the last decade have been astonishing. In 1999, the Southern hub ports were responsible for $180 billion (about $90 billion each) of annual trade. For the ports this was 175% more than was shipped in 1990 and over a nine year period represents a 247% increase. Their growth outstrips the U.S. average port growth or that of any other U.S. port. Between 1988 and 1996 the San Pedro share of total U.S. foreign inbound TEUs rose from 28% to 41% (Mercer Management 1998). A 200% increase from 1996 levels was projected to be achieved by 2020, however, such an increase is already on the horizon according to more than one analyst (Hollingsworth 2001, Los Angeles Economic Development Commission, 2001 LAEDC newsletters, San Pedro port brochures). The recessionary trends building up over 2001 are likely to undermine some of these gains, but currently the ports identify chronic landside congestion as their primary problem (ILWU Town Hall Meetings 2000 and 2001). The two San Pedro ports compete for carrier business within the global shipping commodity chain, but share many infrastructural costs, such as the Alameda Corridor1 9 , which are essential to their shared gateway stature. Their shared unique commodity, entry to the Southern California global city region (GCR), has prompted a relationship characterized by sharp competition on one hand, and cooperation on 1 9 The Alameda Corridor was launched in 1985 by the U.S. Army Corp o f Engineers, in cooperation with the San Pedro ports, as part o f the 2020 plan. It was estimated to cost $2 billion and aimed to “create the largest integrated marine-highway-rail transportation hub in the world”(Eerie and Rodriquez 2000), (see Glossary). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 151 the other2 0 . The largest shipping lines all have a terminal at either one San Pedro port or the other (see comparison below), and intermittently swap sites, as Maersk- Sealand will do when it leaves Long Beach in order to move into its new mega terminal in Los Angeles in late 2001. As sharp as the competition between the two ports may be, it is softened by the long queue of shipping lines desiring a shrinking number of terminal slots at San Pedro. “Shrinking” because both ports are restructuring to transform current terminal space into “mega-terminals” in response to the globalization of shipping lines which has birthed mega-shipping lines and mega-alliances. Long Beach, for example, has COSCO lined up to fill the Maersk- Sealand terminal, after some mega- renovation, of course. Table 5.3 Sample Comparison of San PedroTerminal Tenants - 2000 Port of Los Angeles Port of Long Beach American President Line Pacific Container Evergreen Container Maersk-Sealand Container General American Trans. International Transp. Co. Yangming Container Hanjin Container Nissan Toyota Mobil, Shell, Union Oil Texaco Oil Rio doce Pasha Pacific Banana, Chiquita U.S. Borax Pacific Coast Cement The particular line up of terminal tenants has little impact on San Pedro port traffic. Long Beach handles approximately 45% of Mexican and Latin American 2 0 The Long Beach-Los Angeles rivalry was fiercest in the 1960s and 1970s when Long Beach, which had lost ground to Los Angeles’ superior container service, fought to take over Los Angeles’ cargo freight by underpricing terminals under long leases. By the 1980s cooperation outpaced competition as parity was achieved. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. cargo, whereas Los Angeles handles approximately half as much of this trade. This is due, in all probability to the choice of shipping lines carrying this trade. In general, the ports serve the same geographic regions, much of the same cargo, and many of the same shippers (importers and exporters). In effect, the San Pedro ports comprise a duopoly due to their status as the global city regional load center for the West Coast of the U.S.A. The macroeconomic pull exerted by the ports’ GCR host of Southern California is unique and cannot be engineered by any microeconomy at the port industry level. It pulls in both foreign imports and domestic exports, known as discretionary cargo, which logistically could be routed through other ports. A comparison of patterns of cargo routing through West Coast ports illuminate the position of the San Pedro GCR-load center status in comparison with the niche ports of San Diego and Hueneme, and the export reliant Pacific Northwest hub consisting of the three ports of Tacoma, Seattle, and Portland. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 153 West Coast Port Comparison The dominance of the San Pedro share of West Coast port volume is entrenched enough to trigger a virtuous circle effect, ceteris paribus. In the year 2000 the West Coast total TEU volume surpassed 16 million. The San Pedro Bay ports handled 9.48 million TEUs in comparison to the four Pacific Northwest ports combined total of 4.31 million (Mercer Management 2001)2' A comparison of port volumes and market shares are illustrated in Tables 5.4 and 5.5. 2 1 In 1995, San Pedro ports handled greater than half of the market share of 94 out o f the leading 188 West Coast commodities. If anything, this trend has intensified (POLA 1995, Mercer Management 1998). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Table 5.4 West Coast Port Volumes 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 West Coast Total 7 ,781,848 8 ,325,009 8 ,691,375 9 ,932,259 10 ,432,399 10,888,248 11 ,921,044 13,141,001 14,368,040 16,028,800 San Pedro Bay 3,806,361 4 ,098,680 4 ,398,409 5 ,092,445 5 ,398,846 5 ,750,136 6 ,464,318 7,475,887 8 ,237,330 9 ,480,215 Los Angeles 2,038,537 2,269,223 2,318,918 2,518,618 2,555,344 2,682,802 2,959,715 3,378,198 3,828,850 4,879,428 Long Beach 1,767,824 1,829,457 2,079,491 2,573,827 2,843,502 3,067,334 3,504,603 4,097,689 4,408,480 4,600,787 Northern California 1 ,194,718 1,291,494 1 ,305,134 1 ,491,002 1,549,886 1 ,498,202 1,531,187 1,575,406 1,663,756 1 ,776,922 Oakland 1,194,718 1,291,494 1,305,134 1,491,002 1,549,886 1,498,202 1,531,187 1,575,406 1,663,756 1,776,922 Pacific Northwest 2,735,024 2 ,864,187 2 ,924,866 3 ,282,616 3 ,395,823 3 ,466,732 3 ,654,743 3 ,799,034 4 ,124,310 4 ,318,141 Seattle 1,154,854 1,151,261 1,151,405 1,414,950 1,479,076 1,473,561 1,475,813 1,543,726 1,490,048 1,488,020 Tacoma 1,020,707 1,054,449 1,074,558 1,027,928 1,092,000 1,074,000 1,159,000 1,156,000 1,271,000 1,376,000 Portland 175,900 217,422 239,439 317,961 329,747 302,171 294,930 259,308 293,262 290,943 Vancouver 383,563 441,055 459,464 521,777 495,000 617,000 725,000 840,000 1,070,000 1,163,178 Mexico 45,745 70,648 62,966 66,196 87,844 173,178 270,796 290,674 342,644 453,522 Manzanillo 32,800 50,400 50,900 63,800 86,900 172,000 256,000 276,400 321,900 426,700 Ensenada 12,945 20,248 12,066 2,396 944 1,178 14,796 14,274 20,744 26,822 Source; AAPA and Port Authorities Source: Mercer Management 1998:Exhibit IV-2. Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Table 5.5 West Coast Market Shares Z ) L U I- o o □ San Pedro Bay □ Northern California □ Pacific Northwest □ M exico 100 % 90% 80% 70% 60% 50% 40% 30% 2 0 % 10% 0 % 1 % 35% 1 % 34% 1% 34% 1 % 33% 33% T % ~ 32% ~ r % - 31% TST 29% ~nr 29% -9*- 27% 1991 1992 Source: AAPA and Ports 1993 1994 1995 1996 1997 1998 1999 2000 Source: Mercer Management 1998:Exhibit IV-2 U l The San Pedro Bay ports have remained dominant due to both the large local market and the carriers’ practice of routing inland intermodal cargo through first ports of call in Southern California. The Pacific Northwest ports of the Puget Sound have the second largest combined share, due more to the flow of intermodal cargo (especially at Tacoma) than to local market size. Seattle growth prospects are limited due to its location between industrial and urban areas, and although Tacoma is developing its facilities considerably, it handles only 1.37 million TEUs annually. The Northern California port of Oakland has undertaken substantial improvements to its site and with the decline of San Francisco does not have any significant regional competition. Oakland does, however battle for the same discretionary cargo as the Northwest and Southern hubs. As the only major port in Northern California, Oakland has more volume than any of the individual Pacific Northwest ports, but does not handle as much intermodal traffic and therefore serves a regional cargo base. Oakland is currently developing significant intermodal linkages based on its ambitious Vision 2000 plan. The Mexican ports are discussed below. As long as San Pedro maintains its capacity vis-a-vis trade growth rates, there is little chance that the South Bay will lose its position of load-center. The ports certainly plan to maintain their share. According to the U.S. Maritime Administration statistics, capital expenditures for the San Pedro hub and the New York/New Jersey hub on the East Coast will absorb 40% of the projected $8.3 billion in port improvements U.S. ports are projected to spend through 2004 (Appendix B). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 157 As Table 5.5 shows, the San Pedro market share has risen as those of the Pacific Northwest and Northern California have declined (Mercer 2001 update). This is a result of the San Pedro ports capturing ever larger shares of West Coast cargo growth. Ports compete for carrier terminal tenants as well as carrier vessel calls. Each major steamship line or alliance maintains multiple transpacific services, and each port would like to be included in as many services as possible. This competition is inter-regional, since carriers usually call at only one port in each region. Alliance members, however, may spread their calls between one or more ports in a region based on the prior port associations of the alliance members (Mercer Management 2001). West Coast port competition takes place for regional, niche, and discretionary cargo trade. In general, the two San Pedro ports (of Los Angeles and Long Beach) compete against each other, for both regional and discretionary cargo, but only against the Pacific Northwest ports (of Tacoma, Seattle, and Portland)2 2 for discretionary cargo. As mentioned, the San Pedro ports grip on discretionary traffic has tightened over the decade as its role of West Coast GCR-based load center has become entrenched. Their dominance as the Pacific gateway into North America is currently unassailable. Throughout the 1990s major carriers have sent at least one- half of cargo through San Pedro (50-60%), and split the remainder between Northern California (10-20%) and the Pacific Northwest ports (20-30%) (Mercer Management 1998). In addition, intermodal transshipments are ensured of an “all weather” route 2 2 The Pacific Northwest ports have an advantage for intermodal traffic heading to the upper Midwest. Nonetheless, San Pedro has made gains in this traffic, at the expense o f the Northwest ports (Mercer Management 1998). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 158 by choosing San Pedro.2 3 About 80 percent of the traffic between Asia and the U.S. East Coast moves via West Coast mini-land bridge. Other West Coast Ports The survival of niche ports is predicated for the most part on bulk trades. Niche ports are distinguished between north and south and imports and exports. Northern Pacific niche ports specialize in bulk exports, particularly heavy and massive breakbulk. The Southern Pacific niche ports of San Diego and Hueneme have little export traffic, but have developed specific commodity niches with particular motor companies (see section on Shippers below). The only container trade niche ports engage in is the refrigerated container trade servicing meat, fruit and vegetable companies. Their participation in this trade is relatively small however. According to the public relations representative at the Port of Hueneme, “location, location, location” is the recipe for successful niche ports. In the case of Hueneme it is its proximity to San Pedro which stakes out is location success. These ports do not pose any threat to other hub ports. The two satellite ports of Southern California at Hueneme and San Diego, for example, handle only 2% of west coast total shipping (versus the San Pedro share of 50%). “For niche ports, the price tag for becoming a major competitive port is prohibitively expensive. For 1993-97, the nations’s top 10 ports spent an average of $400m each for new facilities”(Mercer 2 3 The San Pedro Bay has a 500-600 nautical mile disadvantage versus the Puget Sound and a 300-500 nautical mile disadvantage versus the San Francisco Bay (Mercer Management 1998). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 159 Management 1998:13). Hueneme specializes in the import of citrus, passenger cars, some heavy Ro/Ro (roll on/roll off) equipment, and wood pulp. It handles over $3 billion worth of cargo a year. Both the Port of Hueneme and of San Diego have successfully developed a shipping specialization in the import of roll on/roll off commodities such as automobiles and the import (South American fruit) and export (citrus) of produce. San Diego has indicated its desire to develop a global container port, but lacks the financial wherewithal necessary. Its channel would require dredging to reach the 46 feet, and its lack of adequate terminals, piers, crane facilities as well as the absence of intermodal container and dirct rail access to the East, cannot be easily overcome. In 1996, San Diego handled $818 million in cargo value (versus $152 billion at San Pedro). It is currently highly successful as a niche port for specialized cargo, most prominently, automobiles, fruit, and vegetables. Honda has agreed to make San Diego its primary port of entry, and the port offers at least one international carrier who sends smaller container ships through and on to South America before returning to Asia. Although the local time of San Francisco is still featured on clock faces around the world, an artifact of its golden years as the once dominant port of the West Coast,2 4 the port has declined into a niche export port for tobacco products and wine and spirits. It is hemmed in by urban development, limited ability to dredge its 2 4 As a symbol o f regional significance in the world economy, however, these international cloaks still ring true: the North Bay’s prowess remains, only now expressed in the new high value-added services o f banking, finance, and telecommunications which arguably drive the global economy today. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 160 shallow waters and so has been superceded by Oakland. San Francisco, like its larger northern neighbor, relies on bulk export revenues. The only international rivals to the West Coast ports are Canada to the north and Mexico to the south. The latter currently poses little threat to the colossal San Pedro ports, but the U.S. Pacific Northwest ports are losing some Canadian trade they once transshipped. The Pacific Northwest ports, must also battle Canadian ports, in additional to the San Pedro ports, for discretionary cargo imports into the United States. The Port of Vancouver includes three container terminal complexes: Vanterm, Centerm, and Delta Port. A total of 15 transpacific services reportedly call direct at the Port of Vancouver. The Vancouver Port Authority reported that its container traffic increased by 8.7 percent in 2000, to 1.16 million TEU. Total inbound TEU grew 6 percent to 543,851 TEU. Outbound TEU climbed 11 percent to 619,327 TEU (Mercer Management 2001). The strength of the Pacific Northwest ports of Tacoma, Seattle, and Portland is less their status as container ports, than as the exit point for U.S. bulk goods. The largest container port in Mexico, Manzanillo, handles about half the volume of Oakland, 426,000 TEYs per year. It has rail linkages to Mexico City and some interior locations, but any linkage to the U.S. is not probable at this stage due to the mountainous route among other economic factors. Only one of the six ports Mexico is privatizing, the Port of Ensenada (27,000 TEUs), specializes in container traffic. In 1992 the port drafted a development plan which would transform it into a “major international container facility.” In 2000 the port only handled 26,822 TEUs. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 161 Any competition it might eventually pose to San Pedro is quite remote in the foreseeable future. However, Ensenada does compete with San Diego for South American fruit trade and has seen rapid expansion in percentage terms, but still account for a very small portion of the total. Finally, the Panama Canal does divert a minimal amount of traffic away from San Pedro. Panamax and post-Panamax vessels2 5 cannot traverse the canal, although Panama officials are installing a fourth set of locks to accommodate larger vessels (interview with Roderick Esquival, USC, June 2001). There has been speculation that as globalized production moves further south to Thailand, Indonesia, and Malaysia, an all-water route will become more competitive due to an advantage of nautical distance. Thus far, however, most of Southeast Asia’s increased trade has been captured by San Pedro (Mercer Management 1998). In addition, due to the impervious congestion problems that hit the southern hub during the 1997 railroad strike, shipping lines have made sure to maintain the option of an all-water route to the U.S. East Coast (see next section on shipping lines). Currently, one-half of the imports passing through the Port of Long Beach, for example, are destined for the mini-land-bridge rail provides to the East Coast. An all water route is cheaper due to economies of scale, but slower by days. 2 5 Panamax ships carry between 3000-3500 TEUs and are the largest that can pass through the canal. Today’s Post-Panamax mega-carriers reach 9800 TEUs. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 162 West Coast Case Study: Data Collection and Profile The case study of the West Coast ports presents a geographic and economic overview of the international shipping GCN from the vantage point of the West Coast ports. The purpose of this investigation is twofold: (1) to flesh out with detailed empirical information the many general trade reports produced by the industry and related public bodies at the local, national, and international level, and, (2) to ascertain the extent of economic concentration evident in the GCN in terms of shipping lines, port pairs (West Coast ports and foreign ports), shippers (importers and exporters), and cargo value and volumes. In addition, some geographic trade data relating to regional U.S.A. and foreign country points of commodity origin and destination are reviewed. Data regarding cargo volumes and associated commodity values passing through the ports relies on two separate databases. Port Import Export Reporting Service (PEERS) data is a proprietary data base compiled by Lloyd’s List and considered to be among the most reliable available. PIERS data was supplied by the Planning and Research Department of the Port of Los Angeles.1 PEERS focuses on the routing of cargo in terms of ports, countries, and carriers and does not include cargo value as a variable. This reflects industry needs vis-a-vis cost accounting. Tonnage is the most common unit used for transport by 1 PIERS is purchased by ports around the world in order to maximize port efficiencies and anticipate trends which the port must be responsive to. It is therefore exceptional that the Port o f Los Angeles and their Planning and Research Department was interested enough in this academic project to allocate time and funds to configure PIERS data for purposes o f this project. