Sunday, August 31, 2014

International Port Competition and Urban Growth

I spent a lot of time in Singapore in the Summer of 2012 and 2013.  I was amazed at the amount of land that Singapore (a small city/state) devotes to its port.  Such land could be used for other purposes that might yield more long term economic growth?  Few wanted to have this discussion with me. The port was viewed as vital to Singapore's long term growth.  But, Singapore faces competition from several local ports.  I don't believe that a good urban economics paper has been written on ports and international trade and its impact on city growth.

With this in mind (and as a LA home owner), I read that the widening of the Panama Canal may impact U.S Western Port cities (think of Oakland and Long Beach and Los Angeles).  If you want to ship stuff from Asia to the U.S Northeast, is it cheaper to go through Panama or to load up trains and trucks in Los Angeles? If the answer is the former,then how big of a problem does my metro area of LA have? Who will lose? What is the multiplier effect? In 2014, how important is the LA port to LA's growth? Has it produced union jobs or a large number of middle class jobs?

To solve for the cheapest shipping option for a given tonnage of goods from Asia to the New York area must be a standard operations research problem?   You face a choice of renting a cargo ship to go all the way from Asia through the Panama Canal or renting a cargo ship to go to LA and unload onto trucks and trains there to ship to the final destination.  Are there economies of scale here?

Here is an example of an OR article discussing this but it is gated.