Long Beach desperately needs the contract, but, in fact, does not have the long term growth potential to keep COSCO there. The reason this deal is so critical for Long Beach is that money from the harbor district is being diverted to keep their Redevelopment projects afloat.
Now the Port of Los Angeles is making another run at the contract with COSCO. To their advantage the Los Angeles does not have any impediments such as being a former Naval Station so there is no public process involved. According to recent information COSCO expects to move up to one million cargo containers through the facility each year. People in the industry say that level of shipping will need 250 acres which is, in fact, more than the 145 acre site offered by Long Beach. The Los Angeles site being promoted, Pier 400, is in San Pedro Bay. The facility under construction there is on a 470 acre site and thus has room for future expansion. It will be interesting to watch this high stakes game play out.
COSCO could ask for damages from Long Beach for breaking the lease and then go to a better site across the harbor without any more negative publicity. It would be a win-win for China.
Speaking of negative publicity, I heard on the radio (which does not mean it's true) a story that Panama was considering a Chinese company to take over the running of the Panama Canal. If it is true, it will make the Long Beach problem look like a romp in the sandbox. It is to be remembered that there are no privately held companies in China; they all belong to the Chinese government. As a side note, it is believed that when China takes over Hong Kong, they will nationalize OOCL, Inc., a large shipping company based there, and this added with COSCO will give China the largest shipping line in the world.
I still remember when Robert McNamara was head of the World Bank and forced the major New York banks to make huge loans to Panama. When it came time for repayment, Panama refused unless the U.S. gave them the Canal Zone, which President Carter did under the rationale of protecting the New York banks.
It will be ironic if China ends up with the Long Beach Naval Station and the Panama Canal. McNamara has left quite a legacy with Panama and Vietnam. Can we ship him off to China and let him go for strike three?