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 163 ship, truck, or rail. For example, port fees reflect tonnage or per container handling costs, which are most relevant to port operations. The key unit of measurement for containerized ocean cargo, however, is the TEUs (twenty-foot-equivalent units meaning a container), a stock indicator. Data is often collected in this form in the transport industry for the purpose of approximately flows, i.e. the number of passengers or number of freight items handled at airports or container seaports. Commodity values are not typically measured by the transport industiy, except as a lump sum. The Census data on trade flows through the ports is the most reliable source for information on commodity value, and used here, but is not readily integrated into the PIERS database2. Separate data sources are used to help fill-in the nature of these sea freight flows by revealing more specific information on commodity and cargo type, and, very importantly, value. Geographical information, however, is distorted in part due to the practice of labeling bills of lading with the addresses of corporate headquarters rather than the actual point of origin or destination. It should be noted that most international information is collected on a national, versus a city, basis. This is a limiting factor for any conclusions one may draw pertaining to a variety of global networks. City-pair data in the area of transportation is most highly developed for airports and air passenger research. It is hoped that the data analysis undertaken here contributes toward a rudimentary understanding of the proportion, context, and character of ocean freight cargo flows through the West Coast hubs. 2 Per phone interview with Frank Dubich, Senoir Port Planner, Planning and Research Department, Port o f Los Angeles, March 14, 2001. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 164 PIERS (Port Import Export Reporting System)3 data for the year 2000 is used to establish the geographic linkages between ports and the economic content of this trade, including foreign country trading partners, commodity type and volume, international port pairs, shipping line activity and shipper (importers and exporters) participation. Imports and exports are measured according to tonnage or TEU (twenty foot unit containers), cargo-type, and commodity category. United States Department of the Census data, primarily the data base on U.S. Waterborne Trade, is relied on to establish the value in U.S. dollars of this international trade. In addition, other international data banks, particularly those of agencies associated with international organizations such as the United Nations, are tapped to provide context and depth. There is always a risk in introducing data from uncorrelated data banks. Such statistics are introduced in the present project to the extent that they elucidate a point or theme. In general, however, statistics from different data bases cannot be reliably correlated. Concentrated Economic and Geographic Networks PEERS data was compiled for the year 2000 in order to provide an overview of the trade profile of the West Coast ports, including economic and geographic patterns of trade, and the relative importance of the San Pedro hub ports of Los Angeles and Long Beach. In addition, data is analyzed for the purpose of determining the degree to which (1) market share is concentrated among various 3 PIERs is a proprietary data base produced by Lloyd’s Journal of Commerce and made available for the purpose o f this research by the Ports o f Los Angeles and Long Beach. PIERs data does not include cargo value, which reflects the low priority o f this variable relative to the ports logistical concerns. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 165 groups of economic actors and, (2) trade between geographic regions is concentrated among key networks. This represents the dissertation’s working hypothesis. Background research concerning port trade indicates that patterns of economic and geographic concentration have characterized West Coast trade at least for the decade of the 1990s. Sets of data were selected based on their accessibility through the PIERS data base provided by the Port of Los Angeles and on their utility in sketching out geographic and economic patterns of concentration in the West Coast based port- shipping GCC. Sets of data tracked nine pairs of variables listed in general categories of analysis below and shown as a matrix in Table 5.6. Most data sets have four dimensions: variables are paired for direction of trade (imports and exports) and type of cargo (containerized and bulk). 1. Pacific Rim Port Network: Geographic port pairs (foreign port-to-West Coast port) measured in cargo percentage shares 2. GCN Cargo Content and Commodity Flows: a. Commodity type (based on 4-digit harmonized codes) in terms of volume handled at respective WC ports, b. Commodity type (based on 4-digit harmonized codes) in terms of percentage shares carried by respective shipping lines, c. Commodity type (based on 4-digit harmonized codes) in terms of percentage shares handled by respective shippers, d. Commodity type (based on 4-digit harmonized codes) in terms of percentage shares passing between points of origin and destination (USA region/foreign country), 3. Other GCN Linkages and Nodes a. Shipping line percentage share of trade passing through West Coast ports, b. Shipper (importer and exporter) percentage share handled at respective West Coast ports. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 166 Table 5.6 Matrix of Sets of Data for GCN Analysis* Foreign Ship line WC port port x Foreign Commod Shipper** USA Reg country Ship line WC port (x) Forgn port Commod (x) Shipper USA reg+ Forgncntry x X X x (x) (X) (X) (X) (x) (X) x X X * x=matrix, (x) = second entry for matrix **Shippers represent both importers and exporters +Data collected for U.S. Regions is used only for discussion o f intermodal cargo. In addition, PEERS data is elaborated on by reference to other port sources of data, most notably, two reports done for the San Pedro ports by the Mercer Consulting Group and Standard and Poor’s Dri Consulting in 1998 and 2001 (Mercer Management Consulting 1998 and 2001), as well as various West Coast port websites, brochures, and reports. The Mercer analyses utilized PEERS and Census data and statistical software applications for the purpose of extrapolating economic trends and projections as they pertain to the San Pedro ports. PIERS data measures port trade in units of volume and weight. It does not include cargo valuations as these are considered irrelevant for purposes of port operation. As mentioned, the analysis below also utilizes data derived from the U.S. Maritime Administration and the U.S. Department of Commerce, Bureau of the Census, to access the valuation of commodities and cargo, and other additional sources. There are a total of ten American West Coast ports studied. They represent the Southern California Hub of San Pedro Bay consisting of the Port of Los Angeles Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 167 and the Port of Long Beach, two Southern California niche ports: the Port of Hueneme and San Diego, the two Northern California Ports of Oakland and San Francisco, and the Puget Sound Bay ports, the Ports of Tacoma, Seattle, and the smaller Port of Portland, of the Pacific Northwest. In addition, most data includes an “all other” port category which folds together the other smaller niche West Coast ports, namely the Ports of Benecia, Everett, Sacramento, and Alaskan ports. Finally, the current analysis, while complex, is fairly one-dimensional. Each set of data is analyzed in terms of the degree of concentration of market share captured by individual or particular groups of economic actors. Foreign trade coming through the U.S. West Coat ports is concentrated in any terms. Concentration of market share is evident in both import and export flows and in both containerized and bulk cargo trades. The data analysis verifies that the port-shipping GCN is characterized by a distinct and concentrated network of international ports, stitched together by a concentrated number of shipping lines (ocean carriers), carrying commodity flows which are regionally distinct (in the case of exports), between a broad and diverse range shippers (importers and exporters). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 168 Through the Eve of the Needle: the Trans-Pacific Port Network The most cargo traffic in the world is carried along trans-Pacific routes4 , with most of the flows traveling west from Asia to North America (Rimmer 1997a).5 The vast majority of container cargo of the Pacific Rim flows between five West Coast ports and fifteen foreign ports, primarily in Japan and Southeast Asia. Flows, for the most part travel east, from the Asian Pacific ports to the Southwest, primarily San Pedro, ports and secondarily to the Pacific Northwest Puget Sound hub ports (see Figure 5A). No significant container cargo travels to smaller niche ports, including the two located in San Francisco and Portland, as well as the southern Californian ports of Hueneme and San Diego. The San Pedro hub ports manage to distribute USA container exports to over 1550 countries and sends imports to the USA from over 1200 countries (PIERS Y2000). The top fifteen ports linked to the West Coast send over 85% of all container trade to the West Coast ports. The reigning port of Hong Kong, as well as the other top four ports ranked in the chart below, all serve as transshipment hubs for cargo reaching them through smaller feeder ports in the area. Hong Kong is the second largest hub in the world, but the largest hub to the West Coast. It distributes nearly one quarter of all trade to the West Coast ports.6 The top five and ten ports together are responsible for 59.6% and 79.6% of all West Coast port trade, respectively. All 4 This was not the case only a decade ago, when trans-Atlantic routes between the USA and Northern Europe dominated trade. 5 The second most traveled routes carry cargo flows from Asia to Europe, although in volumes smaller by several one-hundred thousand TEUs. 6 As a new addition to the People’s Republic o f China, the Port o f Hong Kong, along with the other major Chinese ports now under development, is projected to channel even more o f the transpacific trades. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 169 of these ports, with the exception of Rotterdam, are located in Japan and Southeast Asia (see glossary of ports and port-to-port GIS map). The respective West Coast port shares of this container trade are illustrated in Table 5.7. This degree of market share concentration corresponds to the technological requirements of containerized vessels. Dredging costs alone effectively limit smaller port container trade as 70% of container ships in the transpacific fleet, for example, now require greater than 40’ dredged channels (Portland web site). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Table 5.7 WEST COAST PORT SHARE OF TOP* FOREIGN PORT CONTAINER TRADE (combined import and export trade) OAKLAND, TACOMA, SEATTLE, FOREIGN,PORT________ TEUS %,TEUS POLA POLB %________% % HONG KONG 2,289,575 24.4 32 41 7 10 9 KAOHSIUNG 1,161,870 12.4 39 26 10 13 10 BUSAN 853,493 9.1 27 43 7 7 12 SINGAPORE 722,747 7.7 35 42 8 3 12 YANTIAN 563,870 6.0 38 46 5 2 8 TOKYO 490,227 5.2 27 21 16 14 16 SHANGHAI 464,388 4.9 48 36 12 0 3 KOBE 334,521 3.6 34 23 15 6 18 YOKOHAMA 314,830 3.4 22 27 14 11 18 NAGOYA 268,028 2.9 32 20 24 7 14 OSAKA 144,775 1.5 21 22 10 21 13 PT KELANG 109,033 1.2 28 56 5 0 10 QINGDAO 93,880 1.0 58 29 6 0 8 LAEM CHABANG 89,481 1.0 70 1 14 0 14 ROTTERDAM 85,292 0.9 18 42 37 0 3 Source: PIERS Y2000 *Foreign Ports handling over 75,000 TEUs in Y2000; Total TEUs are 9,389,129. o 171 The bulk trade is differentiated as liquid bulk, dry bulk, and break bulk. Probably unknown to the American public at large is the fact that the largest amount of oil entering West Coast ports from any one foreign port flows directly from Iraq’s major oil port, Mina A 1 Bakr, as indicated on the Chart below. The charts describing bulk port-pairs also indicate the country of origin and destination cargo was transshipped to or from. As expected these are more differentiated than ports. Interesting as well is that among the obvious flows of petroleum from the Middle East and South America, is the large amounts of processed petroleum products sent to the U.S. from Southeast Asian ports, including Singapore Korea, and Malaysia. The U.S. exports petroleum to these nations as well as Mexico for processing as indicated by the chart showing foreign ports receiving liquid bulk from the West Coast ports. Liquid bulk is sent from and received by a fairly wide selection of West Coast ports, including several niche ports. El Segundo, for example, receives approximately one-half of petroleum shipments from Mina A 1 Bakr and Juaymah (Saudi Arabia). Both dry and liquid bulk flows are heavily concentrated among a few foreign ports which send or receive anywhere from 40%-60% of total West Coast tonnage. Bulk flows received by the West Coast ports, however, are not concentrated through particular ports. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 172 Table 5.8 MAJOR PORTS FOR WEST COAST LIQUID BULK* IMPORTS ORIGIN,PORT_______________ ORIGIN,COUNTRYTOTAL,METRIC,TONS MINA AL BAKR IRAQ 6,454,106 ESMARALDAS ECUADOR 4,583,298 JUAYMAH S ARAB 3,623,739 SAUNA CRUZ MEXICO 2,150,817 CALETA CORDOV ARGENT 1,338,502 VANCOUVER CANADA 1,079,985 JUBAIL S ARAB 1,068,948 ASH SHIHR YEMEN 1,001,481 HIGH SEAS GLF MEX 948,358 BALAO ECUADOR 917,571 SINGAPORE SINGAPR 878,179 ONSAN KOR REP 746,055 COSSACK AUSTRAL 740,078 MINA SUUD KUWAIT 658,750 PTO LA CRUZ VENEZ 647,817 RAS TANURA S ARAB 628,963 ST NICOLAS N ANTIL 627,176 MALACCA MALAYSA 590,636 ULSAN KOR REP 570,044 KERTEH MALAYSA 534,706 Source: PIERS Y2000 *Total liquid bulk sent to West Coast ports is 42,465,145 tons; Total ports are 178. Table 5.9 MAJOR PORTS FOR WEST COAST LIQUID BULK* EXPORTS DESTINATION, PORT__________DESTINATION,COUNTRY TONS SINGAPORE SINGAPR 1,184,736 ROSARITO MEXICO 744,662 LAZARO CARDEN MEXICO 578,715 MANZANILLO MEXICO 503,328 VANCOUVER CANADA 387,337 PTO LIBERTAD MEXICO 192,490 KAOHSIUNG CHINA T 164,877 NIIGATA JAPAN 122,416 ST EUSTATIUS N ANTIL 119,841 YOSU KOR REP 118,092 INCHON KOR REP 106,700 Source: PIERS Y2000 *Total liquid bulk sent by West Coast ports is 5,249,196 tons; Total ports are 74. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 173 Table 5.10 MAJOR PORTS FOR WEST COAST DRY BULK* EXPORTS DESTINATION, PORT DESTINATION,CNTRYTONS TOKYO JAPAN 4,586,417 KAOHSIUNG CHINA T 2,713,284 INCHON KOR REP 2,388,587 CHIBA JAPAN 1,604,847 TAICHUNG CHINA T 1,382,980 GHENT BELGIUM 913,683 KASHIMA JAPAN 842,047 ROTTERDAM NETHLDS 838,338 HIRO JAPAN 826,118 KO SI CHANG THAILND 692,628 KOBE JAPAN 673,487 MARIVELES PHIL R 635,949 OITA JAPAN 628,385 MATSUURA JAPAN 621,018 KAWASAKI JAPAN 531,013 Source: PIERS Y2000 * Total dry bulk exports are 42,978,290 tons; Total ports are 318. Table 5.11 MAJOR PORTS FOR WEST COAST DRY BULK* IMPORTS ORIGIN,PORT ORIGIN,COUNTRYTOTAL,METRIC,TONS BLUBBER BAY CANADA 1,503,274 SAN MARCOS MEXICO 1,251,341 RIZHAO CHINA P 1,204,031 BUNBURY AUSTRAL 973,136 YANTAI CHINA P 817,345 SANTA ROSALIA MEXICO 694,748 NANJING CHINA P 663,550 BEALE COVE CANADA 647,690 CEDROS ISL MEXICO 566,139 DARIEN CHINA P 501,579 Source: PIERS Y2000 *Total dry bulk imports are 16,642,308; Total ports are 138. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 174 Breakbulk cargo flows are the most high-value added and concentrated bulk cargo category. Although the US receives this cargo from several ports and countries, Japan absorbs the overwhelming amount of U.S. breakbulk tonnage. Table 5.12 MAJOR PORTS FOR WEST COAST BREAK BULK* EXPORTS BREAKBULK DESTINATION,PORT__________DESTINATION,COUNTRYTOTAL,METRIC,TONS IYOMISHIMA JAPAN 442,707 TOKYO JAPAN 282,359 TAGONOURA JAPAN 278,107 NAGOYA JAPAN 275,693 TOMAKOMAI JAPAN 275,135 MURORAN JAPAN 238,000 KUSHIRO JAPAN 126,962 SHIMIZU JAPAN 109,985 OSAKA JAPAN 106,798 CROFTON CANADA 105,180 KAWANOE JAPAN 103,325 Source: PIERS Y2000 *Total break bulk exports are 3,704,909 tons; Total foreign ports are 202. Table 5.13 MAJOR PORTS FOR WEST COAST BREAK BULK* IMPORTS ORIGIN,PORT ORIGIN,COUNTRYTOTAL,METRIC,TONS KWANGYANG KOR REP 784,421 LAZARO CARDEN MEXICO 591,763 TOYOHASHI JAPAN 590,793 VICTORIA BRAZIL 427,165 PT KEMBLA AUSTRAL 385,068 VANCOUVER CANADA 349,471 CHIBA JAPAN 340,599 KAOHSIUNG CHINA T 308,097 VITORIA BRAZIL 295,775 ULSAN KOR REP 295,066 PTO BOLIVAR ECUADOR 268,699 INCHON KOR REP 237,100 SHANGHAI CHINA P 213,168 POHANG KOR REP 204,731 NANAIMO CANADA 203,292 Source: PEERS Y2000 *Total break bulk imports are 11,054,383 tons; Total foreign ports are 317. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 175 Shipping Lines operating through West Coast Ports In general, shipping lines specialize in particular types of cargo (see commodity section below). The most lucrative cargo of all is containerized trade and the most lucrative routes for these are the eastward trans-Pacific shipping lanes. For the world's leading container lines, the transpacific trade in 1999 accounted for an estimated $14.8 billion in ocean freight and ancillary charges, according to a study by Dri Shipping Consultants Ltd. (Mercer Management 2001). Eastbound transpacific traffic in 1999 accounted for $11.7 billion, an increase of 39 percent over 1998 due to increases in volumes and higher average rates. Transpacific westbound trade, however, remained flat at $3.1 billion, exacerbating the imbalance in transpacific trade. In addition, the container trade must contend with shipping empties (empty containers) back to the East over the mini-land bridge and the Pacific Ocean. According to the Mercer Report, “the San Pedro ports have maintained a net outflow of empty foreign containers’ ’ ’ in most years. Eastbound trade from the San Pedro hub continues to grow despite geographic disadvantages (for example, an all-water route through the Panama Canal saves intermodal cargo time on its way to the U.S. Southeast and East coast). However, carriers still prefer to send discretionary intermodal cargo by rail across the trans-continental tracks referred to as the “mini-land-bridge.” Both northerly and southerly shippers and carriers serving Indonesia, Malaysia, the Philippines, Singapore, and Thailand favor the San Pedro ports despite geographic disadvantages. As this trade grows, so does the San Pedro market share. