International Trade. (Barely Making the Grade).

Year in Review: First contraction since Asian economic crisis of 1998... Exports through L.A. Customs District hit hard, declining 7.5 percent... Imports eked out a 0.5 percent increase.

Players to Watch: L.A.'s big three trading partners (Canada, Mexico and Japan), along with Chinese manufacturers. exporting to the United States, Korean carmakers.

Buzz for 2002: After contracting 2.2 percent in 2001, look for two-way trade volume through L.A. Customs District to increase -- but just barely... Value of cargo coming through L.A. in 2002 will creep up a percentage point or two from the $225 billion this year... Shippers showing preference for higher-volume ports, like those in L.A., through which they can consolidate several related shipments.

Primary driver, as usual, will be imports. American consumers regain appetite for imported clothing, electronics and cars... But demand will be for value. That trend favors lower-cost Asian imports over European goods, giving West Coast ports an edge.

Serious overcapacity problem will emerge as major issue. Not enough product to fill ever-larger ships coming onto the market... Look for major consolidation in 2002 that could trigger the need for local ports to do some reshuffling of tenants to better align merged shipping lines.

April 14, when Alameda Corridor opens, and July 1, when International Longshore and Warehouse Union's contract with shippers expires... With global recession and industry overcapacity, look for shippers to have upper hand in contract talks... Look for short-term rise in import volume in late spring and early summer, as national retailers build inventories in anticipation of possible West Coast shutdown.

Worsening imbalance between import and export flows exacerbates buildup of containers around port-adjacent communities... Shipping lines increasingly look to leave containers behind at West Coast ports, rather than haul them empty back across Pacific.

On political front, Long Beach elects new mayor in 2002, although termed-out Mayor Beverly O'Neill runs write-in campaign... New mayor to change power dynamics between city and port... Security issues to remain near top of agenda at all local ports... Controversy to swirl around proposals, such as requiring dock-workers to carry identity cards.

Late in year, U.S. recovery will start rippling overseas, triggering small rise in exports. On import side, most interesting force will be China... New membership in World Trade Organization to be impetus to deal with rampant intellectual property piracy... Most worrisome overseas scenario: Japan. Cars continue to be Japan's primary export into L.A., but Americans finally warming up to Korean-made cars as product quality improves.

Grade: C