Port closures pale in big economic picture

LOS ANGELES – Despite a long-simmering labor dispute that threatens a shutdown of 29 West Coast ports, economists and trade experts said closings would have very little effect on the broader U.S. economy. That’s because the trade of goods through U.S. ports represents only a relatively small fraction of the nation’s total economic output.

Although a shutdown would create interruptions and higher costs for businesses relying on trade with Asia, experts said those losses would be offset by greater demand at other ports or for airlines moving freight.

“There are winners and losers, and that’s where the rub is,” said Christopher Thornberg, a founding partner of Beacon Economics in Los Angeles, who has studied previous local port shutdowns. “The ports of L.A. and Long Beach are a convenient source of moving stuff in and out of our economy. Now people are inconvenienced. But inconvenience has never brought down an economy.”

Certainly many businesses would feel the pain, and have already felt it, after months of slowdowns at West Coast ports. Agricultural exporters who ship produce to Japan, China and Australia face canceled orders and spoiled food. Manufacturers who rely on parts from China are contending with work stoppages and delays.

The effects of port closings would be more acute for the Southern California economy, where local jobs in trucking, rail yards and warehousing are at stake.

“The port is an economic engine of Southern California,” said Sung Won Sohn, an economist and professor at California State University, Channel Islands who is a former commissioner at the Port of Los Angeles. “If one of the cylinders doesn’t operate properly, clearly we’ll all be hurt.”

The labor dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union, which represents dockworkers, dates to last fall. The two sides have been operating without a contract since July, when the previous six-year agreement ended.

Economists don’t dispute that companies that deal in commodities such as fruit and seafood will take a hit from the slowdown and potential stoppage.

Shipping through the Panama Canal to the East Coast adds additional expense, as does transport by airplane. But many companies have chosen to eat the higher costs.

“It’s going to cause disruptions and raise prices for some businesses, but it’s not going to result in a significant problem for the U.S. economy,” said Gus Faucher, senior economist at PNC Financial Services Group.