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Steel
Friday | 11 December, 2009 | 3:56 am

Waterways

By Lisa Rummler

December 2009 - In the days when airplanes, freight trains and big trucks existed only in people's imaginations, goods moved from Point A to Point B via wagon, beast or shoe leather. For especially long distances, boats ferried myriad kinds of cargo around the world.

And even though today's businesses can take to the sky or hop a train to transport goods, ships still play a major role among domestic and international importers and exporters. A visit to any major U.S. port will demonstrate that.

This includes the Port of Los Angeles, San Pedro, Calif., the largest steel port on the West Coast and one of the five largest nationwide.

One of the major commodities to pass through these hubs of commerce is metals. At the Port of Los Angeles, thousands of milled products pass through every day.

According to Marcel Van Dijk, marketing manager for the Port of Los Angeles, these include coils, pipe, beam and steel slabs, and they make up both containerized and break-bulk shipments. (The latter consists of goods that are too big or too heavy to go into containers.)

Containerized steel makes up a smaller part of the port's trade than break-bulk steel, but Van Dijk says its emphasis on variety gives the port a solid standing for future growth and success.

"We're known for our containerized cargo, [but] I think the Port of L.A. is a diversified port that handles all cargoes, not only containerized cargo," he says.

This solidity and emphasis on break-bulk shipments will shield the port from any potential effects of the expansion of the Panama Canal, which is in the middle of a project expected to double its capacity.

"With break bulk, I don't see a big issue with the Panama Canal because the steel that's coming to Los Angeles is always and was always for local consumption, meaning Southern California, Arizona and the southern part of Nevada," he says. "It doesn't go farther east from those states because the gulf has a competitive advantage [there]. So I don't see a lot of ships going to the Panama Canal, where they have to pay a steep price for the Panama Canal transit, and then move it back into our backyard. I think we will maintain our market share here."

Although the canal's expansion will likely increase competition regarding containerized steel, Van Dijk says that because this is a smaller part of the Port of Los Angeles' trade, the effect shouldn't be substantial.

"We have to be cautious of any competitor, wherever they are," he says. "But in this case, with steel commodities, especially break bulk, I don't see a lot of changes."

By the numbers
In 2006, at its high point, 4 million metric tons of break-bulk steel went through the Port of Los Angeles.

This year's projections are down significantly, as they are for nearly all businesses across the board. Van Dijk says he expects the port will process just 927,000 metric tons of break-bulk steel in 2009.

"That has to do just with the economic recession," he says. "A lot of that steel is used for industrial buildings that aren't being built at the moment."

Van Dijk also says the steel that passes through the Port of Los Angeles also goes into appliances and automobiles, two kinds of goods that have taken a pounding from the global financial crisis.

Further, the fact that many steel service centers haven't replenished their inventories has taken a toll on the amount of break-bulk steel shipments at the port. "What I've heard from steel traders in the L.A. basin is that instead of ordering steel overseas, they have looked more to their own competitorsÑif they have steel, they buy from each other," says Van Dijk. "Or they go to the domestic mills because the steel price domestically is lower than or competitive with foreign steel at the moment."

Signs of recovery have begun to emerge, though, and Van Dijk says he expects the amount of break-bulk steel to pass through the Port of Los Angeles to rise to 1.3 million metric tons in 2010. MM

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