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 176 Los Angeles and Long Beach captured 77% of the increased trade in this service since 2000 (Mercer Update 2001). As a result, the land bridge moves about 80 percent of all traffic between Asia and the U.S. East Coast. Shipping is a competitive industry, but the giant shipping lines dominate trade due to the narrow network of ports which stitch together the shipping GCN; There are a limited number of terminal spaces available for an equally limited number of shipping lines and their alliance members. Carrier concentration at the industry level, therefore, is related to the degree of concentration enjoyed by their port hosts.1 Approximately one half of all West Coast cargo is carried by the top five container shipping lines. The top ten lines move over 70% and the majority of this trade is captured by the San Pedro hub. Nine of the top fifteen container lines move 50% or more of their exports through San Pedro and all but two of the top twenty- five import over 70% of their containers through San Pedro. The import-export cargo patterns, therefore, seem to be are emulated by patterns of market share among shipping lines, with importers moving more volume through a smaller numbers of ports. Sheer number of TEUs carried also indicates the dominance of the mega lines. Out of a total of 62 shipping lines serving the West Coast, only 27 handle at least 10,000 TEUs per annum. Only ten handle the 100,000 TEUs which contribute 1 It is possible that the success of carriers dominating port hubs and the global city regions they serve, is highly determinative o f the share of world trade they control as well. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 177 toward the huge volumes of containers congesting the port; Five handle double this amount; Two handle over 3000,000 and only one, Marsk-Sealand is pushing the envelope to 500,000. Maersk also breaks its global share of 12.1% of the container trade at the West Coast ports where it controls 14.6% of West Coast exports and 12.8% of West Coast imports (See Tables 5.14 and 5.15).. Table 5.142 TOP CONTAINER SHIPPING LINES* WEST COAST PORT EXPORTS SHIP LINES TEUS POLA POLB OAKLD PORT TACOM SEATTL MLSL 451,736 1 57 18 0 24 0 AMPL 318,505 52 4 24 4 6 11 HYMM 257,798 34 19 8 12 22 5 HJSC 240,532 0 46 23 10 0 22 EVER 230,564 43 0 10 18 30 0 OOCL 177,308 26 39 11 0 0 24 CSCO 175,489 2 42 21 0 1 34 OSKL 145,592 50 4 22 2 7 14 KLIN 134,999 5 34 34 20 6 1 YMAL 118,800 30 32 23 10 4 1 NYKL 116,264 23 31 22 0 0 24 PONL 95,663 43 30 10 0 0 16 HAPL 88,121 29 14 31 0 0 26 SLNG 77,674 0 46 29 11 0 14 CHOY 55,043 0 56 22 5 0 17 ZIML 48,265 3 83 7 1 0 5 Source: PIERS Y2000 *Shipping lines moving approximately 50,000 TEUs or more (The San Pedro hub consists of the ports of Los Angeles and Long Beach, POLA and POLB respectively.) 2 For Shipping Line Codes see Appendix 3. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 178 Table 5.15 TOP CONTAINER SHIPPING LINES* WEST COAST PORT IMPORTS POLA POLB OAKLAND PORTLAND TACOMA SEATTLE SHIPLINE TEUS % % % % ________ % % MLSL 807,540 2 74 11 0 13 0 AMPL 650,674 63 6 6 0 1 23 EVER 623,684 71 1 5 0 23 0 HJSC 446,506 0 70 4 2 0 24 HYMM 403,413 35 39 4 1 12 8 CSCO 377,045 3 86 5 0 0 6 OOCL 317,718 55 31 2 0 0 11 NYKL 297,141 48 36 5 0 0 11 KLIN 288,164 5 67 6 1 21 0 YMAL 213,422 46 35 8 1 10 0 OSKL 210,924 62 8 4 0 3 23 SLNG 164,455 0 71 9 1 0 19 PONL 162,857 61 23 4 0 0 10 CSCN 143,819 93 1 3 0 0 2 MDSC 140,685 100 0 0 0 0 0 HAPL 133,767 52 21 12 0 0 14 CHOY 110,575 0 70 12 2 0 17 CACG 81,966 87 3 10 0 0 0 ZIML 79,748 6 89 3 1 0 1 NSLU 77,192 68 4 22 0 0 6 FESP 69,363 4 74 4 5 0 14 TPCL 64,817 93 0 0 0 0 0 GWSS 63,192 87 11 1 0 0 0 ITAL 50,059 16 39 25 20 0 0 Source: PEERS Y2000 *Shipping lines moving approximately 50,000 TEUs or more. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Figure 5B Shipping Line Market Shares (of West Coast Container Exports) ill I Denmark (14%) ^ - ' f t ' - " , ?/ v , - ~r H < '« ■ " ) Chinal12%) ^T aiw an (7%) # 1 8 1 1 1 Pacific Northwest (19% Northern California (10%) San Pedro (31%)^F< 4* Based on PIERS Y2000 Shipping Lire'Exports Percentages H Korea (Hyundai MerchantMarine Co. Ltd. 8%) (Hanjin Shipping Co. Ltd. 8%) Denmark (Maersk Sealand 14%) H China (Orient Overseas Container Line 6% } (COSCO Container Lines Os. Ltd. 6%) H Singapore (APL Ltd. 10%) | Taiwan (Evergreen Line 79$ West Coast Port Exports Percentages San Pedro (Long Beach 10%) (Los Angeles 13%) Pacific Northwest # (Tacoma 8% ) (Seattle 7%) (Portland 4% ) A Northern California w (Oakland 10% ) I 1:136512204 -J •~D Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Figure 5C Shipping Line Market Shares (of West Coast Container Imports) | Denmark (13%) 5 1 o i ! X * ' K ° ™ ” ‘ : > B - g # a j = p a n ( 9 '/ * I ? v -" * v ‘ w , ) y ^ »|. ■ * > ^ tTsl. A 3: J . '. - . V . - r - ' J'A V . _ 5 # « Ja p a n (9 % ) ■ Chim'd l%) Taiwan (13%) SWffi® Pacific Northwest (12%) Northern Caliifomia (4%) San Pedro (53%) Shipping Line Imports Percentages Based on PIERS Y2000 Derttnark (Maersk Sealand 13%) Korea (Hanjin Shipping Co. Ltd. 7%) (Hyundai Merchant Marine Co. Ltd. 6%] Taiwan (Evergreen Line 10%) (Yang Ming Line 3%) China (COSCO Container Lines Co. Ltd. 6%) (Orient Overseas Container Line 5%) Singapore (APL Limited 10%) Japan (NYK Line 5%) (M K " Line 4%) West Coast Port imports Percentages San Pedro (Long Beach 30%) (Los Angeles 23%) Pacific Northwest (Seattle 6%) (Tacoma 6%) (Portland 0.3%) Northern California (Oakland 4%) A 1:97216896 oo o 181 Shipping lines may specialize in types of cargoes, i.e. container versus bulk trades, but in general they are not differentiated by commodity type. The larger shipping lines have a slightly higher percent of commodity market share, but for both container imports and exports most lines do not handle more than 10-20% on the average for most commodities. A few commodities do present exceptions, such as Maersk-Sealand handling slightly greater than one-third of both Men’s and Women’s apparel. Shipping lines, whether large or small, can capture 50% of more shares of small commodity consignments. Most liquid bulk passing through the West Coast ports is managed by consolidators distributing petroleum shipments consigned by large oil companies. Thus PIERS only identifies “BULK” as the ‘shipping line’ carrying approximately 4,800,000 of the total 5,249,196 tons exported from the ports as well as the 40,514,396 of the total 42,465,145 tons imported through West Coast ports. Again, designations such as “bulk” in the case of bulk cargo, and “order” in the case of container cargo, represents unknown entities. Dry bulk transport is similarly dominated by “bulk” shipping lines: 39,050,246 export tons out o f42,978,290 tons total; 12,488,597 imported tons, out of 16,642,308 total tons. Dry bulk cargo is exceptional in the dominance of exports to imports. Several of these bulk shipping lines also handle the dry bulk trade. PIERS lists approximately 10 shipping lines handling liquid bulk cargo out of the West Coast. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 182 Dry bulk imports and exports are handled for the most part by the same specialized shipping lines operating out of the Pacific Northwest husb and niche ports. These ports cumulatively handle 75% of “bulk” exports and 68% of “bulk” imports. In addition, the second largest shipping lines in each category send 99% of their dry bulk cargo through these ports. PIERS lists approximately 25 shipping lines handling dry bulk cargo. New Competitors Enter the Shipping Lanes It is unquestionable that the burgeoning of world trade, even if concentrated through particular regions, has created opportunities for more players to enter shipping lanes despite the considerably high barriers of entry. This has been facilitated by dominant shipping lines cascading older Panamax-size generation of ships, into marginal trade lanes or selling them off to new entry carriers, and replacing them with mega-ships. The effect is a boost in total shipping capacity and an expected, although not yet realized, squelching of transport prices.3 Many of the Panamax-size vessels are being placed in the alternative all-water route to the U.S. East coast via the Panama Canal due to the shortage of shipping capacity in these East-bound lanes. These medium-size vessels have been displaced from transpacific routes by much larger vessels, so that although the number of vessels 3 The last tim e such an opportunity opened shipping up to new entrants was when the U.S. sold o ff its “liberty ships” after World War II to a host o f shipping lines, including newly organized national lines in the developing world (H ellenic Ministry o f Mercantile Marine website). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 183 in these trade lanes has decreased, the net capacity of the transpacific services has increased. While this represents large percentage gains for East Coast ports it will not cause large traffic losses from the West Coast. A combination of larger vessels and more port calls via alliances is also projected to leave the port shares of West Coast trade relatively stable (Mercer Management 2001). In addition, new entrants are forced to increase service to smaller ports due to the lack of available terminal space at the largest ports (Mercer Management 2001). For the short term at least, the concentration of service at ports and through carriers is therefore relatively stable. Many shipping analysts therefore dismiss the impact of load centering “trends” which would further concentrate the port and carrier linkages of the shipping GCC. Mercer analysts, for example, attribute any lost trade in smaller ports to the weakness of local markets, rather than to big port competition (see Boston example in Mercer Management 201). However, without exception, every major carrier (individually or through an alliance or consortium) has expanded its service coverage to become “global”. “Carriers that do not serve all the markets their customers need cannot offer global service contracts under the Ocean Shipping Reform Act” (Mercer Management 2001). The titans of shipping are globalized and as a result global trade is increasingly concentrated through them and their mega-terminals at world ports. This does not necessarily mean that there is no or less entry. Mercer analysts claim Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 184 that entry is relatively easy based on the number of new entrants which call at San Pedro. They list: • Chilean line CSAV shifted its existing service between Asia and South America to call at Los Angeles in mid-1998. • CMA-CGM, a French carrier, extended its existing Europe-Asia service to serve the U.S. West Coast in 1999. • Zim Israel added additional ships to service the U.S. Pacific Northwest directly and replaced a slot-chartering agreement. • Fesco added a new service linking Hong Kong with the U.S. West Coast as an extension of its Russian Pacific service. • Trans-Pacific Lines, a new carrier, began service in 1999 and announced significant capacity increases in 2000. • China Shipping Group, which previously operated mostly within Asia, also began transpacific service in 1999. • Norasia began transpacific service on a small scale in early 1999 but added newer, larger, and faster vessels starting in 2000. • Wan Hai, a large intra-Asia regional carrier, announced a new transpacific service starting in mid 2000. • Lloyd Triestino, an Italian line now under control of Evergreen, entered the transpacific trade in 2000. The Mercer report concludes that “(s)hipping lines in this trade reportedly offer shippers about 60 joint and/or individual liner services with a total o f456 liner vessels. Both the number and size of ships continues to increase as carriers place new vessels in service” (Mercer Management 2001). The remarkable degree of concentration exhibited at each node of the GCC, however, is missed if the number of players, rather than share of trade, is the focus (see shipping lines section below). All of the above new lines, together, represent Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 185 only a small share of San Pedro trade. In addition, their success is predicated on their ability to locate niche traffic and/or utilize the resources of a global carrier as a subsidiary. The top five shipping lines carry approximately half of cargo to and from West Coast ports. The top ten move over 70% of total trade share. Only twenty-three container lines and about half as many shipping lines carrying bulk cargo even figure in this sector of transportation. This is in large part due to the finite physical boundaries characterizing the trade, namely, a limited number of ports with a limited amount of terminal space and a limited number of viable trade routes linking them. When these limitations are combined with those associated with the barriers of trade presented by technology and associated capital investment, the oligopolistic character of the industry is largely indisputable. West Coast Port Shippers “Shippers” represent agents or companies importing or exporting cargo. Cargo may be shipped by the company manufacturing the commodity or a third- party agent, known as a Consolidator,4 Data represent shippers engaged in the bulk cargo trades (total bulk, dry bulk, liquid bulk, breakbulk and, high value breakbulk3 ), and container cargo. Each set was run in three ways in order to track 4 An important group o f consolidators are known as N V O C C s (N on-V essel Ocean Cargo Carriers). This group reserves container slots or space on vessels and sells it to shippers on the market. They are now grouped along with third party logistics firms under the 1998 Ocean Shipping Regulation Act. 5 These were narrowed down to com m odities listed under the 6000 series o f the standard harmonized code. See section on com m odity types. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. imports, exports, and total (import and export combined), respectively. Three broad trends emerge from these data sets: • Shippers as a whole are more numerous and less concentrated in cargo or port market shares than other economic actors in the port- shipping global commodity network (GCN), • Shippers sending (exporting) cargo through the West Coast ports tend to be less concentrated as a group than shippers receiving (importing) cargo, • Importers and Exporters represent two distinct groups. Shippers who dominate exports are distinct from those representing importers, (and, as usual, most imports dominate exports as measured by all tonnage and volume cargo categories except in the case of dry bulk). It is probable that the distribution of discretionary cargo (imports that are destined for transshipment), among ports is governed by shipping lines based on the pull of the local market and their own or alliance terminal locations), whereas shippers who export choose ports of exit for products based on the proximity of the port to product site (and costs) (Mercer 1998, and Verstoep (1993) in Dicken 1992). This is also supported by the fact that shippers in general utilize different ports for import and for export. For example, the top shippers in the breakbulk 6000 commodities (see index below) are led in imports by California Steel (with 1,277,086 metric tons all handled by the Port of Los Angeles), but do not show up as a leading exporter. Instead, Schnitzer Steel leads exporters with 565,246 tons sent through Oakland and Tacoma. with permission of the copyright owner. Further reproduction prohibited without permission. 187 Bulk Shippers Bulk shippers as a whole are dominated in tonnage by petroleum based firms. Fully 97% of all inbound liquid bulk commodities moving through the West Coast ports (99% in the case of San Pedro) are in three commodity groups: crude petroleum, petroleum products, specialty chemicals. Chevron leads all other shippers by importing 8,630,999 metric tons of petroleum. Arco is among the few oil companies that exports products, about twice as much as it imports (over 961,000 tons of exports and over 409,000 tons of imports). Dry bulk, particularly grains, is a leading export of the northern West Coast ports and is handled for the most part by “order of shipper.” Inbound dry bulk consists of raw materials, and is dominated by one commodity “cement, lime and stone” sent by Mexico, usually by a handful of shippers. Breakbulk inbound tonnage is dominated by shippers importing iron and steel (40%), followed by passenger cars (14%), and exports of lumber and wood (12%) (Mercer Management 1998). Shippers handling the iron and steel and other products include many consolidators and smaller companies who are labeled on the data as simply “order of shipper.” In the 6000 series breakbulk, for example, “order” shippers topped the list and their cargo was distributed across nearly all West Coast ports. Breakbulk (6000 series) cargo includes, but is not dominated by, consolidators. Expeditors, for example, ranked twenty-four, and A. J. Fritz, another Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. large consolidator, ranked fifty in volumes shipped.6 The top companies, however, ship their own wares and are led by California Steel who sends 100% of its product through the Port of Los Angeles. Except for the dry bulk trade, imports dominate exports. A total of 240 shippers imported over 10 million metric tons of 6000 series breakbulk cargo, as opposed to 47 shippers handling over 2 million tons of exports. In the latter case, most exporters send 100% of their cargo through one particular port, rather than dispersed through several West Coast ports. Niche ports are typically situated in the bulk trades where they serve large shippers. The import niches developed by the Southwest ports are quite different than those of the Northwest. In the South, proximity to the GCR hub and its host cities, anchored by Los Angeles, pull in high value imports. The southern Californian Ports of San Diego and Hueneme have been especially successful catering to automotive importers. The Port of San Diego carries 58% of Honda’s imports (41% goes to Portland), but only 5% of their exports. San Diego also handles 100% of Volkswagen imports (over 70,000 tons) and 95% of Isuzu’s exports. A sample of Hueneme’s share of automotive imports in Table ## below shows the success the Los Angeles Customs District niche port has had with a number of companies. Interestingly, Hueneme has close to no exports leaving its docks (approximately 2000 tons for Ford and Truck n Roll 6 Both o f these firms specialize in transport logistics and handle a variety o f inlermodal freight including air freight. with permission of the copyright owner. Further reproduction prohibited without permission 189 companies, as opposed to over 100,000 tons of automotive imports). The major automotive importers send approximately 200,000 tons through Hueneme. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 190 Table 5.16 PORT HUENEME SAMPLE SHIPPERS WEST COAST MARKET SHARE 6000 shippers l/E sample port concentrations IMPORT,EXPORT,SHIPPER METRIC,TONS HUENEME, % JAGUAR ROVER TRIUMPH 14,959 100 LAND ROVER 12,202 100 BMW OF NORTH AMERICA 40,548 100 VOLVO 39,772 95 MAZDA MOTORS 2,308 94 TRUCK N ROLL 1,013 82 DAEWOO MOTOR 45,132 70 HYSTER 1,001 52 MITSUBISHI MOTOR SALES 35,083 51 HANSEN SHPG 2,747 50 NEW HOLLAND AMERICAS 5,167 50 SUZUKI MOTOR 30,482 43 FORD MOTOR 2,779 39 Source: PEERS Y2000 The Port of Portland is a small container port.7 It’s bulk trade is illustrative of the domination the Northwest ports have developed in heavy industry breakbulk (6000 series) cargo, notably steel and iron products, for large shippers. Portland also handles over 400,000 tons of automotive cargo for just two companies, Hyundai and Honda. This is greater than the total automotive cargo handled by the small import niche port of Hueneme. 