Up from Down Under: L.A., Long Beach vie for cargo as Australian trade increases.

Call it a foolish economy.

Seven years ago, the Port of Los Angeles had a near monopoly on Southern California's ocean shipping trade with Australia. Then, as part of an agency-wide effort to cut operating costs, it closed its offices in Sydney and Wellington, New Zealand.

A $70,000-a-year savings.

Meanwhile, the Port of Long Beach, which maintained its office Down Under, has since captured one-sixth of the $3.9 billion in regional traffic annually to and from Australia.

More importantly, it's gained momentum at just the right moment. Last month, the United States signed a free trade agreement with Australia, a net importer of U.S. goods, and trading volume between the two companies is expected to ratchet up once Congress and the Australian Parliament approve the pact.

Los Angeles remains the largest port for the flow of goods to and from Australia. Yet lately it has been forced to play catch-up. Late last month, L.A. port officials embarked on a two-week excursion to Australia and New Zealand, with plans to reopen the Sydney office and sign an agreement on exchanging information with the Sydney port.

"We've become such a global economy that we are having to rethink our global strategic plan," said Al Fierstine, business development director at the L.A. port, who is leading the delegation to Australia.

Fierstine admits that closing the Sydney office was a mistake--especially since the savings were only a small portion of the $1.2 million annual budget for L.A.'s 11 trade offices worldwide. "It was a business decision to cut back on some international and domestic offices we had," he said. "(But) if you're out of sight and out of mind, you lose your market share."

A foreign trade office can help port officials publicize their advantages to Wading partners, and follow up on new opportunities. Ports also use trade offices to update exporters on transit hassles, as in the case of 2002's 10-day lockout of unionized longshoremen when roughly 120 ships were idling off Southern California's docks.

"Nothing can be taken for granted in international trade," said Robert Hunt, senior investment commissioner for the North America division of Invest Australia, the trade agency under the Australian Department of Industry. "You don't simply set up a port and hope that business will come to you. Ports and states and countries all need to market themselves to each other."

Last year, the L.A. port re-opened its office in New York, which was closed at the same time as the Sydney office. (There are no plans to reopen in New Zealand or Chicago.)

In Sydney, Port of Los Angeles officials will emphasize the advantages it holds over Long Beach, such as its larger size and less-congested access roads.

They will also discuss new technologies in place to enhance efficiency, and an upcoming cold-ironing program that allows retrofitted ships docked at the L.A. port to turn off their engines and plug into environmentally friendly electrical generators.

Sibling rivalry 

Competition between the sister ports is nothing new.

When a steamship line's contract with any port terminal operator expires, there are always others ports looking to grab that business with lower leasing rates and/or better services.

"The trade is still coming to Southern California and that's where the shipper wants it. It doesn't make a difference whether it's L.A. or Long Beach," said Don Kee, regional vice president of the Pacific Southwest for SSA Marine, whose Long Beach terminal handles a lot of meat and agriculture products imported from Australia.

Los Angeles has had its share of victories in the sister-port rivalry. It struck its biggest blow in the summer of 2002, when Maersk Sealand, a trading name of A.P. Moller-Maersk MS, moved to its port from Long Beach. That cost Long Beach 1 million 20-foot equivalent units, about one-fourth of its annual cargo traffic.

But Long Beach made up some ground "when Mediterranean Shipping Co. and Hanjin Shipping Co. arrived from L.A. a little more than a year ago.

With the Australian trade, Long Beach officials see an opportunity to increase their market share at the expense of the larger L.A. port. Long Beach handled $616 million worth of trade with Australia last year, up from virtually none in 1997.

"We made more room available for a couple of the lines that bring cargo (to and) from Australia," said Art Wong, spokesman for the Long Beach port, which has maintained its Sydney office since 1975.

Los Angeles is already one of Australia's top foreign trading partners. But the agreement is expected to boost trade between the two countries considerably as quotas are relaxed and tariffs are reduced or eliminated on nearly all products.

"In the coming years, there will be far more cooperation and joint-venturing between Australian and American agricultural producers," said Hunt.

L.A. officials also want to dispel the notion that the facility only handles container cargo. The port has a large automobile terminal, which will come in handy should General Motors Corp.'s Australian subsidiary, Holden, choose to use it when it begins ramping up vehicle shipments to the U.S., which began with a trickle late last year through the Bay Area.

The port would like to snag some of Holden's business, especially since it lost the 70,000-vehicle DaimlerChrysler account to Long Beach last year. (Long Beach offered a better price.)

"We have limited facilities to handle cars," said Wong, the Long Beach spokesman. "If you're talking about bringing in a large number of additional cars, it would be difficult here."