Pacific Maritime Magazine - Marine Business for the Operations Sector

Regional Report: San Pedro Bay

Regional Report: LA/LB

 

A $510 million expansion program at the Port of Los Angeles TraPac terminal will see the first automated container terminal at the Port of Los Angeles as soon as late 2016. Photo courtesy of the Port of Los Angeles.

Of all the various issues that the San Pedro Bay ports dealt with in 2014, perhaps the one that cast the biggest shadow – and caused the most headaches – was cargo congestion.

The problem of backups of cargo containers at the adjoining ports of Los Angeles and Long Beach has occurred off and on over the years, but the issue became more pronounced during the 2014 peak shipping season, the time in late summer and early fall when many vendors across Asia send their goods to North America in time for the holiday purchasing season.

The cargo backlog is being attributed to multiple factors, including an increase in visits by ultra-large container vessels, which have a capacity of more than 14,500 TEUs. Also cited as reasons: a shortage of chassis for drayage trucks to haul the containers to and from the ports; and the formation of alliances by shipping companies resulting in vessel sharing agreements.

The Pacific Maritime Association, which spent the majority of the calendar year locked in negotiations with the International Longshore & Warehouse Union on a new labor contract, partially blamed congestion on the labor organization, saying the ILWU was trying to gain the upper hand in contract negotiations, which began in May.

But as 2014 ended and 2015 began, leaders at both ports expressed optimism that the problem could and would be alleviated in the months to come.

In his annual State of the Port address in January, Port of Long Beach Chief Executive Jon Slangerup said that part of the solution is renovating the port's infrastructure.

"We're improving the capacity and productivity of port operations because the name of the game in the future is all big ships," he said.

Among the projects the port saw progress on in 2014 was the $1.3 billion Gerald Desmond Bridge replacement project and the $1 billion-plus Middle Harbor terminal project, a ten-year redevelopment plan consisting of the combining of two aging shipping terminals, Pier E and Pier F, into one modern facility.

The bridge project is replacing an existing 47-year-old bridge that traverses the port and Terminal Island with a taller, wider structure, which will allow passage of the largest of the current super-sized cargo vessels. The still-unnamed structure is expected to be complete by mid-2018.

"Besides adding to the skyline, the new bridge will increase (vehicular traffic) capacity by about one third, speeding travel for thousands of our daily commuters as well as improving conditions for trucks that today carry 15 percent of America's imports," Slangerup said.

Meanwhile, Phase 1 of the port's Middle Harbor terminal project is expected to be complete by the coming summer, Slangerup said, thereby increasing the port's overall container capacity by 10 percent. When both phases are complete in 2010, Middle Harbor is expected to have the capacity to handle three million TEUs, which would increase the port's overall container-moving capacity by 20 percent.

"Our current projects will allow us to handle to 20,000 TEU vessels that are currently on order by our customers. Now to put this in perspective," Slangerup said, "a 14,000 TEU vessel is as long as the Empire State Building is tall and also is wide as the 405 freeway, both northbound and southbound lanes combined."

Over at the Port of Los Angeles, progress continues to varying degrees on three major construction projects: a nearly $60 million project to improve wharves and increase berth depth at the port's YTI terminal; a $383 million array of transportation projects to improve roadways heavily used by port traffic; and a $510 million Trans Pacific Container Service (TraPac) terminal expansion.

Last November, the port's real estate division opened negotiations with terminal operator Yusen Terminals Inc., or YTI, on a Yusen plan to improve and expand its existing 185-acre terminal. The proposal entails improving the wharves at berths 214-216 by increasing the berths' depth from minus-45 to minus-53 feet, plus modifying the wharves at berths 217-220 to make way for 100-foot gauge gantry cranes, deepening the berths to a minus-47 foot depth and adding an additional track to the terminal's current on-dock rail yard capacity.

The project is planned to increase the YTI terminal's capacity from about 1.6 million TEUs annually to over 1.9 million.

The port's $383 million array of transportation projects, much of it funded by federal grants, includes grade separations and freeway interchange improvements, while TraPac is a $510 million expansion program that will be the first automated container terminal at the Port of Los Angeles. Construction on the automated portions of the terminal began in 2012 and continued throughout 2014 for expected completion as soon as late 2016.

Last December, the Port of LA's Board of Directors approved its latest strategic plan, which focuses on four objectives in 2015 and beyond: building infrastructure to promote growth; an efficient, secure supply chain; improving the financial position of port assets; and maintaining strong relationships with stakeholders.

"Everything that we're doing falls into those four strategic objectives," port spokesman Phillip Sanfield told Pacific Maritime Magazine.