7 Container ports typically handle both container and bulk cargoes. with permission of the copyright owner. Further reproduction prohibited without permission 191 Table 5.17 PORT OF PORTLAND SAMPLE SHIPPERS WEST COAST MARKET SHARE IMPORT,EXPORT,SHIPPER TOTAL,METRIC,TONS PORTLAND, % GOLDENDALE ALUMINUM 288,750 100 TYCO SUBMARINE SYSTEMS 60,068 100 ALCATEL SUBMARINE NETWORKS 20,404 100 MAN B & W DIESEL 8,767 100 ASOMA 5,154 100 SAMANCOR 3,015 100 CASCADE GENERAL 1,267 100 OREGON STEEL MILLS 258,675 97 NORTHWEST ALUMINUM 155,655 96 MITSUI & CO 42,092 87 BSI ALLOYS 32,166 81 FERRO ALLOYS 11,135 76 AMERICAN TRI NET EXPRESS 9,083 76 HYUNDAI MOTOR AMERICA 163,255 72 HONDA MOTOR 252,635 41 Tacoma handles 100% of Kaiser Aluminum imports (Kaiser has no exports) and Seattle handles 100% of Union Pacific Railroad exports (which has no imports). The two Northern California ports of San Francisco and Oakland specialize in the export of manufactured goods for large shippers such as, BecNel in the former case, and SSI International in the latter. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission 192 Shippers in the Container Trade In general, container shippers are a large numerical category and few shippers capture a dominant market share of any single cargo category. The top ranked container shipper, for example, shows up in PIERS data as “order of shipper” and captured 16% of total market share (with over one million containers) last year. This category is essentially an unknown. It is probable that it serves as an umbrella label for many small shippers, freight forwarders and 3PL firms due the fact that fully 75% of all such generically tagged container shippers, move trade through the San Pedro ports.8 This represents nearly 1.2 million loaded TEUS of a total amount of well over 9 million moving through the ports every year. The GCR hub provides ideal linkages for smaller networked firms due to its extensive integration into the global economy. Large consolidators especially flourish in the containerized trade and number approximately half of the top fifteen shippers in the chart below. Consolidators apparently derive inordinate benefits from the regional economy nesting a GCR (global city regions) port hub. Just a few of the 51,824 container shippers listed by PEERS handle large numbers of containers. There are a total of 8 Further, it is probable that this large number o f agents represents an even greater number o f shippers. However, the data is ambiguous on the extent o f concentration in this ancillaiy service linkage o f the port-shipping GCC because o f the unknown number o f individual consolidators, freight-forwarders, and other third party agents grouped together generically. Therefore, the “order” label represent a combination o f shippers o f unknown type or size. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 193 33 exporters handling 10,000 TEUs or more in the year 2000, amounting to 870,771 TEUs. Ninety-two importers handling 10,000 TEUs or more, combined to handle 2,969,008 TEUs in Y2000. Together they handle about 40% of the total 9,389,131 TEUs passing through West Coast ports. This group includes many familiar names: Target is close to the top with over 94,000 TEUs. Other large shippers include Pier 1, Walgreens, GE, Yamaha, Mattel, Fisher Price, Aiwa, Epson, Dole, Samsung, Hewlett Packard Panasonic and Sharp. The leading importer (after “order”) is Expeditors, a consolidator (3PL or Third-Party Logistics firm) which imported 112,000 TEUs (1.3% West Coast port share) last year. The lion’s share of container traffic is sent through San Pedro. The rest is routed through the Pacific Northwest. Most shippers handle under 0.1% of containers. The market share of the 320 or so shippers handling 0.1% or more of West Coast containers (4700-10,000 TEUs ) amounts to between 20-25% of the total number passing through the West Coast ports. The Pacific Northwest sends more West Coast container exports than it receives as imports. In addition, unlike container trade through the San Pedro Hub, most shippers in the Northwest ports’ container trade are clearly identified as large companies or consolidators. Nonetheless, San Pedro reigns with majority market share of all West Coast port shippers, for both imports and exports. The following tables illustrate the market shares of respective West Coast shippers. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 194 Table 5.18 TOP SHIPPERS* IN THE CON TAINER TRADE % RANK IMPORT, EXPORT SHIPPER___________ LOADED,TEUS OF,TOTAL 1 ORDER 1,512,687 16.1 2 EXPEDITORS INTL 121,911 1.3 3TARGET STORES 94,649 1.0 4 AMERICA CHUNG NAM 93,988 1.0 5 RICH SHPG 60,009 0.6 6 NIPPON EXPRESS 58,738 0.6 7 A J FRITZ 55,972 0.6 8 GENERAL ELECTRIC 52,395 0.6 9TRANSLINK SHPG 44,730 0.5 10BLUE ANCHOR 43,793 0.5 11 ROUND WORLD 38,685 0.4 12 TOP OCEAN CONSOLIDATION SERVICE 36,917 0.4 13 HONDA MOTOR 35,623 0.4 14 DOLE FRESH FRUIT 30,825 0.3 15SEATRADE 30,147 0.3 Source: PEERS Y2000 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Table 5.19 West Coast Port Share of Top Container Exporters* OAKLAND, TACOMA, SEATTLE, EXPORT,SHIPPER___________ TEUS POLA POLB % % % ORDER 256,007 28 28 14 11 13 AMERICA CHUNG NAM 93,986 14 32 31 9 9 POTENTIAL IND 29,876 36 28 28 4 4 PACIFIC FOREST RESOURCES 28,758 9 18 21 14 28 IBP 28,236 18 16 17 14 34 GENERAL ELECTRIC 27,177 50 21 1 28 0 DIRECT CONTAINER LINE 24,372 42 38 10 4 6 NIPPON EXPRESS 23,665 14 20 36 5 17 EXXON CHEMICAL 23,569 51 48 0 0 0 EXCEL 21,934 41 23 19 12 4 LINDEN TRDG 20,993 20 54 17 8 1 * All exporters handling over 20,000 TEUs. Source: PIERS Y2000. VO C/i Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Table 5.20 West Coast Port Share of Top Container Importers* OAKLAND, TACOMA, SEATTLE, IMPORT,SHIPPER___________________ TEUS POLA POLB %________% % ORDER 1,256,680 37 41 5 7 9 EXPEDITORS INTL 112,809 30 34 5 13 16 TARGET STORES 94,609 29 39 0 19 13 A J FRITZ 55,530 39 41 7 6 6 RICH SHPG 55,093 90 1 6 0 3 TRANSLINK SHPG 44,621 8 60 7 0 24 BLUE ANCHOR 39,326 38 33 7 18 4 ROUND WORLD 37,308 78 1 3 17 0 TOP OCEAN CONSOLIDATION SERVICE 36,463 43 22 31 0 3 NIPPON EXPRESS 35,074 25 40 5 5 26 DOLE FRESH FRUIT 30,180 98 2 0 0 0 WICE MARINE TRANSPORT 28,963 48 41 7 1 2 ALLIANCE INTL 26,788 61 22 3 2 12 STREAMLINE SHIPPERS ASSOC 26,728 24 54 3 3 15 HONDA MOTOR 26,508 29 5 3 20 43 PHOENIX INTL 26,446 29 35 2 26 8 BRIDGESTONE FIRESTONE 25,976 65 15 0 8 11 GENERAL ELECTRIC 25,218 41 54 0 1 4 *A 11 importers handling over 25,000 TEUs in Y2000. Source: PIERS Y2000 NO ON 197 Inside the Black Box: Commodities. Origins, and Destinations Ocean Freight Cargo Categories Shipping lines carry two basic types of cargo between ports: containerized cargo and bulk cargo. As discussed in detail in Chapter 3, containers are the vehicle for intermodal transport as they easily shift between different transport infrastructure: ship, truck, and rail. They are measured in terms of weight (tonnage) and in number (TEU or twenty-foot-equivalent units). The analysis presented here measures containerized trade based on quantities of TEUs. Containerized cargo may be refrigerated (in so-called Reefer containers) which plug into grids providing electricity to keep meat or produce cool. The bulk trade represents the original cargo category of shipping, the kind that originally represented the potpourri of cargo whose size, weight, and nature (i.e. strength or value) determined its packaging. Bulk required labor intensive loading and unloading due to its unstandardized form. Today, however nearly all cargo is fairly standardized and conforms to the requirements of the special-purpose vessel canying it. Bulk cargo may be sorted into three basic categories: Break Bulk, Dry Bulk, Liquid Bulk. The former includes the very important Roll on/Roll off (Ro/Ro) cargo which is essentially driven on and off enormous ships whose shallow draft allows them to enter smaller niche ports that handle some of their trade. Passenger automobiles, transportation equipment, tractors, and trucks are moved for the most Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 198 part by Ro/Ro vessels, although some passenger cars, particularly those exported from the USA may be containerized. Dry Bulk pipes grains and other dry bulk goods into special purpose vessels. If these dry goods are bagged they typically move by container instead. There are some vessels equipped to perform packaging during the voyage, such as bag sugar. Dry bulk is a dominant export from the Pacific Northwest ports. Although the value of dry cargo exports in 1999was one-fourth the value of dry cargo imports through the West Coast ports. Liquid Bulk transport is completely dominated by petroleum and petroleum products which make up over 90% of such imports. Most of these products enter the U.S. through the Port of Long Beach where nearby refineries provide the next link in their respective GCC. A sense of proportion of different cargo is provided by an analysis by MARAD this year. MARAD divides cargo into three primary vessel services and compared their values and volumes for the first quarter o f2001. Liner value includes container shipments as well as Ro/Ro and Reefer cargo (see cargo glossary). Tanker values are derived primarily from the transport of petroleum and petroleum products. Tramp cargo captures a significant proportion of chartered dry bulk cargo. Import values for all cargoes exceed export values and Liner cargo exceeds volume of any other cargo and is nearly one-half of total value. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 199 Table 5.21 MAJOR CARGO CATEGORIES IN VALUE AND VOLUME value (millions of dollars) volume (million metric tons) TOTALS- $242,134 385,685 LfNER - TOTAL $164,289 50,534 Imports $113,313 27,763 Exports $50,976 22,772 TANKER - TOTAL $40,492 213,533 Imports $36,094 197,073 Exports $4,397 16,460 TRAMP - TOTAL $37,353 121,617 Imports $24,982 51,469 Exports $12,372 700,148 Source: MARAD and US Army Corps of Engineers April 2001, official US foreign waterborne transportation statistics, derived from Waterborne Databank. West Coast Cargo Concentration and Commodity Profile This study analyzes West Coast commodity imports and exports in terms of volume (or number of container TEUs), the ports they passed through, and their foreign origin and destination (final section).1 The purpose of this analysis is to determine areas of concentrated market share either at the port, in the commodity type, or the geographic locations sending or receiving commodities in order to flesh out some microeconomic details of the port-shipping global commodity network. The data presented here is primarily culled from PEERS2 data, the Mercer Management San Pedro Bay Ports Long-Term Cargo Forecast3 issued in 1998 and 1 It would be useful in later studies to “stack” these data sets using a netware in order to determine the degree o f their correspondence, but such an analysis is not undertaken here. 2 Port Import Export Reporting Service, a data base sold on a commercial basis to ports around the world by Lloyd’s o f London. 3 Mercer Management Consulting, Inc. and Standard and Poor’s DRI, October 1998. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 200 its update in 2001. Commodities are classified based upon PIERS use of international four-digit harmonized commodity codes. Insight into commodity grouping ranging from the 1000 to 7000 series handled at the ports can be gleaned from the following sample. Table 5.22 SAM PLE C O M M O D IT IE S B Y CODE 7000 Series represents general merchandise such as eyewear, footwear, handbags, typically transported by container. 6000 Series is discussed below as breakbulk, liquid bulk, dry bulk cargoes. 5000 series represents stone and minerals such as granite, mica, limestone, silica, representing dry bulk cargo. 4000 series is extensive and includes chemicals, organic compounds and inorganic alloys and acids, adhesives (including medical), fatty acids, glues, essential oils, rubber, drugs, urea, gun powder, and major petroleum and similar products such as: 4750 PETROLEUM/CRUDE&FUEL OIL 4751 PETROLEUM GAS,LPG,ETHANE ETC 4752 GASOLINE & AVIATION FUEL 4945 RADIOACTIVE CMPDS,ISOTOPES 3000 series represents consumer products shipped typically in containers and including: 3608 RUGS&FLOOR COVERINGS 3810 UNIFORMS 3665 SHEETS.TOWELS.BLANKETS 3820 WOMEN'S&INFANTWARE 3720 SCARVES&MUFFLERS 3730 NECKTIES 3740 HOSIERY 3760 BRASSIERS 3765 RAINWEAR 3780 UNDERWEAR,T-SHIRTS 3800 MENSWEAR 3830 APPARELS, MISC. 3839 WEARING APPAREL MISC 3853 MOPS 3854 BAGS&BAGGINS 3860 NYLON GOODS 3906 RAGS 3956 FABRICS,INCL.RAW COTTON Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 201 Table 5.22 (Continued! 2000 series covers composite and paper goods such as: 2226 STRAWS,RATTAN&CANNING 2528 SULFITE&SULPHATE PAPER 2260 WILLOW WARE 2542 GRASS PULP 2402 VENEERS&PLYWOOD 2548 CHART&GRAPH PAPER 2453 BOARDS 2563 PAPER&PAPERBOARD.INCL WASTE 2500 WOOD PULP 2564 ENVELOPES 2510 ROOFING MATERIALS 2565 BOXES&CARTO NS 2523 CIGARETTE PAPER 2567 PAPERMACHE WARE 2525 FILTER PAPER 2702 BOOKS&PERIODICALS 2526 NEWSPRINT 2705 NEWSPAPERS Finally, the 1000 series includes a broad variety of human and animal food products as well as plants and animals as this sample indicates: 1301 GRAINS&FLOUR PRODS 1562 CANDY,JAM,CONFECTIONS 1305 RICE 1565 COCOA BEANS&PRODS 1409 VEGETABLES 1601 COFFEE 1461 FRUITS,MISC 1605 TEA 1464 BANANAS 1661 NON ALCOHOLIC BEVERAGE 1467 BERRIES 1670 BEER&ALE 1469 CHERRIES 1671 SPARKLING WINES 1471 GRAPEFRUIT&LEMONS 1701 TOBACCO 1472 MANDARIN ORANGES 1706 CIGARS&CIGARETTES 1473 ORANGES 1714 SOYBEANS&PRODS 1561 SUGAR 1763 OLIVE,PALM,PEANUT OIL What is most striking about the commodity profile of imports and exports flowing through the West Coast ports, is the extent to which the highly industrialized nation of the U.S.A. exports raw and semi-processed materials and receives processed and manufactured goods. This not only indicates the great store of raw materials and food products the US currently possesses, but also general patterns of Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 202 trade characterizing trans-Pacific routes in particular, as discussed in the following section concerning trading partners. A sample4 of containerized commodities handled by the West Coast ports starkly portrays the differentiation in commodity type and volume between imports and exports. Imports are approximately double the size of exports in number of TEUs (containers). The distribution of exports across West Coast ports is also considerably wider than for imports. The lion’s share of container imports enters San Pedro as first vessel call for nearly all container carriers. Approximately 750 different containerized commodities flow through the ports each direction, amounting to well over 1000 commodity types and thousands more of different products by brand and variation. 4 It should be noted that columns entitled “TONS” or “TEUS” pertains to the total tonnage or number o f containers (TEUs) of a given entity listed in column one, i.e. in the above sample the total number o f containers hauling paper goods through the West Coast ports is 459,853 and the percentages shown o f respective ports is o f that total only. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 203 Table 5.23 SAM PLE C O N T A IN E R E XPO R TS* - W EST COAST PORTS EXPORT TEUS POLAPOLB OAK PORT TAC SEAT PAPER&PAPERBOARD, INCL WASTE 459,853 27 30 19 6 9 9 PET&ANIMAL FEEDS 237,042 17 22 13 16 10 23 GENERAL CARGO,MISC 124,768 30 38 17 1 7 6 VEGETABLES 118,771 7 9 18 15 22 28 MEAT,CHIEFLY FRESH&FROZEN 111,313 20 19 33 1 14 14 FABRICS, INCL. RAW COTTON 93,058 42 43 13 0 1 1 SYNTHETIC RESINS, NSPF 84,785 44 43 5 2 5 1 FRUITS,MISC 78,590 16 26 22 0 19 16 LOGS&LUMBER 70,819 7 5 6 25 21 35 MIXED METAL SCRAP 62,952 29 33 19 6 9 4 SYNTH RESINS & PLASTICS 59,996 41 40 5 0 12 2 GROCERY PRODS,MISC. 56,416 18 32 33 2 5 8 POULTRY,CHIEFLY FRESH&FROZEN 48,423 3 13 35 0 24 23 ORANGES 43,874 31 50 19 0 0 0 BOXES&CARTONS 43,076 14 14 4 28 14 26 HIDES,SKINS,FURS 41,192 17 31 21 3 5 23 AUTO PARTS 40,090 35 17 27 2 5 14 VEGETABLE FIBRES 31,497 11 11 0 53 1 23 WOOD PULP 31,405 14 14 2 13 29 27 HOUSEHOLD GOODS 30,091 20 43 19 2 9 4 Source: PIERS Y2000 * Total TEUs exported are 3,086,031. According to the Mercer Report commissioned by the San Pedro ports in 1998, consumer products represented 32% of inbound containerized cargo to the West Coast ports in 1996. Electrical equipment led other various manufactured commodities by contributing another 12% of this cargo. Some foodstuffs such as meat, fresh fruits and vegetables, are moved by refrigerated (Reefer) container boxes. This cargo combined with other food items such as dry bulk grains, represented 11% of outbound San Pedro and West Coast cargo. Paper and other containerized consumer products contributed another 10% each. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 204 Table 5.24 SAMPLE C O N TA IN E R IM P O R T S * - W EST COAST PORTS POLA POLB OAKPORTTACOM SEATL IMPORT TEUS % % % % % % FURNITURE 537,415 39 40 6 0 7 8 TOYS 404,640 37 41 4 0 7 10 EDP,NUMBER,ADDRESS MACHINERY 330,253 38 40 16 0 2 4 FOOTWARE 293,444 32 45 2 1 10 11 GENERAL CARGO,MISC 261,147 41 35 6 0 7 11 AUTO PARTS 251,413 36 25 11 0 11 17 APPARELS,MISC. 193,681 44 35 3 1 5 14 ELEC&ELECTRONIC PRODS,MISC 185,966 38 42 5 0 4 11 PLASTIC PRODS, MISC 172,850 43 40 5 0 5 6 AUTO&TRUCK TIRE&TUBES 124,848 53 29 3 1 5 9 WOMEN'S&INFANTWARE 122,704 26 49 2 0 8 15 LAMPS&PARTS 117,203 40 44 2 1 6 7 HARD WARE,MISC 107,737 45 35 3 0 8 9 KITCHENWARE 97,792 32 45 7 0 7 9 DECORATIONS 97,451 37 36 5 1 13 8 SPORTING GOODS,MISC 96,848 46 36 5 0 7 6 BICYCLES&PARTS 86,182 40 38 11 0 5 7 COOKING,IRONING,HEAT APPLI 82,671 45 40 1 0 6 8 MENSWEAR 81,545 28 50 3 0 8 12 TV EQUIP 80,711 36 46 2 0 7 9 FABRICS, INCL. RAW COTTON 74,090 35 54 2 0 2 6 PAPER&PAPERBOARD,INCL WASTE 69,731 39 37 10 2 4 8 METALWARE,MISC 54,229 43 35 6 1 5 10 RADIO,STEREO EQUIP 53,731 33 43 7 0 6 11 MACHNRY MISC.CASETTE PLAYERS 53,389 39 37 5 0 7 10 ARTS&CRAFTS 52,518 41 37 8 0 4 10 POTTERY&CERAMICS 51,388 41 38 7 1 6 8 HANDBAGS 50,794 36 44 2 0 5 13 Source: PIERS Y2000 * Total TEUs imported are 6,303,097. