Latin American trade represents only a small fraction of the goods moving through the Port of Long Beach, but port managers plan to soon release a strategy to increase commerce between the local port and points south.
Noel Hacegaba, the port’s managing director of commercial operations, expects plans to be ready for the consideration of harbor commissioners in early 2016. Interest in Latin American markets has been spurred by the expansion of the Panama Canal, the port’s own Middle Harbor expansion project and reports of manufacturing activity shifting from China to East Asia, he said.
“We are more ready than ever to start tapping new markets,” Hacegaba said.
Besides Port of Long Beach staffers’ work to develop a strategy for increasing Latin American trade, Long Beach Mayor Robert Garcia has undertaken trade-related trips to Latin American destinations this year. Port of Los Angeles officials have also made similar moves, sending delegations in hopes of increasing the flow of goods moving between Southern California and Latin America.
“We can’t rely on China and Asia for all of our trade,” Garcia said.
For Long Beach’s part, Garcia spent time in Peru — the country where he was born — and Chile in late November and early December. His itinerary included visits with the U.S. ambassador to Peru, Lima’s mayor and a Peruvian exporters group, according to information provided by Garcia’s office. While in Arica, Chile, Garcia attended the Latin American Congress of Ports.
Garcia also traveled to Honduras in September on a State Department-sponsored trip that involved meetings with port executives as well as a speaking gig at an LGBT leadership conference, according to the mayor’s office.
Port of Los Angeles officials — including harbor commission President Vilma Martinez, the former U.S. Ambassador to Argentina; commission Vice President David Arian and port marketing manager Marcel van Dijk — have also undertaken trade missions to Latin American destinations, said spokesman Phillip Sanfield.
“Latin America is a very good market for us, especially the perishables trade,” van Dijk said.. “A lot of coffee is coming from there, while Asia is more the finished products. We get fresh fruit from Chile in the winter season.”
Garcia and Mario Cordero, the chairman of the Federal Maritime Commission who served on Long Beach’s harbor commission before serving in a federal role, said in a joint interview that it’s important for the Port of Long Beach to diversify its trade patterns beyond East Asia.
At present, however, the Long Beach port’s share of trade from Latin America represents only a single-digit percentage of its overall cargo volumes.
“Business has substantially increased, but the truth is, we’re still at 3 percent,” Cordero said. “It is not wise to put all of our eggs in one basket when it comes to China and Asia.”
Perhaps not, but China and other nations dominate the rankings of regional trading partners. The Los Angeles County Economic Development Corp. observed in its 2015-2016 International Trade Outlook that China alone accounts for 42 percent of all two-way trade between the Los Angeles Customs District and places beyond. More than $176 billion worth of trade moved between the China and the Los Angeles district in 2014. The district includes the ports of Los Angeles and Long Beach as well as Los Angeles and Ontario international airports and facilities in Ventura County, and as far away as Las Vegas.
China — followed by Japan, South Korea, Taiwan and Vietnam — ranked as the Top Five trading partners for importers and exporters within the Los Angeles Customs District.
Among Latin American nations, Mexico ranked 25th, with $2.7 billion worth of trade moving between that country and the Los Angeles district last year. The economic development group acknowledged, however, that number undervalues the total worth of goods moving between the L.A. area and Mexico, since many imports are counted as entering the United States elsewhere, such as in the San Diego region.
Mexico, according to the group, is the Los Angeles area’s second-largest export market.
Latin American nations to the south of Mexico didn’t get as much ink in the economic development group’s report, which observed that overall economic growth in Latin America and the Caribbean slowed to 1.3 percent in 2014. Forecasters predicted a slight contraction in South America this year before an improvement to 1.3 percent growth in 2016.
The pace of economic growth in Central America is projected to increase 0.1 percentage point to 4.3 percent next year, according to the group.
The World Bank similarly reports economic growth in Latin America and the Caribbean has slowed when compared with the 2003-12 period, when rates exceeded 5 percent. On the other hand, growth in the past years has led to a substantial increase in the ranks of Latin America’s middle class, with some 70 million people advancing out of poverty in the last several years.
One development that may lead to future trade between the local area and South America, Hacegaba said, can be seen in reports in China Daily and Bloomberg showing Chinese interest in making investments into Latin American manufacturing capacity.
What’s more, Cordero pointed to free trade agreements such as the proposed Trans-Pacific Partnership and shippers’ embrace of megaships as factors to consider. Larger vessels hailing from Asia would also be able to pick up goods in Latin America before reaching Southern California.
“The challenge and the vision here is to have a diverse economy,” Cordero said.
By Andrew Edwards, Press-Telegram