Pacific Maritime Magazine - Marine Business for the Operations Sector

Regional Report: LA/Long Beach

 

March 1, 2018

Crews utilize movable scaffolding on the Gerald Desmond Bridge project. Photo courtesy of the Port of Long Beach.

When it comes to shipping, location and access to the world's biggest trade partners is everything.

It is a big reason why the Ports of Los Angeles and Long Beach are the nation's two busiest seaports, together moving 40 percent of US imports and 25 percent of its total exports.

"What sets it apart is our close proximity to the nation's most important trade route," said Port of Long Beach Executive Director Mario Cordero, referring to the Trans-Pacific trade route to Asian trade partners, especially China.

"When you talk about cargo coming from Asia to this gateway and we get to Chicago 11 days earlier than the alternative – by that I mean direct water to the East Coast – and you put a dollar amount to that, that's a savings to the shipper of 20 to 40 percent," Cordero said.

Besides the global market, there's the huge domestic consumer market in the West, from Los Angeles to Las Vegas and Phoenix and its proximity to more than a billion square feet of warehousing within 300 miles of the port, said Chris Chase, Cargo Marketing Manager for the Port of Los Angeles.

And while the port consists of two separate entities with different governing bodies and operating budgets – and sometimes engage in competition for business – the ports of Los Angeles and Long Beach are more collaborative than competitive, officials said.

"We do more things together than we do apart the two ports," Chase said. "I think the port next door isn't our competitor; to everybody else other than the two port authorities and a few minor other people, the fact is it's one gateway. If you own cargo and you're shipping it, you're not making decisions based on whether it's LA or Long Beach; you're deciding whether or not you bring it Southern California."

Both ports have a history of collaboration, especially in their efforts to curb port-related emissions in the region and finding solutions to make both ports more efficient.

"We both know that when it comes to our competition, people compete against the gateway, not necessarily against us individually as ports," Cordero said. "I think the relationship at this point between the two ports is at its height in terms of collaboration because we understand the competition right now is at its height."

And competition against the world's ports could not be fiercer as ports in Mexico, Canada, the East Coast and the Gulf Coast race to widen and deepen their harbors and waterways and improve facilities to accommodate the next generation of vessels.

"The reason you use a port, generally speaking, is the ability to get that cargo where it needs to be at the right time," Chase said. "And because of all the options that we have here in Southern California, that keeps us competitive. We have the rail, we have large warehousing opportunities, we have a frequency of service that offers a lot more... we have options other places do not have. That's what's great about the gateway we have here in Southern California. There are many options, many things that can be done to drive the overall supply chain."

Port of Los Angeles

The Port of Los Angeles is coming off two record-breaking years, posting more than 9.3 million TEUs in 2017. That's the most annual cargo handled by a port in the Western Hemisphere, and 5.5 percent more than in 2016.

This year, the port is projecting cargo growth of 2 to 3 percent.

The rise of consumer confidence and spending drove those numbers, as well as Port of Los Angeles Executive Director Gene Seroka's approach to leading the nation's busiest seaport, port officials said.

"I think what stands out in LA is when Gene Seroka came in (in 2014), the leadership that he brought in terms of the whole concept of optimizing the supply chain and really looking at what we've got, the land use that we've got," said Phillip Sanfield, port director of media relations.

He cited Seroka's leadership in partnering with GE Transportation to create a digital portal that gathers and organizes shipping information to help the supply chain better prepare for cargo arrivals, a partnership that happened after lack of equipment, a labor dispute and other factors congested port operations.

"Now in addition to the hard infrastructure – the cranes and the docks – we're leading the way globally in terms of digital infrastructure and making sure that we get every inch of space utilized on these docks at the right time and the efficiencies is what we're driving now," Sanfield said.

Officials hope this portal is a workable system that will help other ports better manage the supply chain, Chase said.

"We have the berths and we have the land to handle these containers," Chase said. "What we need to do is handle those containers more efficiently, to not waste our space, and that's really what this whole goal is – to be able to invest in technology to help make our structural work better."

Port officials are closely watching how the latest alliances and mergers shake out for the port, which may mean less shipping lines, but bigger ships.

A big concern for the port is China's restrictions on recycled paper, one of Los Angeles' biggest exports, which primarily go to China, Chase said.

"That has an impact," he said. "We just don't know what it's going to be; it's hard to tell."

Meanwhile, a predicted boom in housing and development may bode well for Los Angeles, whose major import commodity is furniture. Another import, auto parts, should remain a robust player in the future as well, Chase said.

To stay competitive, the Port of Los Angeles has a slate of terminal and roadway projects on the docket.

Recently completed projects include the expansion of TraPac Container Terminal at Berths 136-147.

The work, which was finished in 2017, involved extending wharves to 4,600 linear feet, creating deeper water depth at Berths 144-147, putting in new cranes, making road and gate improvements and terminal buildings, and constructing a new on-dock rail facility.

Improvements to Yusen Container Terminal at Berths 212-224 were also completed in December. The project involved upgrading Berths 214-216 to a -53- foot depth and Berths 217-220 to a -47- foot depth, and modernizing the wharves to accommodate 14 post-Panamax container cranes, adding a loading track in the on-dock rail yard and installing four new AMP connections, according to the port.