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 205 West Coast commodity trade is especially concentrated in the bulk trades5 . Bulk commodities, feature prominently among the approximate 66% of total West Coast tonnage derived from forty commodity categories. These forty commodities are led by crude petroleum and petroleum products, wheat, com, wood, cement, coal and ethers. The top twenty exports account for a whopping 75% of exports. Exports to Asia, for example, are topped by agricultural goods for consumption, forest and paper products, cotton, scrap metal, electronic components, and manufacturing machinery. In contrast, imports through the West Coast are dominated by high value commodities (excluding petroleum) led by motor vehicles, parts and equipment, and finished products (often containerized). The top twenty imports account for 56% of total imports (and six of the top ten for 38%). Liquid bulk imports of petroleum and related products dominate West Coast port tonnage by weight. A rather narrow range of products, all of which are listed in the table below, comprise this cargo. These products are primarily imported into the San Pedro hub and “other” small niche ports, along the northwest coast. Crude surpasses the second largest liquid bulk product by a ratio of 8:1 and liquid bulk imports surpass liquid bulk exports in tonnage by approximately 8:1 as well. Three categories of this cargo, crude petroleum, petroleum products, and specialty chemicals, comprise over 95% of both West Coast and San Pedro inbound tonnage; In 1996 they comprised 69% and 90% of the cumulative West Coast share and of 3 See Appendix 5 for Country code information concerning West Coast Bulk Trade. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. San Pedro, respectively (Mercer 1998). Imports of crude petroleum from Venezuela, and secondly from Mexico, top the list. Table 5.25 L IQ U ID B U L K IM P O R TS - W EST CO AST PORTS IMPORT TONS POLA POLB OTHERS PETROLEUM/CRUDE&FUEL OIL 32,762,414 9 33 52 GASOLINE & AVIATION FUEL 4,889,339 58 18 16 ETHERS 3,262,252 25 29 39 SOD CMP,CYANIDE-HYDROXIDE 248,018 34 11 44 MOLASSES 209,499 36 7 48 KEROSENE, NAPHTHA 187,600 59 19 22 FUSEL,HEXYL,OCTYL ALCOHOLS 163,994 12 13 75 CASTOR,CORN&COCONUT OIL 142,658 0 0 84 CROTONYL.DECYL,ETHYL ALCOHOL 126,653 0 0 11 PETROLEUM ADDITIVES 84,679 34 50 0 OLIVE,PALM,PEANUT OIL 75,826 0 0 93 PETROLEUM&MINERAL WAXES 68,285 22 0 78 PETRO PRODUCTS NSPF 62,413 0 17 83 GLYCOL,GLYCERINE 52,822 6 94 0 TOLUENE,XYLENE,MIDDLE OIL 44,338 0 0 91 UNCLASSIFIABLE CHEMICALS 41,105 0 2 62 MINERAL OIL 40,431 0 2 94 BORIC ACID,HYDROCHLORIC ACID 1,273 0 0 100 TALLOW&ANIMAL GREASES 1,200 0 0 0 ALIPHATIC HYDROCARBONS 173 100 0 0 PETROLEUM GAS,LPG,ETHANE ETC 172 0 0 0 42,465,145 Source: PEERS Y2000 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 207 Table 5.26 L IQ U ID B U L K EXPO RTS - W E S T COAST PORTS EXPORT TONS LA LB S F TAC OTHR PETROLEUM/CRUDE&FUEL OIL 4,176,898 25 16 32 9 16 MINERAL OIL 281,262 52 11 3 0 34 GASOLINE & AVIATION FUEL 231,234 0 0 10 48 42 TALLOW&ANIMAL GREASES 145,784 20 27 9 42 0 PETROLEUM GAS,LPG,ETHANE ETC 143,351 80 0 0 7 13 ALIPHATIC HYDROCARBONS 71,462 3 11 3 0 83 UNCLASSIFIABLE CHEMICALS 70,367 0 0 0 86 6 BORIC ACID,HYDROCHLORIC ACID 56,448 100 0 0 0 0 SOD CMP.CYANIDE-HYDROXIDE 34,791 0 0 8 92 0 CASTOR,CORN&COCONUT OIL 15,365 9 10 0 0 81 ETHERS 6,828 0 100 0 0 0 CROTONYL.DECYL,ETHYL ALCOHOL 6,004 0 0 0 100 0 PETRO PRODUCTS NSPF 4,793 0 0 0 0 100 OLIVE,PALM,PEANUT OIL 4,206 0 0 0 0 100 PETROLEUM ADDITIVES 388 100 0 0 0 0 KEROSENE,NAPHTHA 14 5,249,196 Source: PIERS Y2000 100 0 0 0 0 Dry bulk cargo is the only major commodity for which exports exceed imports. Dry bulk is exported from a variety of ports, depending upon the product. Again, this is a function of exporter (shipper) choice based on port proximity to product location. Inbound dry bulk is primarily made up of raw materials and cement, lime and stone (64% in 1996). Over half of outbound dry bulk are represented by grains. Coal and other petroleum products make up nearly the other half. Dry bulk exports are dominated by the Pacific Northwest ports which rely on them for trade revenues. Dry Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 208 bulk imports are more evenly distributed between southern and northern ports, including niche ports. Table 5.27 L E A D IN G * D R Y B U LK EXPO RTS - W EST COAST PORTS EXPORT________________________ TOTAL,METRIC,TONS GRAINS&FLOUR PRODS 18,645,360 COAL&COKE 9,207,295 LOGS&LUMBER 3,231,034 SOD CMP.BROMIDE-CHLORATE 2,763,024 SOYBEANS&PRODS 2,013,667 PTASS CHLORIDE,PTASS SULFATE 1,702,331 METAL SCRAP,FERROUS, PIG IRON 1,656,577 CALCINE&PETROLEUM COKE 1,049,511 Source: PIERS Y2000 *Total dry bulk exports are 39,050,246 tons. Table 5.28 L E A D IN G * D R Y B U L K IM P O R T S - W EST COAST PORTS IMPORT______________________ TOTAL,METRIC,TONS CEMENT&CLINKERS 4,255,227 LIMESTONE CHIPS 2,221,741 GYPSUM 1,972,761 ANTIMONY, BAUXITE, BERYL ORE 1,561,511 SILICA, SAND&GRIT 1,195,037 LOGS&LUMBER 853,698 Source: PIERS Y2000 *Total dry bulk imports are 16,642,308 tons. Breakbulk identified under the 6000 digit series of the harmonized commodity code includes some of the most high-value added category of commodities passing through the ports. These products include consumer durables and processed or semi-processed producer-related inputs such as ores and alloys as Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 209 well as manufactured equipment including vehicles and machinery of all types. Breakbulk inbound commodities through the West Coast in 1996 was led by iron and steel (40%), passenger cars (14%) (both from Japan and Southeast Asia), and lumber and lumber and wood (12%) (approximately 95% from Canada) (Mercer 1998). A sample of breakbulk commodities ranging from alloys to equipment is listed in Table 5.29. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 210 Table 5.29 SAM PLE B R EA K B U LK C O M M O D IT IE S (6000 C O M M O D IT Y SERIES) 6012 IRON&MANGANESE ORE 6013 MERCURY,MOLYBDEN.NICKLE ORE 6015TITANIUM,TUNGSTEN ORE 6037 MIXED METAL SCRAP 6050 PRECIOUS METALS 6052 SILVER,GOLD BULLION&PRECIP 6082 CARBON STEEL 6104 OIL FIELD EQUIP 6326 ALLOYS,MISC 6327 RARE EARTH ALLOYS 6782 CRUSHING MACHINERY 6783 INJECTION&EXTRUDING MACHN 6784 VENDING MACHINES 6785 MACHNRY MISC.CASETTE PLAY 6786 MACHINERY PARTS,MISC 6801 MOLDS 6802 VALVES 6803 BEARINGS BALL&ROLLER 6805 MOUNTED BEARINGS,BLOCKS 6822 ENGINES,MOTORS,&PARTS 6601 BOILERS,CONDENSRS,HEAT EXCHG 6825 COMMUTATORS 6602 GENERATORS 6603 TURBINES, STEAM 6609 PUMPS 6611 FANS,BLOWERS,COMPRESSORS 6612 AIR CONDITIONERS 6613 REFRIGERATION EQUIP 6622 PACKAGING MACHINERY 6625 FIRE FIGHTING EQUIP 6640 CONSTRUCTION & BLDG EQUIP 6641 HOISTS&CRANES 6660 AGRICULTURAL MACHINERY 6661 LAWN&GARDEN EQUIP 6662 DISHWASHERS 6680 PAPER MACHINERY 6682 PRINTING MACHINERY 6683 PLATE MACHINERY 6701 TEXTILE MACHINERY 6702 KNITTING MACHINERY 6704 LAUNDRY MACHINES 6827 MAGNETS 6829 TRANSMISSIONS 6830 ELEC&ELECTRONIC PRODS,MISC 6831 BATTERIES 6833 HOUSEHOLD APPLIANCES 6834 ELEC CLIPPERS,CUTTERS 6839 WELDING MACHNERY 6842 COOKING,IRONING,HEAT APPLI 6845 APPLIANCES,MISC 6846 TELECOMMUNICATIONS EQUIP 6847 AMPLIFICATION EQUIP 6850 RADIO,STEREO EQUIP 6852 TV EQUIP 6856 RADAR,SONAR,NAVIG EQUIP 6875 SEMICONDUCTORS&TUBES 6920 BUSES,CAMPERS 6921 AUTOMOBILES 6922 AUTO PARTS 6923 TRACTORS 6924 TRUCKS,LIFTS,&PARTS 6707 TEXTILE MACHINERY PARTS 6741 CASTING&CONVERTING MACHNERY 6925 MOTORCYCLES 6742 METAL ROLLING MACHINERY 6944 AIRCRAFT 6743 METAL WORKING MACHINERY 6946 AIRCRAFT PARTS 6761 EDP,NUMBER,ADDRESS MACHINERY 6762 CAL MACHINERY&REGISTERS 6763 DUPLICAT&OFFICE MACHS.MISC 6765 BUSINESS MACHINE PARTS Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 211 The top twenty U.S. exports are producer bulk goods which, in general, depend on ocean transport. Niche ports have more opportunity to become active in the bulk trades, due to low infrastructural demands. Hueneme’s success, for example, is based on breakbulk specialties as indicated below. It handles nearly 60% of banana imports and over 10% of automobiles. Hueneme is a dedicated port for several auto manufacturers (see shipper section), as well as Reefer (refrigerated cargo) trade. Table 5.30 SA M PLE H U E N E M E IM P O R TS AND M A R K E T SHARE IMPORT__________________________TOTAL,METRIC.TONS HUENEME% SHELLFISH 36 100 PINEAPPLES,EXCEPT CANNED 15 100 TEXTILE MACHINERY 13 100 PESTICIDES 5 100 FURNITURE 62 85 DYES & DYING INTERMEDIATES 3,457 81 MOTORCYCLES 6 67 BANANAS 525,387 59 TRACTORS S,239 57 PACKAGING MACHINERY 87 56 ENGINES,MOTORS,&PARTS 25,714 53 CRUSHING MACHINERY 551 52 GENERAL CARGO,MISC 114,419 45 AGRICULTURAL MACHINERY 3,171 42 BOXES&CARTONS 127 36 AIRCRAFT 53 36 GLUE,GELATIN,OSSEIN 302 28 BEARINGS BALL&ROLLER 361 16 CONSTRUCTION & BLDG EQUIP 72,253 13 AUTOMOBILES 2,116,799 13 AUTO PARTS 20,577 12 MACHNRY MISC.CASETTE PLAYERS 19,583 12 PLASTIC PRODS, MISC 652 11 FRUITS,MISC 215,463 10 Source: PIERS Y2000 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 212 Hueneme’s breakbulk exports are, like all of the West Coast, considerably smaller and less valuable, than its imports, and is dominated by produce with citrus comprising its heaviest export tonnage commodity. Table 5.31 SAMPLE H U E N E M E EXPORTS AND M A R K E T SHARE EXPORT TONS HUENEME% GRAPEFRUIT&LEMONS 55,483 100 ORANGES 38,252 100 BANANAS 187 100 CHARCOAL&PULPWOOD 103 100 PINEAPPLES,EXCEPT CANNED 14 100 RUBBER PRODS,MISC 18 61 HIDES,SKINS,FURS 66 42 PLASTIC PRODS, MISC 800 38 BUSES,CAMPERS 1,773 30 MOTORCYCLES 12 17 FABRICS,INCL.RAW COTTON 99 15 TRUCKS,LIFTS,&PARTS 3,740 13 MEASURING EQUIP,METERS 8 13 Source: PIERS Y2000 Network Regional Directions: More on Foreign Trading Partners The top trading partners to the San Pedro port hub are representative of the entire West Coast port trade on the average. This is true in large part because the trade patterns evident in one San Pedro port so large that they determine the West Coast average. One caveat concerning this particular set of data is in order. The country of origin of commodities is based on the shippers (exporter’s) address. Therefore, even if a commodity is manufactured elsewhere, it is documented according to the address Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 213 recorded by the company, which is typically a headquarter address. Figures 5D, 5E, 5F, and 5G distinguish the distribution of foreign countries importing and exporting container and breakbulk trade through the West Coast ports. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 214 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 215 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. »v:*1 Pu sia France* * * l r ' * - ~ *7 K o — r ^ ^Philippines Thalia •Guam Singapo Figure 5F Foreign Country Container Exports (to West Coast Ports) Japan Based on PIERS Y2000 Foreign Country Container Exports Percentages >25.0 10.0-14.9 £ 5.0 - 9.9 * 1.0 -4.9 • 0.1-0.9 Panama*® n u e<ue!a Coiorr la* ^ -'JJ 1:193317996 216 Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Figure 5G Foreign Country Container Imports (from West Coast Ports) United & p „ • China > ,H n " g JtiT ii GuatemaTaigfc Costa R Jcj Guam Malayila] SingapV" Foreign County Bulk Imports Percentages Ecuador £ \ . , New Zealand 1:199024798 Based on PIERS Y2000 217 218 The following section shows the major commodity groupings traded between key U.S. foreign trading partners, beginning with Japan. Japan imports and exports the more sophisticated or specialized products the U.S. trades. Not only does it import over 90% of specialized bulk equipment and machinery, such as meters and measuring equipment, automotive engines, aircraft parts, etc. that the U.S. exports, but it also imports 90% or more of expensive bulk consumer items such as berries, newsprint, citrus and pet feed. The largest category of Japanese exports to the U.S., not surprisingly, is transportation equipment ranging from air, rail, and automotive including 82% of all containerized motorcycles. The U.S. also receives over 70% of its automobiles from firms addressed in Japan. Table 5.32 JAPAN E X P O R T M A R K E T SH A R E O F S A M PLE B U L K U.S. IM P O R T S * IMPORT____________________________ TONS JAPAN % TURBINES,STEAM 1,507 100 SOYBEAN,SESAME,SUNFLOWER OIL 1,291 100 DYNAMITE, EXPLOS IVES 907 100 CASTING&CONVERTING MACHNERY 627 100 HOUSEHOLD GOODS 257 100 PIPE FITTINGS 238 100 MEASURING EQUIP,METERS 146 100 SAWS 106 100 TV EQUIP 103 100 WELDING MACHNERY 99 100 PLASTIC FILM&SHEET,MISC 82 100 CARBON&GRAPH CATHODES&ELECTR 52 100 ALUMINUM PIPES,TUBES,POWDER 45 100 BATTERIES 43 100 VENDING MACHINES 38 100 BELTS&BELTING 526 99 WOMEN'S&INFANTWARE 171 99 AUTO PARTS 20,577 99 AUTO&TRUCK TIRE&TUBES 37,129 99 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 219 Table 5.32 ('continued) IMPORT TONS JAPAN% ENGINES,MOTORS,&PARTS 25,714 98 AIRCRAFT PARTS 1,348 97 BOILERS,CONDENSRS,HEAT EXCHG 266 97 RAILWAY EQUIP 142,573 96 PRINTING MACHINERY 2,960 95 RUBBER PRODS,MISC 41 93 METAL WORKING MACHINERY 26,123 93 INJECTION&EXTRUDING MACHNRY 8,172 88 PUMPS 428 87 KITCHENWARE 291 87 STRAN D&CAB LE 72,085 84 DYES & DYING INTERMEDIATES 3,457 81 HARD WARE,MISC 638 79 SPORTING GOODS,MISC 926 73 CONSTRUCTION & BLDG EQUIP 72,253 71 AUTOMOBILES 2,116,799 71 BEARINGS BALL&ROLLER 361 70 GENERATORS 11,340 68 C-TARPITCH, PYRIDINE, PYRENE 64,770 68 STOVES&HEATERS 654 68 METAL ROLLING MACHINERY 180 65 GLUE,GELATIN,OSSEIN 302 64 MACHNRY MISC.CASETTE PLAYERS 19,583 56 FOOTWARE 49 51 Source: PEERS Y2000; 50% market share or greater Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 220 Table 5.33 JAPAN IM P O R T M A R K E T SH A R E O F S A M PLE B U LK U.S. E XPO R TS EXPORT TONS JAPAN% NEWSPRINT 314,082 100 GRAPEFRUIT&LEMONS 55,483 100 PHOSPHATIC FERT,POTASH RED 52,871 100 ORANGES 38,252 100 FiELD SEEDS&BULBS 35,629 100 UREA, BASIC SLAG FERTILIZER 2,018 100 ALUMINUM BLOCKS 1,275 100 SACCHARIDES/POLYSACCHARIDES 400 100 PRINTING MACHINERY 176 100 FOOTWARE 165 100 AIRCRAFT 104 100 VANADIUM,ZIRCONIUM&MISC.ORE 101 100 STOVES&HEATERS 58 100 LUNCHMT 35 100 BERRIES 20 100 MEAT,CHIEFLY FRESH&FROZEN 2,161 99 COATED FABRICS 99 98 VEGETABLE OILS,MISC. 20,759 97 PET&ANIMAL FEEDS 293,391 96 LOGS&LUMBER 3,231,034 94 BUSES,CAMPERS 1,773 92 WOODEN WARE, MISC. 2,378,517 91 METAL WORKING MACHINERY 724 89 MEASURING EQUIP,METERS 8 88 ORGANIC,INORGANIC ACID ESTER 22 86 SOYBEAN,SESAME,SUNFLOWER OIL 7,169 86 AIRCRAFT PARTS 84 86 TRACTORS 4,791 84 ENGINES,MOTORS,&PARTS 2,087 84 STEEL,MISC.INCL.INGOTS 3,269 84 BENTONITE 226,510 78 ALUMIN RODS,FORGiNGS,SCRAP 30,549 76 AUTOMOBILES 66,254 75 ALUMINUM COMPOUNDS 828 73 HIDES,SKINS,FURS 66 71 FISH,FROZEN 6,617 68 COAL&COKE 9,207,295 64 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 221 Table 5.33 (continued) EXPORT TONS JAPAN% RICE TRUCKS, LIFTS,&PARTS MACHNRY MISC.CASETTE PLAYERS CONSTRUCTION & BLDG EQUIP 416,503 61 3,740 54 9,854 53 12,250 53 Source: PEERS Y2000; 50% market share or greater. Interestingly, many commodities are apparently exported from and imported to fairly specific origins and destinations and not distributed across a wide range of countries. For example, the majority of U.S. exports and U.S. imports going through the West Coast ports of the following sample products are imported or exported in significant tonnage by just one country. South Korea Receives 89% of all oil field equipment; 100% of all aluminum and steel wire, and carbon steel; 63% of all canned food stuffs (one must wonder if these are destined for U.S. army bases). Sends 100% o f various liquid hydrocarbons, 64% of refrigeration equipment, 91% of electric and electronic products; 87% of an enormous 851,661 tons of metalware. Singapore Receives 100% of 42,000 tons of hardware miscellany. Sends 75% of all mineral oils Receives 100% of steel bars, 70% of foam and waste and scraps; 81% of air conditioners, and a majority of certain specialty chemicals and machinery parts. Sends 100% of petroleum and mineral waxes, 74% of cement and clinkers, 95% of apparel. Some insight into the distribution of commodities is granted by a study produced by the Port of Los Angeles (POL A) of its 1997 third quarter imports, China China Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 222 (Mainland), is the leading trade partner followed by Japan in both commodity weight and value. In this representative quarter, China’s imports were valued at over $5 billion and weighed 860,167 metric tons. Although Japan’s imports, by weight, were approximately half of China’s by weight, the value, over $4 billion was over 4/5 of China’s. This is due to the profile of specific commodities traded with particular countries. For example, the leading commodity imported from Japan was motor vehicles valued at just over $700 million (out of total $866 million received at POLA). China’s leading export to POLA was toys, valued under $450 million. The next four largest imports from China, ranked by value, were lamps and lighting parts, furniture and parts, footwear, plastics. These consumer products are representative of Chinese exports to U.S. markets in general. Compare these with Japan’s next four exports to POLA: parts for passenger vehicles, pneumatic tires, oil (not crude), and semi-processed iron and steel. These products, with the exception of motor vehicles are representative of intermediate products of industry. In addition, the overwhelming share of high-value added manufactured products and parts (6000 series of Harmonized Standard code) are imported from companies with Japanese addresses. In other words, even if the commodities themselves are manufactured outside of Japan, they are sent to the U.S. by a Japanese based or owned company. Taiwan is ranked third in both commodity weight (276 million tons) and value ($1.4 billion) in this data set. Automatic data processing machines is by far the highest valued commodity at $291 million in comparison to the average $30 million value of the next four commodities: screws, bolts, nuts, washers, etc., furniture, seats Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 223 (non-medical), and equipment for sports and pools. Fourth position is held by Ecuador, due to their export of bananas ($32 million, representing over 70% of banana bulk tonnage and 97% of containerized bananas received by West Coast ports) and crustaceans ($38 million, representing 72% of all shellfish received by West Coast ports). The total value of imports for Ecuador is $85.5 million. The value of imports from other trading partners drops from there. A listing of top container import and export trading partners (Tables 5.34 and 5.35), ranked by number of TEUs, demonstrates the differentiation of Japan, China, and Southeast Asian nations in the commodity trades. The range of foreign partners for U.S. container exports is slightly wider than the range responsible for major U.S. container imports. Tables 5.36, 5.37, and 5.38 provide a sample of leading container imports and exports from top Asian trading partners which are indicative of the way global commodity networks are patterned, with particular countries specializing in types of commodity exports. There is some relationship between imports and exports between the West Coast and these trading partners which may indicate a network at the corporate level which stitches together subsidiaries both economically and globally (geographically). Also apparent is the tendency for the smaller economies to claim a smaller market share of any one particular commodity, particularly of U.S. exports. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Table 5.34 Leading Foreign Trade Partners - U.S. Container Imports IMPORT__________________________ TEUS CHI,% JPN,%TAI,% KOR,%THA,% IND,%MAL,% PHI.