Economic Perspective PACIFIC RIM TRADE

Transcription

1 Economic Perspective PACIFIC RIM TRADE Presented by Lee Harrington Vice Chairman LAEDC and WTCA LA Long Beach China Conference April 25, 2006

2 TOP 5 SOUTHERN CALIFORNIA TRADE PARTNERS 1995 Japan $37.2 China 14.6 Taiwan 11.0 Korea 10.4 Hong Kong 5.5 (Real 2005 $ Billions) 2005 China $102.0 Japan 46.4 Korea 17.9 Taiwan 15.2 Hong Kong 6.5

3 Los Angeles/Long Beach Ports CONTAINER TRAFFIC Millions of TEUs ( TEU = Twenty Foot Equivalent Unit)

4 WHERE DO ALL THE IMPORTS GO? The Answer To, or Through Us 35% Go directly to local consumers/ manufacturers 15% Go to local consumers after value added 15% Go to local locations out of state delivery 35% Go through us (train/truck) out of state consumers/manufacturers.

5 TOP IMPORTERS BASED ON TEU VOLUME Wal-Mart Stores Inc. 2. The Home Depot Inc. 3. Target Corp. 4. Lowe s Cos. 5. Kmart Corp. 6. IKEA International A/S 7. Payless Shoe Source Inc. 8. Pier 1 Imports Inc. 9. Big Lots Inc. 10. Toys R Us Inc. 11. Limited Brands Inc. 12. Michaels Stores Source: Journal of Commerce

6 Year 2000 Two-Way Surface Trade Between California and Regions of the United States (International via Alameda Corridor East & Domestic via all Trade Corridors) Northwest International: $2.2B Domestic: $60.4B Great Plains International: $8.6B Domestic: $42.4B Great Lakes International: $25.0B Domestic: $69.4B Atlantic Seaboard International: $34.4B Domestic: $74.6B Southwest International: $98.0B Domestic: $80.3B South Central International: $12.1B Domestic: $54.2B Southeast International: $16.0B Domestic: $71.7B *Southwest international total includes CA s overseas trade; the domestic total excludes CA s $1.3 trillion trade with itself. Source: OnTrac Trade Impact Study (Final) OnTrac All Rights Reserved.

7 CHANGE IN CONTAINER VOLUME -- MAJOR WEST COAST PORTS Los Angeles - Long Beach 1,264 Oakland 120 Tacoma 25 Seattle ,000 1,200 1,400 (Thousands) Sources: Ports of Los Angeles, Long Beach, Oakland, Tacoma, and Seattle

8

9 Photo: Los Angeles World Airports FACT: Growth is coming and things will get worse if we do nothing! 2.7 million more cars will make getting around on the freeways even more difficult. Millions more truck trips will also add to the congestion. Gridlock = Economic, Environmental and Quality of Life Meltdown

10 Environmental Perspective More Pollution = More CANCER Risk

11 Federal Perspective: More Duties = More General Funds

12 Railroad Perspective: More Containers = More Bottlenecks Crunch Time is Comparison of Intermodal Capacity and Demand in the Los Angeles Basin Total Intermodal Demand Existing Capacity Millions of Intermodal Lifts f 2010f 2020f

13 Trading Partner Perspective: More Delay = Carrying Costs Imports Arriving at Ports of LA/LB Estimated Annual Cost to Asian Manufacturers (Millions) Average Delay 1 Day 5 Days 10 Days All Trade Partners $37.1 $185.4 $370.7 Source: LAEDC

14 Problem: Inventory Carrying Costs Direct Costs of Delay: Estimate: 10% Capital Cost and Loss of Value Indirect Costs of Delay: Need for larger inventories Greater capital and depreciation costs PLUS additional storage space

15 Problem: Total Inventory Carrying Cost of Delay Imports Arriving at Ports of LA/LB Estimated Annual Cost (Millions) Country of Origin All Trade Partners China Estimated Annual Cost of Delay Average Delay 1 Day 5 Days 10 Days $37.1 $185.4 $370.7 $15.0 $75.1 $150.1

16 Southern California s Greatest Challenge International Trade Forecast (LA Customs District Container Traffic Forecast for POLA/POLB f Source: LAEDC

17 Southern California s Greatest Opportunity -- International Trade Related Jobs Millions Of Jobs Source: LAEDC

18 Congestion and Air Quality Solutions Modernized Goods Movement System Southern California 1 Container Train = 280 Trucks = 756 Cars Modern Technology = Clean Air Near Dock Rail Yard Inland Ports/Hubs Third Corridor Out At Grade Conflicts Short Haul Rail Service Short Sea Shipping

19 How do we connect the dots? Connect environmental needs Connect job needs Connect local needs Connect State tax needs Connect capacity needs Connect everything -- system wide solution

20 GREEN Freight Initiative A new vision with new values and a new commitment Global Regional Local Communities Prepared by: Southern California Leadership Council LAEDC Center of Economic Development

21 ENVIRONMENTAL benefits Green Waterways Develop strategies with our global partners to significantly reduce diesel pollution in our shipping lanes and ports. GREEN Freight Initiative

22 ENVIRONMENTAL benefits California Green Corridors - Highways and Rail Lines Bay Area Central Valley S. California Implement a system of freight-related highways and railway corridors facilitating the use of clean engine technology and reduced diesel emissions. Implement sustainable design and enhanced community benefits. GREEN Freight Initiative

23 ENVIRONMENTAL benefits Green Corridors Develop strategies for interstate rail and roads that reduces diesel pollution across the region, improves quality of life, and grows jobs. Our Vision. Reduce potential health risks of stakeholders living around the corridors and gateways Current perspective GREEN Freight Initiative

24 COMMUNITY improvements Developing green corridors along freeways and railways as buffers for communities and recreational zones GREEN Freight Initiative Our Vision Current perspective

25 GREEN Freight Initiative A new vision with new values and a new commitment While transportation funds should solve transportation problems, the tools for funding a Green Freight Initiative can include tax increment, air rights, vertical mixed use land, and bonds supported by community, environment, and business stakeholders. This is the vision of our Green Freight Initiative for California. Prepared by: Southern California Leadership Council LAEDC Center for Economic Development Los Angeles County Economic Development Corporation

26 Green Freight Finance Plan How It Could Work Best Thinking So Far Private Investment Must Pay For Private Benefits (33%) Public Investment Pays For Public Benefits State (33%) and Federal (33%) Expanding California s Goods Movement Capacity Will Be Felt: Statewide Nationwide Worldwide Public/Private/Partnership Shares Cost-Benefit

27 The Investment will pay for itself! Tax Credits (Expenditures) Additional Tax Revenues $1,400 $1,200 $1,000 ($ Millions) $800 $600 $400 $200 Thank you! Present Value of New Revenues = $6.7 B $0 -$ $400 Present Value of Tax Expenditures = $3.2 B

28

29