This year, improvements to Everport Container Terminal at Berths 226-236 may start later this year. Plans to deepen berths and modernize its terminal facilities to make way for larger ships – which include building an additional 1.5 acres of backland and upgrading five new AMP connections – is under design review.

Meanwhile, port and BNSF officials are plotting their next moves following the results of a recent California Court of Appeal decision on their $500 million railyard project.

Approved in 2013, the Southern California International Gateway near-dock intermodal rail project (SCIG) has been in legal limbo as several lawsuits filed by the city of Long Beach, environmental and neighborhood groups claim the project's environmental impact report did not do enough to address SCIG's impacts to neighborhoods and the environment.

In 2016, a court sided with Long Beach and others, ruling that additional study was needed on the project's environmental impacts and invalidated parts of the EIR.

Los Angeles and BNSF appealed the decision and on Jan. 12 the California Court of Appeal reversed the trial court's 2016 ruling on all but one EIR analysis issue: ambient air concentrations.

The port is also working on several projects aimed at improving public access and enjoyment of the waterfront.

"When Gene got here, he wanted to tie the success of the port's revenues to community investment, a formal plan that ties a percentage of our revenues to investing in the community," Sanfield said.

That includes plans for a $52.7 million Wilmington Waterfront Promenade (with construction to start this year), a $23.8 million Avalon Promenade and Gateway Project (with construction to begin in 2019) and the revitalization of Ports O' Call Village into the rebranded San Pedro Public Market, a space that will feature 16 acres of restaurants, retail and office uses and a waterfront promenade with outdoor space and an open-air amphitheater for live entertainment, according to the port.

Work on the public market is slated to start this year, with plans to open in 2021.

Port of Long Beach

Like its neighbor in Los Angeles, the Port of Long Beach is reporting 2017 as a record-breaking year.

In its annual State of the Port Address in late January, Cordero announced that the nation's second busiest seaport moved 7.54 million TEUs last year, its busiest year in history.

This was inconceivable 1.5 years ago, when Korean carrier Hanjin filed for bankruptcy in 2016. This was a major blow for Long Beach, where Hanjin had made its largest major terminal investment.

"If you look at the conversation here a year and a half ago, it was a serious conversation in terms of how it's going to play out, not only in the short term but in the long term for the Port of Long Beach with the loss of one of our important carriers or partnerships with a major carrier," said Cordero.

The port was able to rebound quickly. The commission moved forward to explore a new business opportunity that resulted in a 2M Alliance service that brings 14,000 TEU vessels to Pier T on a weekly basis.

Then came the partnership between MSC and Hyundai Merchant Marine, allowing Hyundai to return to Long Beach after years at the Port of Los Angeles.

The SM line business, the new South Korean carrier, at Pier A, also debuted in Long Beach last year. And at Pier J, Pacific Container Terminal received a visit in 2017 from the Himalaya, COSCO's largest vessel ever to come to North America at 14,500 TEUs.

ITS is also stepping up its game, developing its own new digital system to upload more information about cargo.

"What we went through as a port, not only with regard to that filing but how it impacted operations – how it caused temporary congestion – to where we ended up last year with our best cargo numbers in the history of the Port of Long Beach is a great story to tell," Cordero said.

The port's reputation for customer service and willingness to invest long-term in the necessary infrastructure are also key in Long Beach's competitiveness, spending $4 billion over a decade to improve facilities for efficiency and sustainability.

About half of that money is being spent on two of Long Beach's largest projects, the replacement of the aging Gerald Desmond Bridge and the redevelopment of Middle Harbor, which are on track to be completed sometime in 2019.

The first new lanes are expected to open in 2019 on the new Gerald Desmond Bridge, where 15 percent of the nation's import cargo crosses that bridge.

"It's the bridge to everywhere," Cordero said. "Containers that cross that bridge end up in every congressional district in the mainland."

When completed, California's first cable-stayed bridge will not only improve traffic and movement of containers but also the navigation of the vessels that come through that particular harbor, Cordero said.

Meanwhile, the port is moving forward with the third phase of Middle Harbor, the project that fuses two older terminals into one mega-terminal for Long Beach Container Terminal. When fully operational, Middle Harbor has the potential to move up to 3.5 million containers annually while reducing emissions by half previous operations generated by the two smaller terminals, Cordero said. This terminal can handle 22,000 TEU vessels, he said.

The Port of Los Angeles moved more than 9.3 million TEUs in 2017 – the most annual cargo handled by a port in the Western Hemisphere. Photo courtesy of the Port of Los Angeles.

"That project will be a state-of-the-art terminal that will exemplify the vision of what this port of known for, which is the Green Port," he said. "That will be the example of the Green Port of the future."

Another potential green project is the $120 million on-dock rail project at Pier B. If it moves forward, the proposed facility will allow the port to put more cargo on-dock and eliminate 750 trucks from freeways daily.

"There's no other port in the nation that has invested the kind of monies that we have invested in our capital infrastructure or infrastructure projects," Cordero said. "We have a resume as a proven leader ... not just on the environmental progress that we're doing here but we're also moving the needle on operational progress. ... Long Beach has been seen as a leader both on the environmental front and on our customer service in terms of what we do to attract cargo and with that, the numbers speak for itself."

 
 

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