% SIN, FURNITURE 537,415 59 0 13 1 4 8 7 3 TOYS 404,640 94 1 1 0 1 1 1 0 EDP,NUMBER,ADDRESS MACHINERY 330,253 47 10 10 11 8 2 6 2 FOOTWARE 293,444 88 0 1 1 2 6 0 0 GENERAL CARGO,MISC 261,147 66 5 10 6 2 2 1 2 AUTO PARTS 251,413 8 72 11 4 1 0 0 0 APPARELS,MISC. 193,681 24 0 5 6 6 10 2 6 ELEC&ELECTRONIC PRODS,MISC 185,966 44 12 5 9 6 2 11 4 PLASTIC PRODS, MISC 172,850 82 1 7 2 3 1 1 0 AUTO&TRUCK TIRE&TUBES 124,848 16 48 7 18 2 3 0 1 WOMEN'S&INFANTWARE 122,704 50 0 8 6 5 4 1 6 LAMPS&PARTS 117,203 89 1 5 3 1 0 0 0 HARD WARE,MISC 107,737 56 4 32 3 1 0 1 0 KITCHENWARE 97,792 67 1 12 5 7 5 1 0 DECORATIONS 97,451 93 0 2 0 2 0 0 2 SPORTING GOODS,MISC 96,848 69 0 20 2 4 1 1 2 BICYCLES&PARTS 86,182 79 1 19 1 0 0 0 0 COOKING,IRONING,HEAT APPLI 82,671 54 1 1 27 9 0 7 0 MENSWEAR 81,545 40 0 6 11 3 4 2 5 TV EQUIP 80,711 20 14 5 10 18 5 22 0 FABRICS, INCL.RAW COTrON 74,090 27 4 20 29 2 3 1 2 PAPER&PAPERBOARD.INCL WASTE 69,731 30 17 4 14 1 9 1 0 METALWARE, MISC 54,229 57 8 13 7 2 1 1 1 RADIO,STEREO EQUIP 53,731 59 8 2 4 1 4 20 1 MACHNRY MISC.CASETTE PLAYERS 53,389 45 22 14 4 2 1 1 0 ARTS&CRAFTS 52,518 55 0 1 1 3 5 0 8 % 0 0 3 0 1 0 6 6 0 0 2 0 0 0 0 0 0 1 2 4 1 3 0 2 1 0 224 Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Table 5.34IContinued) Leading Foreign Trade Partners - U.S. Container Imports IMPORT______________________ TEUS CHI,% JPN,%TAI,% KOR,%THA,%IND,%MAL,%PHI,%SIN,% POTTERY&CERAMICS 51,388 73 3 1 1 5 2 3 1 0 HANDBAGS 50,794 85 0 1 2 2 3 0 4 0 FANS,BLOWERS,COMPRESSORS 44,705 61 12 14 5 6 0 0 0 1 DUPLICAT&OFFICE MACHS.MISC 44,672 24 54 1 3 8 0 8 0 0 CANNED FOODSTUFFS 42,548 13 0 2 1 19 6 1 21 1 LEATHER PRODS 42,433 46 0 3 2 24 1 0 17 0 ENGINES,MOTORS,&PARTS 39,842 18 59 5 7 2 2 1 1 2 GLOVES 39,535 35 0 5 2 9 5 38 1 0 HOUSEHOLD GOODS 37,086 19 28 3 12 2 1 1 1 5 BAGS&BAGGINS 35,526 62 1 4 5 7 9 2 3 0 SHEETS,TOWELS,BLANKETS 34,942 52 1 4 3 3 1 0 0 0 MOTORCYCLES 32,436 7 82 7 2 0 0 0 0 0 HOUSEHOLD APPLIANCES 30,668 88 1 2 7 0 0 0 0 1 AMPLIFICATION EQUIP 29,222 53 3 13 7 3 2 13 2 3 WOODENWARE.MISC. 27,328 53 1 4 1 8 12 4 3 1 GLASSWARE 26,173 41 4 9 3 1 8 2 0 0 SHELLFISH 26,012 13 2 1 4 50 8 0 1 1 GROCERY PRODS,MISC. 26,005 22 10 7 8 24 2 2 8 1 SCREWS, FASTENERS 25,667 25 3 64 4 2 0 0 0 0 AUTOMOBILES 25,027 1 68 9 6 0 0 0 0 0 225 Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Table 5.35 Leading Foreign Trade Partners - U.S. Container Exports EXPORT TEUS CHI% JPN%TAI% KOR,%THA,%IND,%MAL,%PHI,%SIN,%AUS,% PAPER&PAPERBOARD, INCL WASTE 459,853 42 8 7 18 4 8 1 3 1 1 PET&ANIMAL FEEDS 237,042 4 72 7 11 1 2 0 1 0 0 GENERAL CARGO,MiSC 124,768 14 21 6 10 2 2 1 3 5 7 VEGETABLES 118,771 10 57 7 5 1 1 2 3 3 2 MEAT,CHIEFLY FRESH&FROZEN 111,313 4 73 3 16 0 1 0 0 0 0 FABRICS,INCL.RAW COTTON 93,058 15 11 10 10 6 14 1 2 0 1 SYNTHETIC RESINS,NSPF 84,785 61 7 7 5 2 1 2 1 10 2 FRUITS,MISC 78,590 18 10 25 1 2 5 3 4 2 0 LOGS&LUMBER 70,819 13 57 4 6 2 4 1 4 0 1 MIXED METAL SCRAP 62,952 91 2 2 2 0 1 0 0 0 0 SYNTH RESINS & PLASTICS 59,996 45 13 11 10 3 1 2 2 10 1 GROCERY PRODS,MISC. 56,416 14 21 6 9 2 2 2 7 6 3 POULTRY,CHIEFLY FRESH&FROZEN 48,423 65 13 3 11 0 1 0 1 1 0 ORANGES 43,874 35 20 3 24 0 0 7 1 6 2 BOXES&CARTONS 43,076 13 46 7 12 1 7 1 1 1 7 HIDES,SKINS,FURS 41,192 32 8 18 37 3 1 0 0 0 0 AUTO PARTS 40,090 7 46 2 9 5 4 0 1 2 19 VEGETABLE FIBRES 31,497 0 51 9 40 0 0 0 0 0 0 O S 227 "O < D 3 G '■3 G O V in CO in ' JD H C O t : o a. x W V- a> C s - * - » c o O c/i q 4> G t ; c d X < 1 3 T3 ra G so o X SO _ c -5 « < D C / 3 3 < Z 0 3 x o id 0 3 3 L U H t — x o a. x L U O^ OT- Ni n NONOOl NO^ ^ NCMOO O n O O n O ' - M i D T - ' f O C M C M S l D N I D M t M C D O O T - 0 3 T - C O i - t - 0 0 0 > - - < - - 5 - C O ' r - ' < - 0 O ^ r O O I O M '- M 'r rO N t N n O ( D T - N O N O r - O N O '- i - m o ^ w w n o l O N C M O m N N O r o O r - ' - W O ' i f W ' f r - O 1 0 9 0 ' - N r t M ^ r l o n O ( D ( D I J ) ( D ( l) t - ^ r r o c M c o t M O i n i n T - ' j - T - f l i - p - T - r o M t D O C M O O C O C M O ffl'-oiinnfflT -N O O N ccicM ^ C M C M C D T - T - i - N T - D C M ^ i n 03 O n N O f f l N ' f N C M cm t- r- t- cm t- cm c n c o o c n c M C M O o o CO v - C M t- C M t- C O lO T — C O L O C O O C O C D C M O C D C 3 0 C O C D C O o C M o C D O C O C D C O C D C O C M o M * C D C M C M C M CO C D O m ^T C O G O C O C O T — in C M C D C O C M T“ C D in h - co T “ o ' C D N -~ C D " C D " in" in" co“ c m " c m " " 5 — o “ CD o " 05" C D " co" c d" C O C O C M C M C M C M C M C M C M C M C M C M C M C M C M ^r- ■ * “ C O Q O O O Q _ l o X LU 03 3 O X 03 D O X CL x CO 3 cc«o 1 1 1 t: r-J Q_ 3 LL < Z »3 X LU ^ CO J z g CO < LU O X Z LU O CO a o oc z x x n S5 O 5 rV < 03 < a o I — LU 03 5 3 X o q CO 03 2 D- *=• L U CO Z Q < CD O K I o O 5 fe £ p S I 03 CL 111 03 LU o < X LU > 03 L U 03 03 X LU V < < “■ o UJ 2 p LU LU m o a o X % o - X o g O u LU < K Z = o 03 Z 03 L U X 03 —j a m 03 — S u. ^ C O 6 3 < o w CD X ^ q < S x ° y 3 2 LU H - h — LU X < 52 o o3 _ 03 UJ X 5 i < ti 2 x o Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission o f th e copyright owner. Further reproduction prohibited without permission. Table 5.35(Continued) Leading Foreign Trade Partners - U.S. Container Exports EXPORT TEUS CHI% JPN% TAI% KOR,%THA,% IND.% MAL,% PHI,% SIN,% AUS,% DIATOMACIOUS EARTH 16,538 1 13 4 5 4 2 1 1 2 9 FOAM WASTE&SCRAP 16,097 89 1 1 1 0 0 0 0 0 0 FURNITURE 16,018 17 32 3 5 1 1 1 2 10 7 CANNED FOODSTUFFS 16,016 6 46 18 9 1 0 0 1 2 4 MEDICAL EQUIP&SUPPLIES 15,341 11 19 10 5 1 0 2 2 9 21 BUILDING MATERIALS 15,014 5 57 3 17 1 0 1 2 3 2 ELEC&ELECTRONIC PRODS,MISC 14,701 25 12 6 5 8 1 1 13 5 3 RUBBER, SYNTHETIC 12,619 29 24 13 7 5 5 2 2 6 4 VINYL ALCOHOL,PVC RESINS 12,612 68 2 11 3 2 3 0 0 5 2 ALUMIN RODS,FORGINGS,SCRAP 11,593 30 24 18 21 1 1 2 0 0 0 BEER&ALE 11,477 10 28 32 4 0 0 0 0 1 2 ENGINES,MOTORS,&PARTS 11,201 25 24 2 5 1 0 2 1 8 21 EDP,NUMBER,ADDRESS MACHINERY 11,101 23 7 5 10 3 0 8 1 12 4 AUTO&TRUCK TIRE&TUBES 10,343 1 64 1 7 1 0 1 2 1 8 CONSTRUCTION & BLDG EQUIP 10,308 7 4 2 3 1 1 1 1 2 7 CANDY,JAM,CONFECTIONS 10,299 12 34 10 9 3 6 1 9 3 7 TV EQUIP 10,079 4 1 6 13 0 0 4 0 1 1 MINERAL OIL 10,073 13 16 22 6 4 11 3 4 6 3 TOYS 9,978 13 16 5 4 0 0 1 1 3 12 METAL SCRAP,FERROUS,PIG IRON 9,713 29 7 23 37 1 0 1 0 0 0 RICE 9,451 2 30 1 1 1 11 0 18 2 4 N - > N O 00 229 Table 5.36 LEADING U.S. IMPORTS FROM TAIWAN IMPORT__________________________________ TOTAL,LOADED,TEUS TAIWAN% SAWS 7,000 81 NUTS&BOLTS, STUDS 20,377 74 SCREW EYES,HOOKS 84 74 SCREWS, FASTENERS 25,667 64 STAINLESS STEEL PIPE 877 63 COPPER ANODES,INGOTS 1,042 53 ADHESIVE&PRESSURE TAPES 3,641 53 PHONO RECORDS 2,259 47 TIN PLATE, INCL.SCRAP 355 45 STEEL PLATE&SHEET 2,512 43 MISC. INORGANIC COMPOUNDS 2,254 43 TEXTILE MACHINERY PARTS 286 42 RIBBONS 922 41 PACKAGING MACHINERY 624 40 FLAVORS 727 39 STEEL WIRE RODS 817 39 BICYCLE TIRES&TUBES 1,101 38 SEWING MACHINES 2,715 38 Source: PIERS Y2000 The specialization in Taiwan, in terms of U.S. imports entering the West Coast, is evident in the significant market share they control of light-weight metal ware. Taiwanese share o f TEUs over the 20,000 mark of nuts, bolts, screws, etc. is particularly notable, as is China’s domination of light-weight consumer items (such as basketry, toys, apparel, and spoting goods) and entry level electronics such as fans and cassette players. Korea’s specialization in wire, bars, cable and resins is evident. Korea has also apparently noteworthy success with some more sophisticated electrical consumer items such as air conditioners. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 230 Table 5.37 L E A D IN G U.S. IM P O R T S F R O M K O R E A IMPORT_________________________________ TOTAL, LOADED,TEUS KOREA% NEWSPAPERS 480 92 NITRILES 723 86 OYSTERS 203 83 JUDO,KARATE EQUIP 247 70 STAINLESS STEEL WIRE 536 67 STAINLESS STEEL BARS 1,278 62 COPPER&BRASS RODS 1,686 61 DEXTROSE&GLUCOSE 4 50 STAPLE FIBRES 7,941 47 TACKS&NAILS 14,031 46 SSA-FATTY AMINE,AMIDE NSPF 160 46 AIR CONDITIONERS 19,674 45 FERRITES 759 45 SELENIUM,SILICON,STRONTIUM 1,112 44 HOSIERY 2,588 44 RUBBER,SYNTHETIC 8,665 43 SAFES,ZINC WARE,COINS 2,053 39 STRAND&CABLE 4,024 38 SYNTH RESINS & PLASTICS 17,917 38 Source: PEERS Y2000 U.S. Exports to these trading partners is less easily focused, except in the case of Japan. Japanese imports of containerized goods leaving the West Coast dominate 70-90% of consumer items, which are often higher priced and considered “luxury” items: lunchmeat, tobacco and cigarettes (94%), berries, and even bananas, which are transshipped from Ecuador through San Pedro. Japan also imports 64% of auto and truck tires and tubes. Again, this may be indicative of the automotive global commodity chain or a conglomerate network between subsidiaries and contractors. Again, the “Japanese” address for these U.S. exports may simply indicate corporate headquarters while the actual commodities are shipped elsewhere in Southeast Asia. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 231 China has seized increasing market shares of a broad range of commodities imported through the West Coast ports. U.S. exports, however, are less diverse and the largest Chinese market shares are apparently linked to low-end intermediate goods and recyclables. Table 5.38 L E A D IN G U.S. EXP O R TS T O C H IN A EXPORT_____________________________________ TOTAL,LOADED.TEUS CHINA% MIXED METAL SCRAP 62,952 91 FOAM WASTE&SCRAP 16,097 89 NEWSPAPERS 29,503 72 VINYL ALCOHOL,PVC RESINS 12,612 68 POULTRY,CHIEFLY FRESH&FROZEN 48,423 65 SYNTHETIC RESINS,NSPF 84,785 61 PE.MELAMINE.UREA RESINS 18,762 58 SYNTH RESINS & PLASTICS 59,996 45 PAPER&PAPERBOARD.INCL WASTE Source: PEERS Y2000 459,853 42 Imports. Exports, and Global Integration Based on the analysis of data in this chapter, trade through the West Coast port nexus of the port-shipping Global Commodity Network (GCN) is characterized by the following patterns of concentration: 1. The great volume of imports relative to exports, except in the case of dry bulk exports (which the Mercer Consulting Group suggests will decline as a share of West Coast trade), 2. The enormous size of the San Pedro market share, in nearly all markets, particularly in imports, relative to other West Coast ports, due in large measure to its GCR hub port status (and consequently it’s location as “first port of call” along the West Coast), Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 232 3. The relative shares of trade handled by a limited and dominant number of economic actors (shipping lines, and to a lesser extent, shippers) and carried along a limited number of trade routes in the Pacific Rim between a relatively limited number of ports and trading partners, 4. The specialization of ports in handling particular types of cargo and commodities, (and therefore categories of shippers). It is clear from this cursory overview of a very large amount of data (consisting of over thirty separate matrices), that further analysis of this global commodity network is warranted. The next analytic approach would benefit from the application of correspondence analysis, literally known as netware. Nonetheless, the descriptive analysis provided here evidences patterns of concentration along trade routes, between various economic partners, and of cargo. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 233 Chapter 6. Conclusion: International Trade and Globalized Transportation Trade and Global Concentration Trade through the West Coast seaports provides an ideal portal for glimpsing at least one significant and large slice of international trade characteristic of the global economy. Indeed, as Rimmer observes, “The stretching of shipping networks across the globe has been closely associated with the expansion and integration of the world economy” (Rimmer 1997a: 8). Ocean freight transportation, as a result of profound technological change as well as its function in capitalist circulation, has significantly contributed to the realization of capitalist global production. Simultaneously, the historically international transport sector, has been transformed into a globalized one. This dissertation has developed a hybrid construct, the global commodity network (GCN), in order to analyze the role of the ocean freight transport sector as both a sector of production in its own right, and as a vital pillar of circulation and global trade. The utility of the GCN is derived from incorporating economic geography inspired by GCR (global city research), which lends insight into the geographic profile of capitalist circulation, into an analysis of ocean freight transport as a GCC (global commodity chain) of industrial production. The empirical investigation of the profile of West Coast trade through the ports used the GCN in order to context the economic details of cargo category, commodity type and value, market shares of key industry participants, and regional directions of trade, in terms of geographic patterns. It is hoped that the patterns which emerge from this Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 234 investigation helps to elucidate the economic processes of globalization as well as associated geographic configurations of trade and production. The empirical investigation of trade through the West Coast ports is supportive of the hypothesis underlying this project that this trade tends to be concentrated in terms of the respective market shares of particularly dominant groups of economic actors and within rather circumscribed geographic networks. The most concentrated market shares are evident among the top carriers (shipping lines), particularly in the containerized trades. The least relatively concentrated market shares are evident among shippers (importers and exporters), due in large part to their much greater numbers. In all trade lanes, market concentration among shipping lines and shippers is greater for imports than for exports. This trade is also markedly concentrated at the port node where the geographic network of load centers (largest ports) dominate most trade, especially containerized trade. Trade lanes themselves are most heavily concentrated in the Trans-Pacific and among only a dozen ports. Trading partners evidence concentration in market share by volume, value, and commodity type. Analysis of trade patterns associated with this latter group is especially useful in determining the extent to which trade through the West Coast ports is evidence of global integration and will be discussed further below. The ocean transport supply chain is highly concentrated in other respects as well: capital assets, revenues, product volumes and values, and ownership in each of its central linkages, most notably: shipping lines, shippers and ports. Based on the empirical study of the West Coast ports, each of these nodes has a distinct functional Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 235 and geographic profile. That is to say, that each link in the GCC is dominated by a singular group of industry actors with distinct geographic areas of operation. This GCC is highly concentrated due to a number of factors. High barriers of entry due to the complimentary technology associated with required economies of scale limit both the number of carriers and the numbers of ports equipped to compete. In addition, shipping transport is a historically closed sector not characterized by any significant degree of horizontal or vertical integration. Economies of scope also present barriers to entry as sufficient economies of scale are required in order for carriers to offer round-the-world or pendulum service routes. In general, the global commodity chain functions as a producer-driven global commodity chain (GCC) governed primarily by carriers increasingly organized through global alliances. Governance of Global Commodity Chains (GCCs) and the Port-Shipping GCC as a PDC The Global Commodity Chain (GCC) framework has previously developed the differentiation of GCCs according to two distinct governance structures. Producer-driven GCCs (PDCs) represent "industries or industry segments in which TNCs play the central role in coordinating the production system (including its backward and forward linkages) in GCCs.... (and are) most characteristic of capital- and technology-intensive industries like automobiles, computers, aircraft, and electrical machinery" (Gereffi 1992:2). In contrast, buyer-driven GCCs (BDCs) industries represent what business literature once referred to as hollow firms (Riddle Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 236 and Brown 1988:247). These are "manufacturers without factories" who "rely on complex tiered networks of subcontractors that perform almost all their specialized tasks" (Gereffi 1992:3). Although all of these activities increasingly rely on knowledge inputs and innovative technology, the focus of the upstream segment of BDCs is the product design or service package and is more immediately related to the downstream service activities of distribution than with the upstream capital- intensive technology and research and development (R&D) which are at the heart of PDC operations. The port-shipping GCC in this case study appears to operate as a PDC dominated by shipping lines which may operate within a transnational or national conglomerate with extensive international ties. As discussed at length, this industry is dominated by a handful of shipping lines which each deliver a core, capital intensive and highly technological service, the transport of cargo, by a fleet either leased or owned by the corporation. Clearly, the barriers to entry into oceanbome transportation can be overcome only by the largest of economic actors. Although "big" is not enough, nor sufficient, it is certainly necessary. High capital investment capabilities to cover vessel purchase and operation as well as costly service overhead keep firm birthrates and also death rates low enough to enable huge shipping lines to have an oligopoly over ocean freight. Although shipping line service was once differentiated and organized primarily by the route monopoly granted to major shipping lines organized into liner conferences, it has since been homogenized by the technological changes examined Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. in Chapter 3. These changes, notably the rise of containerization, as well as the liberalization in the 1980s of conferences have since given way to ocean carrier alliances in which members sell one homogenized product, container slots (See Chapters 4 and 5). Carriers have long taken advantage of this capability to share, charter, or exchange unused vessel capacity (“slots”) in selected trades. The standardization of oceangoing containers and handling equipment now allows one ocean carrier’s containers to travel on another carrier’s vessels without operating penalties. By sharing capacity, one carrier can still serve a market even if it is not using its own ships (or supplement its own vessels) while the other can offset the cost of excess capacity. As a result shipping lines achieve international economies of scope as well as technological economies of scale, both of which under gird their ability to govern the international sea freight as a PDC. As demonstrated in Chapter 3, competition among shipping lines has shifted from the domain of the core product, ocean transport, to that of a new product that relies on the integration of multiple links in an ever longer and more complex GCC. The fact that the transport product is now door-to-door, even shelf-to-shelf transport has heightened the leverage of shipping lines within the PDC. Competition among shipping lines is increasingly based on this service package which depends on IT capabilities allowing the shipping line and the customer to track cargo through a multi-modal route from point of origin to destination. Nonetheless, the lion’s share of revenues is derived from their core service, namely ocean transport, which they Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 238 sell to shippers (importers and exporters).1 The growing importance of intermodality and IT services in the downstream distribution and marketing of ocean freight services investigated in Chapter 3 has also increased the importance of the Buyer Driven Chains (BDCs) which interconnect PDCs. The Global Commodity Network is composed of many levels of interconnecting and overlapping producer driven chains (PDCs) and buyer driven chains (BDCs). Competition waged in BDCs is as fierce as that waged in PDCs, but "weak" in the sense that it is centered in the realm of exchange where numerous firms primarily vie for price, market and wage advantage. Barriers to entry in BDCs can be erected by the largest companies due to their immense bargaining power, knowledge of markets, auxiliary services or outlets, as well as their ability to afford to take risks in an effort to sustain competitive advantage. In BDCs the battle for market-share takes full advantage of available technology but does not typically generate such technology. As mentioned, shipping lines are aggressively driving vessel technology. The coordinating advantages of BDCs are employed primarily to promote or sustain markets or to seek out and acquire more, cheaper or better quality inputs, including labor. Firms dominating BDCs in particular must maintain multi product lines and unceasingly modify, update and ultimately replace each one of these. 