JACK MIXNER STRATEGY

1+714.449.1040     www.mixnerstrategy.com

Containers - lots of them - come into the US through the Ports of Long Beach and Los Angeles. From a national point of view, the ports dominate west coast container shipments arriving from Asia.

Three key points:

1. Shippers will go where the costs are cheapest and the down time to unload cargo in port is shortest (Levinson).
2. Baja California is considering building a multi-billion dollar port south of Ensenada in Baja, California (Dickerson).
3. Local authorities, the Air Quality Mangement District if I am not mistaken, are beginning to ban older, more-polluting trucks from servicing the harbors (to pick up incoming containers) because they are polluting the air (Roth).

Trumping the billion dollar investments in the LA ports by the Mexican government and its contractors to build an entirely new port without green restrictions is an iffy proposition in a down economy.

Less pollution and less traffic flowing through the LA region is perhaps the only positive outcome of a Baja port. In the short run, a successful bid to build a port in Baja is a disaster for the middle-class truck drivers servicing the LA ports.

What should the ports do?

One solution is to slowly wind down. That'll will take some time as the investments and infrastructure are huge and not easily - or sensibly, I know - abandoned.

The other solution is to turn the problem - regulation leading to higher costs - into a marketing opportunity.

1. Make sure that every shipment through the ports is branded with the green port label.
2. Make sure the shippers know about the green port label.
3. Make sure ultimate consumers know about the green label, so much so that they demand green labeling on everything they buy.

The Ports have a choice:

• Wind down now or sometime in the future or
• View things as a very large marketing opportunity and act accordingly - now.

Given the large investments already sunk in the ports, I suggest the later.

One last thing about green labels: they only last so long before everyone else - the other harbors - have a green label of some sort of their own. While the label may work for a while the harbor's task is never done. After the green marketing effort, they need to address other things, like pay to employees (why do they always come first), technology to speed handling of containers, train and truck technologies, and other things to speed containers off the ships and on their way to consumers.

References

Dickerson, Marla. Mexico plans huge Baja port for U.S. trade. LA Times. 28 August 2008. http://www.latimes.com/business/la-fi-mexico28-2008aug28,0,844963.story

Levinson, Marc. The Box. How the Shipping Container Made the World Smaller and World Economy Bigger. Princeton University Press. 2006.

Roth, Alex. Two California Ports Will Ban Older Trucks. Wall Street Journal 29 September. A32.