The happy news for Southern California ports is that after years of delays and inactivity, they are finally ready to start building again. The question, however, is just what should they be building? While the Port of Los Angeles and the Port of Long Beach have been busy fighting lawsuits, playing environmental hardball with their customers, and developing programs to appease the surrounding communities, East Coast ports have been developing their infrastructure.

The East Coast - which hopes to capitalize on the pent-up frustration among shippers seeking to escape the regulatory quagmire in Southern California - is counting on the expansion of the Panama Canal to help make their plans a reality. Completion of the canal expansion is expected in 2014.

But now that many of the environmental issues have been resolved in Southern California, the Los Angeles and Long Beach ports are shifting into catch-up mode - moving forward on numerous projects, many of them first proposed a decade ago. The problem with that is that the world has changed in the past 10 years.

Ten years ago trade was booming and the ports were bursting at the seams trying to handle it all. Economic projections at the time showed shipper demand continuing to increase unabated into the future.

Since then, terminals have negotiated a contract with the ILWU that allows the use of technology to help move larger volumes of cargo more efficiently. On-dock rail and the Alameda Corridor have served to reduce the number of truck trips that would have otherwise been needed to move the cargo. The two ports have implemented stiff and costly environmental standards. And trade volumes have tanked as part of the economic recession, and there's great uncertainty about when they will recover.

In an uncertain age of lowered volumes and most analysts predicting only slow growth in the years to come, how many hundreds of millions of dollars should ports be spending to increase their capacity? And in an age when it is hard to predict what will happen in the next two or three years, how eager should ports be to finance new projects with 30-year bonds?

All infrastructure projects sound like good ideas in the planning stages. And yet:

• The Alameda Corridor project - a $2.4 billion Los Angeles-Long Beach joint venture that was well-executed and did exactly what it was designed to do - is now having problems meeting its bond payments.
• The $200 million LAXT coal and petroleum coke export terminal in Los Angeles, which opened in 1997 and closed six years later, was unable to compete after Australia cut its price for coal and froze L.A. out of the market.
• When the Port of Tacoma in 2006 announced with great hoopla its joint venture with the Port of Olympia to develop a logistics center near Maytown, it sounded like a great leap forward. Now the port is still trying to recoup some of the $21 million it paid for the 745-acre property before the project fell victim to community pushback. The $3.5 million it spent on environmental mitigation is lost.
• And Tacoma's this week (see story in this issue) acknowledged that it spent $190 million - most of it for the purchase of property - before the plan for a new $1.3 billion terminal for NYK was abandoned.
  Selecting when and where to invest in infrastructure is not an easy task even in the best of circumstances and no plan is without risk.

But perhaps instead of playing catch-up with the East Coast ports, the West Coast ports should be thinking about playing leap-frog. Perhaps they should be redefining what the port of 30 years from now is going to look like and then planning for that.

This is already happening on the environmental side. Since the ports adopted their Clean Air Action Plan, entrepreneurs have come out of the woodwork with ideas on how to operate more cleanly. There are ideas for generating energy from the waves, building hybrid tugboats and yard tractors, scrubbing vessel exhaust gases right at the dock, incorporating flywheel-technology to save fuel and cut emissions, developing heavy-duty electric trucks, and transporting containers with zero-emission cargo-movers that will automatically shuttle boxes from one location to another. Some of those have already been built; others are still on the drawing board.

Not all those schemes are going to succeed. But the ports are spending money to look at the various concepts, test them in the real world, and pick the best to support.

When it comes to infrastructure, it's probably not surprising that ports are stuck with the same basic plans for new facilities that were first conceived a decade ago. After investing that much time and effort into writing bullet-proof Environmental Impact Reports and fighting to get to where they are today, the two ports have a lot invested in seeing them through to conclusion.

But there is a time for bold action and a time to ponder the "what ifs."

What if trade doesn't grow as expected? The experts are predicting a slow but steady recovery, but they have a less-than-perfect record for prognostication. And as labor - cheap or otherwise - becomes a lesser part of the manufacturing process and transportation costs grow, will Americans start making more stuff at home rather than buying it from factories on the other side of the world?

In an era of disruptive technology, what are the game-changing ideas that will help ports do the same job with less land and fewer people?

For example, the concept of inland ports - an idea that has been kicked around for years but never really developed - has the potential to make the huge waterfront container yards as dated as the breakbulk transit sheds that they replaced. An inland port, connected to the docks by some kind of automated conveyance, could let the ports reduce their current footprints by the water and move the jobs and infrastructure to cheaper property a few miles inland.

Is that the model for the future? Maybe not, but before billions are invested in facilities that may become obsolete in coming years, port folks need to ponder and plan for just what that future will be.

-- The Cunningham Report