1 According to a recent interview with one carrier CEO, the company’s “core activities” are in “ocean transport (which accounts for about $1.1. billion o f our total revenue o f approximately $1.3 billion - most o f it, in fact).” Interestingly, he includes certain nonfactor support services, “global logistics, vehicle processing/PDI (pre-delivery inspection) and also the operation o f terminals,” as an integral part o f this core product (interview by Mark Ellis, November 8, 1999, Laboumet website (http://www.laboumet.net). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 239 Importantly, these downstream linkages have lower barriers to entry and are therefore full of numerous freight forwarders, agents, and third-party (3P) integrators, and some handle significant trade shares.2 Although the advancement of IT systems and applications may alter the role and influence of dominant integrators in the future, they compete with Shipping lines primarily in the field of logistics management. Integrators work to prevent empty capacity and idle equipment by coordinating information and instituting interactive EDI connections between the shipper, producer, and sub-suppliers within the logistical chain. Economic actors in this downstream segment of the shipping GCC are segmented into shipping lines and non-shipping line competitors. In this linkage of the GCC, participants bundle many non-factor services into a single service, a delivery system. The “delivery system” product provides transport service, the core service, as well as necessary non-factor services which include support systems such as documentation services, insurance, communication and information networks. Any one or all of these services can be sourced out or horizontally integrated into industrial GCCs.4 Third-party integrators operate within a BDC distinct from, but overlapping the shipping PDC in these downstream activities. The most influential 3P providers operate in multiple 2 This link w as previously dominanted by non-vessel ocean cargo carriers (NVOCCs) who operated on the same basis, but who are now recognized only as third-party agents by Ocean Shipping A ct o f 1998 3 The largest o f these m iddlem en com pete with shipping lines by purchasing banks o f slots and reselling them to shippers, often at lower prices. The largest W est Coast integrator, Expeditor Inc. controls 1.3% o f the W est Coast market. In contrast, the largest shipping line, M aersk-Sealand, controls a 12% market share (see Chapter 5). 4 Historically, m ost o f the world’s major oil lines are also the largest ship owners. Esso- M obil, BP-A m oco, Shell, and Chevron all own their ow n tanker fleets which represent 8- 10% o f tanker tonnage (m aritim e website), as have other bulk cargo producers such as D ole and Hyundai. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 240 transportation sectors, but do not deliver a core transport service. In contrast, shipping lines have extended their service product to multi-modal transport systems only if these systems are integrally connected with ocean transport. The influence of the carriers vis-a-vis the vast majority of shippers and 3P agents is heightened due to economic and structural barriers; The high barriers of entry which characterize PDCs is evident not only in the lease or purchase of vehicles, costly operation of transport, but also the expense of leasing finite terminal space at a limited number of technologically equipped ports. Alliances have allowed shipping lines to spread these costs among themselves, but there is no similar organization or unity among shippers or 3P agents. Undermining this leverage, however, is the typical state of overcapacity characterizing the industry, created in large part by economies of scale spawned by technology which is producer (shipping line) driven. Ports are central geographic nodes in the international sea freight GCC and, taken together, form a meta-global city region (GCR) network (see Chapter 3). Despite their obviously vital role in the global commodity network (GCN), they do not provide it with any apparent governance functions. Rather, the ports are integrated into the GCC through the core transport activities provided by the shipping lines. In the case of the West Coast U.S.A. ports, any leverage exercised over the shipping lines is based primarily on their geographic location vis-a-vis GCRs (see below). The West Coast ports all provide incentives to attract shipping lines to lease terminal space through pricing (the more cargo sent through the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 241 cheaper the rate) and infrastructure.5 They must expend considerable capital for compulsory complementary technology to sustain the shipping line’s cellular vessels: gantry cranes, wide berths, deeply dredged canals, and mega-sized terminals. They must now also supply the efficient multimodal connections demanded by shipping lines engaged in fierce competition to provide a seamless transport supply product. The ports are also the geographic site where amodal as distinguished from intermodal agents operate. They supply support services which are contracted for by the port or carrier as necessary, but do not represent a linkage within the port- shipping GCC. They form a separate local market and include pilots, tugboats, forwarding agents or integrators who do not act shippers. Finally, the most up-stream and most down-stream linkages of the port- shipping GCC network are represented by shipbuilding and shipbreaking, respectively. Shipping lines are key economic actors in both of these segments of the industrial GCC linkages as well and exercise considerable influence, as a buyer of ships on one hand and a seller of scrap on the other. The shipping lines order vessels from the upstream shipbuilding linkages, and either spin off aging vessels into secondary or tertiary shipping tiers or into the ship-breaking link downstream where the vessels are mined for scrap metal. Factor services (also identified as producer or "intermediate" services) required by shipbuilding involve extensive linkages integral to production plans: i.e. an engineering consultancy or architectural design, which 5 For example, the ports have been pressured to condense numerous terminals into fewer mega-terminals to serve mega-carriers and their alliance business (in the case o f both San Pedro ports and all o f the Pacific Northwest ports). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 242 are also interactive with the production process: i.e. building plans are continuously revised during construction. These are part of shipbuilding’s own industrial GCC and distinct from the ocean transport GCC. The descriptive project of situating the economic and geographic linkages of the port-shipping GCN in the global economy is presented in Chapter 4. There, it becomes evident that, as a great deal of globalization literature indicates, the highest value-added core niches of PDCs and BDCs are geographically located where the most lucrative markets and most highly developed institutional and economic infrastructures in the world tend to be agglomerated. In addition, the transformation of a historically international industry into a globalized one has resulted in the increasing importance of economies of scope, which depend on coordinating advantages (Dunning 1989:117). Coordinating advantages are possible only if the linkages interconnecting segments of a GCC and between different GCCs are of the highest efficiency and effectiveness. Thus, these core-niches necessitate high-end services that can become a firm's primary competitive advantage; an advantage often greater than advantages secured via traditional cost and efficiency allocations. But even this is not enough. "The key to longevity in dynamic, knowledge-intensive industries ... is to be in a position to control the transformation of the market, rather than merely respond to changes in it" (Mytelka 1987:50). The larger and more international an enterprise is the more control it can exert directly and, more importantly, indirectly over other economic actors in the GCC. This control is strengthened by the atomization of production to the extent that Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 243 smaller economic agents must conform to the economic demands emanating from core niches which are expressed increasingly through the market rather than through any organizational hierarchy. These results are consistent with the port-shipping Global Commodity Network (GCN) case study. Carriers emerge as chief governors of the sea freight Global Commodity Chain (GCC) based on their strategic position amid the many intersection GCCs criss-crossing the port-shipping GCN. To a large degree, they integrate these many GCCs. They also determine the ports they frequent within the parameters of market demand and the requirements of complementary technology. The regional ports capture trade for which they have a locational or logistically advantage and compete for intermodal trade which is discretionary. As discussed at length, the San Pedro hub captures the lion’s share of discretionary traffic quantitatively due to its status as first port of call, which in turn is based on the regional market demand. An analysis of the profile of commodities passing through the ports beyond cargo category (i.e. containerization versus bulk trades), however, does not suggest any other qualitative dimension to the hub share. The type of commodities passing through the ports reflects forces exogenous to the ports, such as shipper location, product destination, or carrier contracts. In sum, the ocean transport supply chain functions as a producer- driven global commodity chain (GCC) governed primarily by carriers increasingly organized through global alliances. Atomization of production has increased the number of linkages representing stages of production and the geographical location of those stages in GCNs. The Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 244 coordinating function of the production of GCCs depends on the innumerable services organizationally controlled by the TNCs at the forefront of international production. These services, particularly those associated with finance capital (as demonstrated by a vast literature on globalization), are globalized in that they represent a significant degree of FDI across borders. The role of ocean transport in the sphere of circulation is critical to and supportive of the integration of the many industries and geographical regions spanning a globalized economy. It is clear that the development of international transportation services capable of physically connecting these locations and the many stages of production spanning the globe is essential to the existence of GCNs. Some of the most valuable findings of the empirical portion of this dissertation lend insight into our understanding of this global integration. Trade and Global Integration PIERS data is inconclusive concerning the degree of global integration represented by trade through the West Coast ports. That is, the profile of imports and exports moving through the ports may or may not represent intermediate goods required by GCC-organized production. According to PIER’s harmonized four-digit commodity codes, foreign trade merchandise is composed of both fully assembled (and packaged) commodity goods as well as intermediate goods which are purchased by both producers and consumers alike. The best approach, therefore, is a closer analysis of linkages and cargo content passing between trading partners. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 245 For the most part West Coast seaborne trade relies on just a few of the over 100 countries trade flows to and from. In 1998 five countries accounted for 58% of total tonnage and 67% of total trade value: Japan (largest export share), China (largest import share), Taiwan, South Korea, and Ecuador (Mercer Management 1998). The West Coast ports send one half of imports on to the rest of the country, especially to the western regions. It has been estimated that in 1998, 62% of West Coast imports were distributed to the nine-state Western region and 58% of exports originated in the nine-state region.6 Further, an interesting pattern indicative of geographic concentration based on commodity type moving between regions, particularly for imports, emerges from the data. Commodities entering the USA through the West Coast ports are linked to fairly specific countries of origin (see Chapter 5). This is borne out by data culled from the foreign ports paired with West Coast ports, as well as data concerning commodity country of origin. West Coast exports are also highly differentiated from imports which indicates some degree of regional specialization in production. Exports are also dwarfed by imports in sheer tonnage. This is reflective, on one hand, of the great variety of domestic shippers using the ports for their exports. On the other hand, the relatively smaller size of this trade may be associated to the nature of these exports. It is possible that many of these exports are intermediate goods which are combined with intermediate goods from other geographical regions at off-shore 6 Based on PIERS data for 2000 and Mercer Management! 998. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 246 production sites, and then imported in greater quantities as finished products or other processed intermediate goods. The data is supportive of this possibility as indicated by several analyses. The 1998 Mercer report states that the “Far East expanded economic growth (has been) built on exports, coupled with the growing demand for intermediate products from the U.S. which are, in turn, used in the region’s (Southern California) exports” (Mercer 1998:1-1). The Port of Los Angeles 1995 Annual Report amplifies this point, deducing that “Raw or partly improved products comprised most exports while imports consisted of more processed or finished goods” (9). Other data is supportive of this finding. “U.S. companies have had to emphasize cost efficiency in competing with Japanese and other Asian companies. To do so, they have increased sourcing of components and finished products from the four Asian Tigers and other Southeast Asian countries, thereby contributing to the increased U.S. trade with the region. So have the Japanese companies” (Kotabe 1998). The example of scrap metal based on PEERS data helps to illustrate this sequence. Last year, over two million tons of “mixed scrap metal” were exported by the West Coast hub ports (44% San Pedro). Nearly 100% of it is sent to Southeast Asia, 56% to Korea alone, which, sent back well over 850,000 tons of metalware (87% of West Coast total), over 27,000 tons of electronic and electrical equipment (91% of West Coast total), and other metallic goods, including barbed wire (100% of West Coast total). Presumably, a great deal of exported scrap metal reenters the US in the form of a wide spectrum of products imported from foreign trading partners. