The slumping economy has forced the Port of Los Angeles to cut its current spending budget by more than $20.5 million amid a projected 20 to 30 percent decline in shipments during the first quarter of 2009.
Port officials in recent months have eliminated several unfilled positions and reduced some costs, including travel expenses, to keep the books balanced. An optimistic harbor commission had signed off in June on a $1.15 billion budget for this fiscal year, a 15 percent increase from the previous one.
Given the dismal economic forecast now, "our most prudent course of action is to hunker down and plan for possible significant reductions in revenues in the coming year," said Geraldine Knatz, executive director of the Port of Los Angeles.
"We are tightening hiring and have asked divisions to hold vacancies," Knatz said. "We have asked divisions to take a critical look at their budgets and to cut spending."
By the close of 2008, the port is expected to handle about 5 percent fewer shipments than in 2007, according to Knatz. In contrast, the port saw container volumes increase by 289 percent from 1997 to 2007.
"For the remainder of the fiscal year, I have been speaking to our customers about their business projections moving forward into 2009," Knatz said. "What I found was predictions of business being off 20 to 30 percent during the first quarter of 2009."
Nearly 80 percent of the port's income comes from cargo container fees collected from its seven terminals, which are reporting massive drops in imports and exports as 2008 comes to a close.
Part of that dramatic reduction stems from a recent announcement that Maersk Line will eliminate one of its services to Los Angeles as part of a new vessel sharing agreement with CMA-CGM.
The local trend closely mirrors what's happening at ports across the country, with a projected 6.1 percent drop in shipments compared to last year, according to Global Insight, a port industry analyst.
"I think every business is looking to cut spending and conserve cash right now, but the port is a service business and you don't want service levels to decline," said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. "I don't see any real improvements until 2010, but by 2011 the economy should be moving at a pace that makes everybody feel better."
Kyser warned that Los Angeles should avoid slashing the $308.7 million worth of funds budgeted for capital improvement projects at the port, which include the massive expansion of the TraPac terminal, berth improvements, heightened security and technology advancements and waterfront development in San Pedro and Wilmington.
"You don't want to take money out of those capital improvement projects because terminal operators are already nervous about the slow rate of expansion at the ports," Kyser said.
"The best way for the port to save money right now is to put a freeze on hiring, avoid purchasing new vehicles and make cuts in other departments across the board."
Port officials in recent months have eliminated several unfilled positions and reduced some costs, including travel expenses, to keep the books balanced. An optimistic harbor commission had signed off in June on a $1.15 billion budget for this fiscal year, a 15 percent increase from the previous one.
Given the dismal economic forecast now, "our most prudent course of action is to hunker down and plan for possible significant reductions in revenues in the coming year," said Geraldine Knatz, executive director of the Port of Los Angeles.
"We are tightening hiring and have asked divisions to hold vacancies," Knatz said. "We have asked divisions to take a critical look at their budgets and to cut spending."
By the close of 2008, the port is expected to handle about 5 percent fewer shipments than in 2007, according to Knatz. In contrast, the port saw container volumes increase by 289 percent from 1997 to 2007.
"For the remainder of the fiscal year, I have been speaking to our customers about their business projections moving forward into 2009," Knatz said. "What I found was predictions of business being off 20 to 30 percent during the first quarter of 2009."
Nearly 80 percent of the port's income comes from cargo container fees collected from its seven terminals, which are reporting massive drops in imports and exports as 2008 comes to a close.
Part of that dramatic reduction stems from a recent announcement that Maersk Line will eliminate one of its services to Los Angeles as part of a new vessel sharing agreement with CMA-CGM.
The local trend closely mirrors what's happening at ports across the country, with a projected 6.1 percent drop in shipments compared to last year, according to Global Insight, a port industry analyst.
"I think every business is looking to cut spending and conserve cash right now, but the port is a service business and you don't want service levels to decline," said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. "I don't see any real improvements until 2010, but by 2011 the economy should be moving at a pace that makes everybody feel better."
Kyser warned that Los Angeles should avoid slashing the $308.7 million worth of funds budgeted for capital improvement projects at the port, which include the massive expansion of the TraPac terminal, berth improvements, heightened security and technology advancements and waterfront development in San Pedro and Wilmington.
"You don't want to take money out of those capital improvement projects because terminal operators are already nervous about the slow rate of expansion at the ports," Kyser said.
"The best way for the port to save money right now is to put a freeze on hiring, avoid purchasing new vehicles and make cuts in other departments across the board."