Major Shipping Firm to Leave Long Beach Port for Los Angeles

In a move that threatens to unseat Long Beach as the nation’s busiest container port, the world’s largest shipping company announced Wednesday that it will move its local cargo operations across San Pedro Bay to Los Angeles.

Maersk Inc., which recently bought Sea-Land Services Inc., has agreed to lease space on Pier 400 in the Port of Los Angeles, an enormous container terminal now under construction in the middle of the harbor.

Long Beach officials said they tried to persuade Maersk to move to the controversial Long Beach Naval Base, but after a year of negotiations the Danish-owned shipping giant decided Pier 400 would be cheaper and more convenient than the abandoned naval facility.

“This will be a state-of-the-art facility for the U.S.,” said Los Angeles Harbor Commissioner Ted Stein. “We are thrilled a world-class facility has attracted a world-class client. It is a win-win situation.”

Maersk officials said Pier 400 offers the company on-dock rail lines, good highway access, lower operating costs and the opportunity to custom build a 484-acre terminal that can easily accommodate its fleet of giant container ships that move cargo to and from Asia.

Maersk’s parent company, A.P. Moeller, builds the largest freighters in the world--ships that carry so many containers that large terminals are needed to efficiently handle them all.

Under terms of the agreement, the Port of Los Angeles stands to earn about $2 billion in revenue from the 25-year lease, which is scheduled to begin in mid-2002. When the facility is finished, Maersk officials predict that it will be the largest container terminal in the world.

The company’s executive vice president, Philip V. Connors, said Maersk signed a memorandum of understanding with the port and the agreement will be completed in the months ahead. He said he does not expect any major obstacles during the finalization process.

The relocation of such a large shipping line to Los Angeles represents a serious threat to the dominance of Long Beach as the country’s premier container port. Over the last 12 months, the harbor has handled the equivalent of 4.3 million 20-foot shipping containers, while Los Angeles has moved about 3.7 million.

Maersk and Sea-Land now handle the equivalent of 1 million 20-foot shipping containers a year in Long Beach, where they have leased terminal space since 1978 and 1962 respectively. Both companies account for about 13% of the port’s revenue.

“We will miss them,” said Yvonne Avila, a spokeswoman for the Port of Long Beach. “However, all our carriers need more space and they have been waiting patiently for our talks to conclude with Maersk.”

The Port of Long Beach had offered Maersk 8,500 feet of wharf and a 500-acre terminal on two parcels, one on the naval station and one on the other side of Ocean Boulevard, the main road that cuts the port in half. The plan would have required a new underpass to connect the parcels.

Avila said talks will proceed immediately with several shipping lines related to the naval station site as well as the terminals to be vacated by Maersk and Sea-Land. She said the setback will not affect the ongoing development of the Navy property.

Economists described the Maersk lease as a major coup for the Port of Los Angeles and a big hit in the pocketbook for Long Beach. But the deal, they said, will not affect the enormous benefits both ports have on the area’s economy.

“For the region as a whole it’s a wash,” said Jack Kyser, chief economist with the Los Angeles Economic Development Corp. “It’s literally the difference of somebody moving down the block.”

Long Beach officials also said predictions of their demise as the No. 1 container port in the nation may be premature because there is a good chance they can recover much of the lost cargo in the years ahead.

The port’s major customers still include some of the fastest growing shipping lines in the world, including Hanjin, Hyundai and COSCO, the shipping line of the Chinese government. In addition, new carriers have entered the busy Asian markets.

“I don’t expect the scales to be tipped for at least two to three years,” Avila said. “Maersk and the Port of Los Angeles are engaged, but they haven’t walked down the aisle yet.”

Times special correspondent Stephen Gregory contributed to this story.