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 247 The most valuable and processed goods are often traded between the most developed and wealthiest economies. Japan, for example, receives the vast majority of U.S. 6000 series breakbulk commodities (see chapter 5), and sends 71% of the two million tons of automobiles imported into the West Coast. It is not clear to what extent these imports contain parts (which contain U.S. scrap metal) imported by Japan from Korea. Some scrap is likely to be embodied in the 16% of automobiles imported from Korea as well. (Japan received no U.S. scrap metal exports). The data is also ambiguous concerning the true country of origin for U.S. imports. Imports labeled as sent from particular countries, such as Japan, may well be manufactured by Japanese subsidiaries in Southeast Asia. It is less likely, however, that imports labeled as originating in Korea are manufactured in Japan. The present study can only begin to deduce the degree of globalization operative within this GCN. One measurement of the extent to which international trade is indicative of globalization and therefore integration of otherwise separate markets, is the extent to which intermediate goods are shipped between subsidiaries of major MNCs. This is difficult to measure for the port-shipping GCN due to the generic listing of commodities by code and the unreliability of shippers’ names and addresses. One promising avenue for determining the extent of global integration is measuring the extent to which firms are active in more than one national market. UNCTAD’s Division on Transnational Corporations and Investment did such a study and found that there has been an explosion of this kind of economic activity Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 248 over the last decade. By 1990, 37,000 firms qualified as multinational in their activities, responsible for 205,00 separate foreign affiliates. In 1992 the world’s largest 100 firms controlled approximately $3.4 trillion in assets of which approximately 40% was held outside the firm’s country of origin. In the same year world-wide sales by foreign affiliates reached $4.8 trillion, which exceeded the $4.3 trillion traded in world-wide trade by non-affiliates. This, according to two scholars tracking multi-national corporations, demonstrates “their considerable influence and control over global patterns of production, trade, technology, investment, Industrial structure, and competition” (Dymond and Hart 2001). U.S. public agencies similarly track multi-national corporate activity. The Bureau of the Census, Foreign Trade Division, of the Department of Commerce, tracks the “share of related party trade” which zeroes in on “trade by U.S. companies with their subsidiaries abroad as well as trade by U.S. subsidiaries of foreign companies with their parent companies” (U.S. Department of the Census 2000). According to their June 2001 report, Related party trade accounted for $563 billion or 47 percent of the total annual value of imports, and $246 billion or 32 percent of the total annual value of exports. The share of related party trade for 1998 and 1999 was also 47 percent for imports and 32 percent for exports. The highest ratio of goods trade by related parties among Pacific Rim major trading partners, was 74 percent for imports from Japan. This indicates a high integration of Japan and the U.S., although it would be difficult to surmise the degree of integration between GCRs (global city regions) or the exact commodity content of this trade. The lowest ratios were 11 percent for domestic exports to Korea and Hong Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 249 Kong showed the lowest ratios of related imports; China and Taiwan, the lowest ratios of related exports. However, the PIERS data is suggestive of integration of global commodity chains for particular industries (indicated below). Another form of economic integration is indicated by trade balances. It is less than hyperbole to suggest that the poorest of nations cannot afford debt while the richest run deficits. Bureau of the Census statistics indicate that the two most significant of U.S. trading partners reliant on the West Coast ports for their trade, Japan and China, make up over one quarter of the U.S. trade deficit (Website 2001). Of the total U.S. international deficit of $31.2 billion our good s deficit with Japan reached $6.2 billion (Japan’s total exports to the U.S. were $5.9 billion and their total imports $12.1 billion), and our goods deficit with China stood at $5.7 billion deficit (total U.S. imports of $7.6 billion worth of Chinese goods as compared to our total exports of $1.9 billion to them).7 Thus, there is integration of our consumption markets with their production markets. The weakest trading region for the West Coast ports is the West coast of Africa. It has neither the geographic proximity nor economic strength to reach U.S. Pacific hubs. Areas such as these that display little trade, minimal trade imbalances (either direction), or any significant related party trade, in general, are not globally integrated. Clearly, transport linkages must be considered as a crucial prerequisite to participation in global trade. As regulator}' barriers fall and technical distances shrink transportation costs, ironically, become a more salient issue. That is to say that place 7 The U.S. has a $2.8 billion deficit with Mexico (total exports $9.2 billion total imports $12.0). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 250 according to pure distance, may no longer be a major factor of transport costs, but access to the technological colossus built out of global transport networks may is. These networks may have high barriers of access for those economies and economic actors less integrated into the global economy (and therefore the transport systems). Currently, for example, transportation costs for some agricultural exports can reach 50 percent, if not more, of the GIF (cost, insurance and freight) value of the shipment “even with today's comparatively low ocean freight rates” (Reichert 1999). According to research conducted by Wijnolst and Wergeland (1996), the fifteen landlocked nations of Africa continue to suffer from excessive transport costs. High import transport costs inflated the consumer prices of imported goods, while high export transport costs undermined the countries' competitiveness in foreign markets. An understanding of this dimension of transport geography may be deepened in future research by reference to regional transportation statistics. In Summation This dissertation informs globalization studies with a fresh case study and the development of a hybrid theoretical construct, the global commodity network (GCN). The GCN construct is drawn from globalization theories, represented by Global City Region (GCR) theory and Global Commodity Chain (GCC) research, and provides a means of incorporating the regional (geographic) and sectoral (economic) orders of crisscrossing global commodity chains associated with international trade through the West Coast ports into a macro-analytic framework. The case study, in turn, investigates the role of ocean freight transport as both a Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 251 sector of production, which is impacted by globalization, and as a vital pillar of circulation, which is integral to the globalization of other productive sectors. The empirical evidence analyzed here suggests that geographical trade patterns and economic linkages characterizing the port-shipping GCN in the Pacific Rim represents a concentrated corridor of trade among geographically dispersed regions in the service of a highly concentrated, yet similarly geographically dispersed, group of corporate economic actors (shipping lines and shippers) and national trading partners and regions. These patterns of concentration, centralization and dispersal, are identified and analyzed in the present study as fundamental to the processes of globalization and are related significantly to transformative technology. The analysis of the function, trade content, and significance of transport in the complex web of global commodity chains8 and connected global regions undertaken here contribute to the development of a focused macroeconomic context and strong theoretical basis for future research analyzing the economic and geographical underpinnings and consequences of globalization. o The port-shipping transport GCN includes a host of additional stakeholders who require study not possible within the bounds of this project. In fact, at the point of production, where sea meets dock, this GCN is highly concentrated among a handful of carriers, the major port load center or hub in San Pedro, and a tightly organized union, the ILWU. Further research into the many linkages of labor into this GCN would also illuminate the current project. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 252 Bibliography Allen, Bruce. 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Further reproduction prohibited without permission. 264 United States Bureau of the Census, Department of Commerce. 2000. Report U.S. Goods Trade: Imports & Exports by Related Parties. Website (http://www.census.gov/foreign-trade). —. 2001. The U.S. International Trade in Goods and Services (February to May; . 2001). Website (http://www.census.gov/foreign-trade). United States House Committee on Transportation and Infrastructure. 1996. Status of the nation's surface transportation system (Committee print). Washington, D.C.: U.S. G.P.O. United States Marine Transportation System. Report to Congress. MTS Task Force, Washington D.C., 1999. United States Maritime Administration. 2000, Report on total capital expenditure 2000-2004 by U.S. ports. Washington, D.C.: U.S. G.P.O. Website (http://marad.dot.gov/publications). Walton, Lisa Williams. 1994. Electronic data interchange (EDI). Transportation Journal, Winter v34 n2 p37(9). Weikel, Dan. 1999. Freighters Enter Age of Mega-Ship. Los Angeles Times. June 15. Wijnolst, Niko and Tor Wegeland. 1996. Shipping. The Netherlands: Delft University Press. Williams, Alan. 1992. Transport and the Future. In Modern Transport Geography, eds. B.S. Hoyle andR.D. Knowles. London: Belhaven Press. Williams, Francis. 2000. Growth in Seaborne Trade Expected. Financial Times of London, December 12:18. Woo, Myung. 1992. New Dependence of the Korean Automobile Industry. In Commodity Chains and Global Capitalism, eds. Gary Gereffi and Miquel Korzeniewicz. Westport: Praeger. Wooster, Martin Morse. 2000. Unsung shipping revolution. The American Enterprise, (January) 11:65. Vest, Thomas. 1999. Los Angeles' International Connections: Strengthening the Ties, Targeting the Impact, (unpublished paper). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 265 Vickerman, John. 2000. Presentation at Modernization and Mechanization, Second Annual ILWU State o f the Trade and Transportation Industry Town Hall Meeting, Febraury 15. Yotopoulos, Pan A. 1989. Discussant in Herbert Giersch, Services in World Economic Growth. Germany: Inst, fur Weltwirtschaft and. Univ. Kiel. Zuckerman, Amy. 1998. World Standard Developments. In Metal Center News, Radnor. Volume 38: February, 3:63-66. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 266 Appendix I Glossary Alameda Corridor Project consolidates port-related train traffic onto a 20-mile high speed, high capacity and fully grade separated transportation corridor linking the San Pedro Bay Port with key transcontinental rail yards near downtown Los Angeles. It also widens and improves parallel truck routes. The $1.8 billion project will be complete in 2002. American Association of Port Authorities (AAPA) represents greater than 150 public port authorities in the Western Hemisphere (U.S., Canada, Latin America, Caribbean). Cargo Types Bulk cargo includes breakbulk, dry, and liquid bulk cargos. Dry or Liquid bulk is flowable/dumpable and homogenous (liquid, gas or solid state i.e. powders, granueles, lumps). Semi or neo-bulk is more often referred to as Breakbulk cargo today. It is not flowable/dumpable, but is homogenous i.e. bundled timber, fruit, coils, vehicles (including Roll on/Roll off cargo). Breakbulk (see Bulk cargo). Container cargo is stored in twenty foot equivalent unit (TEU) or forty foot equivalent unit (measured as two TEUs) boxes and transported on specialized carriers. Refrigerated containers are known as Reefers. Discretionary cargo is typically intermodal cargo received by a port and sent beyond the port’s local economic and geographic region. Dry bulk (see Bulk cargo). General cargo represents conventional cargo which is non homogenized, and transported by container, trailer, flat, pallet or heavier units. Liquid bulk (see Bulk cargo). Ro/Ro refers to Roll on/Roll off cargo transported on specialized carriers; typically on wheels such as passenger cars, trucks, tractors, etc. C arrier refers to a shipping line with status that varies according to cargo carried or national or international law; also refers to a vessel. Shipping lines maintain beneficial ownership of the ships they operate regardless of the national flag a vessel flies or if the vessel is operated by a sub-contractor. ocean common carrier is a legal definition associated with U.S. regulations set by The Federal Maritime Commission requiring ocean carriers (meaning shipping lines) to operate at least one vessel calling a U.S. port in order to gain certain privileges under American shipping law. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 267 C arrier (continued) Bulk carriers cany a uniform load and are often self discharging (270,000 dwt). Capesize carriers (@120,000dwt). NVOCC (non-vessel-operating common carrier) refers to a firm which purchase space on carriers to resell. Panamax or 4th generation container (60,000 dwt) can carry over 4500 containers and cannot fit through the present day locks of the Panama Canal. Post-Panamax are the next generation of so-called mega-carriers. ULCC (ultra-large common carrier) are tankers (476,000 dwt). Flag of Convenience or a flagged ship is one registered in a national registry and therefore theoretically belonging to that nation’s merchant fleet. Registration generates revenues for the host country and allows the carrier to avoid incurring labor and tax expenses related to national law. Global City Region (GCR) is a theoretical construct focusing on the economic networking of international geographic regions (see Chapters 1 and 2). Global Commodity Chain (GCC) is a theoretical construct focusing on the geographical configuration of the economic stages of commodity production (see Chapters 1 and 2). Global Commodity Network (GCN) refers to the hybrid theoretical construct which combines the following two concepts: the Global Commodity Chain (GCC) which focuses on the economic stages of commodity production and the Global City Region (GCR) which focuses on the economic networking of international geographic regions. Intermodal Cargo Cargo which must be transshipped to a second form of transport such as that offered by truckers, Railroads, or air freight. 1LWU (International Longshore and Warehouse Union) is the union of all U.S. West Coast (in Washington, Oregon and California) dockside labor. International Maritime Association is a United Nations specialized agency concerned with international regulations regarding the maritime industry. Maritime Labor refers to dockside or seaside labor. Dockside labor is unionized in the U.S. West coast ports by the International Longshore and Warehouse Union (ILWU). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 268 Modernization and Mechanization (M & M) Contract was negotiated by Harry Bridges, President of the ILWU and Paul St. Sure, President of the Pacific Maritime Association in 1961. It greatly improved conditions for dockside labor along the Pacific coast, agreed to automate many dockside labor functions, and established a labor union-shipping lines compact which still provides the framework for negotiations today. PMA (Pacific Maritime Association) is the organization which represents shipping lines in contract negotiations with the ILWU pertaining to dockside labor at the West Coast ports (in Washington, Oregon, and California). Ports are landside facilities serving a range of sea and intermoda 1 transportation functions depending on their depth and character of integration into the global economy. Port Communities and Regions represent local communities directly impacted by the existence of a port within its borders as opposed to hinterlands or lands further away that ports may serve (through intermodal transport); Regions directly or indirectly influenced by or influencing ports at the state, national, and/or international level. Shippers represent a wide range of importers and exporters, including product manufacturers sending or receiving goods as well as 3P-L (third party logistical firms), freight forwarders, consolidators, or a NVOCCs (non-vessel ocean cargo carriers) who purchase cargo space to resell. Shipbreaking is the most downstream linkage of the shipping global commodity chain. Aging ships are mined for recyclables before being destroyed. Shipping Lines are typically trans-national corporations that own and operate carriers (vessels) under a national flag of their choice (see carrier). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Appendix 2 269 Top Ten U.S. Port Authorities by Total Capital Expenditures 2000-2004 (Thousands of U.S. Dollars) RANK PORT EXPENDITURES SHARE 1 New York/New Jersey $1,536,924 18.4% 2 Long Beach $ 943,965 11.3% n J Los Angeles $ 936,641 11.2% 4 Oakland $ 617,319 7.4% 5 Houston $ 591,262 7.1% 6 Seattle $ 393,673 4.7% 7 Tacoma $ 333,973 4.0% 8 Georgia $ 326,677 3.9% 9 Everglades $ 325,282 3.9% 10 Miami $ 315,009 3.8% TOTAL TOP TEN $6,320,725 75.6% TOTAL ALL PORTS $8,361,168 100% Source: U.S. Martime Administration, United States Port Development Expenditure Report, December 2000:6. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 270 Appendix 3 SHIPPING LINE CODES FOR WEST COAST CONTAINER TRADE DATA Abbreviated Shipping Full Shipping Line Name Line Name/Headauarters MLS or MLSL Maersk Sealand - Denmark AMP or AMPL APL Limited - American President (iContainer Unit of Neptune-Orient) EVE or EVER Evergreen Line - Taiwan HJS or HJSC Hanjin Shipping Co. Ltd. - Korea HYM or HYMM Hyundai Merchant Marine Co. Ltd. - Korea CSC or CSCO COSCO Container Lines Co. Ltd. - China OOC or OOCL Orient Overseas Container Line - Hong Kong KLI or KLIN “K” Line - Japan NYK or NYKL NYK Line - (Nippon Yusenkaisha) Japan OSK or OSKL Mitsui O.S.K. Lines Ltd. - Japan YMA or YMAL Yang Ming Line - Taiwan PON or PONL P&O Nedlloyd - joint British-Dutch SLN or SLNG Senator Lines - Hanjin subsidiary HAP or HAPL Hapag-Lloyd Container Line - Germany CSC or CSCN China Shipping Container Lines - China MDS or MDSC Mediterranean Shipping Co. Ltd. - Switzerland CHO or CHOY Cho Yang Shipping Co. Ltd. - Korea ZIM orZIML Zim Israel Navigation Co. - Isreal FES or FESP FESCO CAC or CACG CMA-CGM - France NSL or NSLU Norasia Container Lines Ltd. - Switzerland WES or WEST Westwood Shipping Lines - ALL OTH All Others Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 271 Appendix 4 COUNTRY CODES FOR WEST COAST CONTAINER TRADE DATA Abbreviated Country Name Full Country Name PIERS Country Code CHI China (includes Hong Kong) 570 (includes 582) JPN Japan 588 TAI Taiwan 583 KOR South Korea 580 THA Thailand 549 IND Indonesia 560 MAL Malaysia 557 PHI The Philippines 565 SIN Singapore 559 AUS Australia 602 IDA India 533 ITA Italy 475 NZD New Zealand 614 ECU Ecuador 331 GER Germany 428 UKM United Kingdom 412 CHE Chile 337 NTH The Netherlands 421 BNG Bangladesh 538 GUM Guam 935 FRA France 427 PAK Pakistan 535 ALL OTH All Others — Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 272 Appendix 5 COUNTRY CODES FOR WEST COAST BULK TRADE DATA Abbreviated Country Name Full Country Name PEERS Country Code JPN Japan 588 CAN Canada 122 MEX Mexico 201 KOR South Korea 580 IRQ Iraq 505 SAR Saudi Arabia 517 ECU Ecuador 33 1 CHI China (includes Hong Kong) 570 (includes 582) TAI Taiwan 583 AUS Australia 602 VEN Venezuela 307 SIN Singapore 559 PHI The Philippines 565 MAL Malaysia 557 IND Indonesia 560 ANT Northern Antilles 277 THA Thailand 549 ARG Argentina 357 YEM Yemen 521 BRA Brazil 351 BEL Belgium 423 KUW Kuwait 513 ALL OTH All Others --- Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

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Creator Rabach, Eileen Rhea (author)

Core Title By sea: The port nexus in the global commodity network (the case of the West Coast ports)

School Graduate School

Degree Doctor of Philosophy

Degree Program Political Economy and Public Policy

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Economics, Commerce-Business,economics, general,OAI-PMH Harvest,transportation

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Hamilton, Nora (committee chair), Kalaba, Robert E. (committee member), McKenzie, Roderick (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c16-229657

Unique identifier UC11334641

Identifier 3073837.pdf (filename),usctheses-c16-229657 (legacy record id)

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Document Type Dissertation

Rights Rabach, Eileen Rhea

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