2014 was a year of new alliances in the maritime shipping world: not only did Maersk Line and Mediterranean Shipping Co. form a vessel sharing agreement dubbed the 2M Alliance, but the CMA CGM Group, the world's third largest container shipping company, announced Sept. 8 the signing of three major agreements with United Arab Shipping Corp. (UASC) and China Shipping Container Line (CSCL) that combine vessel sharing, slot charter and slot exchange.

Seroka said such alliances in recent years have resulted in additions to the ports' congestion problems.

"They are now dispersing larger cargo over a wider number of terminals, impacting our on-dock rail capabilities," he said. "We have 13 terminals in the San Pedro Bay port complex associated with liner shipping companies. Combined with those alliances, the cargo is being spread out. It's almost like a jellybean jar that's mixed up; you've got containers of different sizes and shapes all dispersed in a very different way than previously done."

"We've called on the liner shipping companies to load their vessels in a sequential fashion so we can be more efficient," he continued. "What we want to do here is load more on-dock rail, getting trucks off the road. Unfortunately, it's gone just the opposite way. In talking with some of our friends with the railroads, we see now cargo moving from our port complex to the suburban rail facilities fourfold greater than even a year ago."

With shipping lines teaming up as part of the shifting maritime industry landscape, it was only a matter of time before other industry stakeholders followed suit. And in October, the ports of Seattle and Tacoma announced a plan to unify the management of their marine cargo terminals and related functions under a single seaport alliance, pending Federal Maritime Commission approval.

Now the San Pedro Bay ports are looking at joining the trend: officials with both Los Angeles and Long Beach say they're committed to working together in 2015 and beyond on several issues, and to expect announcements during the first quarter of the year.

"There will be some very interesting work happening," Seroka said. Marketing, legislation, safety and security, the supply chain and environmental causes are all areas where he says the ports can work together.

The willingness by Long Beach to collaborate closely with its arch rival is a reversal from the city's stance during the first half of last year. In April 2014, LA Mayor Eric Garcetti suggested that the adjoining ports work together much more closely, saying that they were "a single entity." However his Long Beach counterpart at the time, Mayor Bob Foster, forcefully slammed the door on the idea. The door was opened again once Foster termed out in July and was replaced by Long Beach's then-vice mayor, Robert Garcia.

"I think there is a change in the ideology of the two ports working together, and Mayor Garcetti and Mayor Garcia have a strong relationship," Sanfield said. "I think it is a new day. We have had collaboration – I don't want to understate the gains we've made on security and the environment. But we now realize we need to continue that and do more."

Officials at both ports said that environmental initiatives will be a big part of their collaborations, as was the case when they came together to formulate the San Pedro Bay Ports Clean Air Action Plan, a sweeping set of anti-pollution rules and regulations that was adopted in November 2006.

"There will be more to come and our mayors will lead the charge in these areas," Seroka said, "but I look forward to a new day in working together and I think we can collectively move the ball forward in a great manner."

Among the things each has been doing separately up to this point to relieve congestion is trying to increase the supply of chassis' that cargo terminals have at their disposal.

In December, a temporary empty container depot opened at Long Beach's Pier S in order to free up truck-trailer chassis and ease port congestion. Because many terminals are congested and have little room to accept empty cargo containers, more space is needed to temporarily store those empties; the empty container depot frees up the chassis' for truckers to reuse to pick up new loads on the busy docks and speed up delivery.

The 30-acre site, operated by Pasha Stevedoring and Terminals, is scheduled to close March 31, by which time the port expects the backlog in cargo to be cleared.

Also, in February four companies started a "gray," or neutral, chassis pool at the Los Angeles and Long Beach ports, which is expected to be fully operational in March. The "gray" pool is a plan between three chassis leasing companies and a marine terminal operator under which a chassis can be picked up from one company and dropped off with another company, which is expected to add fluidity to the system.

Other measures in consideration or currently being used by the ports to help alleviate cargo backups at terminals include: working with railroads to explore shuttle train opportunities to the Inland Empire to free up more cargo space on docks; implementing more channels of real-time communication, systems for terminal operators and carriers to communicate and share information; and improving gate traffic and status monitoring to improve turn times.

Container pick-up and drop off appointment systems are also being looked at.

"We've got a number of initiatives to attack congestion both from the technology front and the operational front," Sanfield said.

But despite all the talk of congestion, and despite the need for the San Pedro Bay ports to expand and reconfigure cargo terminals, the hard data suggests that both ports still remain plenty busy: while the Puget Sound ports in Seattle and Tacoma moved a combined 3.4 million TEUs in 2014, the Port of Long Beach alone moved twice that many, 6.8 million. And the nation's busiest port, the Port of Los Angeles, moved 8.3 million.

In fact, 2014 was the third-busiest year ever for container traffic at both Los Angeles and Long Beach, which proves that while they may have their various issues to deal with, they still remain one of the biggest economic juggernauts in North America.

 
 

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