Regional Report: Los Angeles and Long Beach
June 1, 2020
As the novel coronavirus shutters businesses and public spaces across the country and the world, the ports of Los Angeles and Long Beach and their supply chain partners press on to keep vital goods and commerce flowing.
And while port authorities and related businesses are exempt from California Gov. Gavin Newsom's stay at home order because they are considered essential, these entities are no less affected by the COVID-19 health crisis.
Both ports are seeing cargo numbers tumble from the same time a year ago, while related businesses such as American Marine Corp. anticipate reduced revenues.
But these entities are rallying, maintaining business operations while adapting to the challenges brought on by one of the most disruptive pandemics in modern history.
Port of Long Beach
While speaking with pacific maritime magazine in April, Port of Long Beach Executive Director Mario Cordero recalled the irony of what he said at the annual State of the Port address.
In January, he had said keeping the port a leader in cargo movement was going to take long-term teamwork with stakeholders.
"I said it in the spirit that here in Southern California, we needed to really enhance our collaborative efforts to continue to be a leader in the movement of containers of cargo, given that the competition is fierce now in terms of the choices that shippers have of where their cargo goes," Cordero said. "I never fathomed that we were going to have the high level of collaboration in regard to the crisis that came upon us."
That partnership will be necessary at the nation's second busiest seaport, which has taken a hit in recent weeks because of COVID-19.
The first quarter saw nearly two dozen canceled sailings, with container volumes falling 6.4 percent in March. With more blank sailings, the port is expected to be down 14 percent in the second quarter, Cordero said.
April and May numbers, however, are expected to surge from cargo that was delayed from the manufacturing closures in China during its COVID-19 sheltering in place order.
The port is working with stakeholders to minimize bottlenecks when that surge of cargo happens and address the issues post-surge, when things get challenging in an economic downturn, Cordero said.
The average impact of a blank sailing is about $300,000 in lost revenue for Long Beach, he said. If the port had 19 sailings lost in the first quarter and sees 14 sailings lost in the second quarter – as of press time – that's almost $10 million revenue loss in the first half of the year.
"I think it's fair to say everybody in the supply chain has been impacted, including port authorities," Cordero said, adding that the US-China trade war was already affecting numbers.
"Certainly the trade war dynamic and the tariff application created disruption in this industry," he said. "And now with the COVID-19 acceleration of impacts here, we've gone from disruption to chaos in the supply chain."
Cordero said it will take the same initiative and excellent customer service that the port practiced during the global recession more than a decade ago, when the port saw a 25 percent loss of container volume from June 2008 to June 2009.
"We had the fortitude to continue to move to make sure that we not only moved containerized cargo in a way that kept us as a leader as a container gateway, but we also moved on our capital improvement projects," he said. "So what it will take now is that same kind of fortitude and collaboration working with our stakeholders."
That's the approach the port is taking as it keeps business open and presses toward the completion of its biggest projects, both of which started in the midst of the global recession.
Slated to open this year, the $1.47 billion cable-stayed span to replace the Gerald Desmond Bridge will feature six traffic lanes, a bike and pedestrian path, more room to accommodate larger cargo ships and better traffic flow with more efficient transition ramps and connectors.
The port is also completing the third phase of Long Beach Container Terminal's automated facility, which will curb emissions by half while increasing cargo flow by as much as 3.5 million containers.
"This port moves forward with the fortitude to continue its endeavor in terms of improving capital improvement projects – now we're the beneficiaries of that," Cordero said.
"We're doing everything we can to make sure commerce moves again, exemplifying that the Port of Long Beach will meet the tough challenges ahead."
Meanwhile, the port is doing its part to help fast-track the shipments of medical gowns, gloves and other essential health equipment made in Asia needed to tackle the COVID-19 crisis.
Goods are being guided through several Long Beach marine terminals and placed in special staging areas for truckers to quickly deliver to regional distribution centers.
"It's great to see this come together as we all move quickly to prioritize getting products where they are needed in this uncertain time," said Patrick Halloran, director of Global Trade Logistics for Cardinal Health, which has been working with the port to bring those supplies to Long Beach.
Cordero said he's proud of the terminal operators and the port for coming together on that effort.
"Early on, we worked with our terminal operators to make sure that we prioritize containers that come in and out of the terminals that contain the very valuable medical supplies that are needed not only by our professionals in the health industry, but the men and women in essential positions up and down the state," he said.
Port of Los Angeles
Every week since March 12, Port of Los Angeles Executive Director Gene Seroka has been delivering video statements about the state of the port, which continues to run without disruption with terminals and gates running daily.
Seroka offers optimism but doesn't shy away from the reality of the situation.
"As the economy has contracted, we are seeing smaller container ships return to service," he said in his April 17 address. "Unfortunately, more than 30 scheduled sailings have been canceled through mid-July."
The port saw March cargo numbers fall 30.9 percent to 449,568 TEUs compared to the same time last year, its lowest amount of monthly cargo since February 2009.
For the first quarter of 2020, volumes dove 18.5 percent compared to the first quarter of 2019.
Seroka previously said the soft numbers were attributed to "two serious shocks to our supply chain system" – the trade war between the US and China and now the COVID-19 pandemic.
"With US retailers and cargo owners scaling back orders, volumes are soft even though factories in China are beginning to produce more," Seroka said. "Amidst this public health crisis, there will be uncertain months ahead in the global supply chain."
The good news, he said, is that workforce labor shift counts at the ports of Long Beach and Los Angeles were up 20 percent recently and were at their highest level in nearly two months. He added that the port also anticipates higher container volume in April as manufacturing in China normalizes and some US businesses replenish their inventory.
"This is encouraging news in the short term but unfortunately overall volume in the year 2020 will be considerably lower than last year," Seroka said.
Aside from taking necessary precautions to limit risk exposure to COVID-19 at the port – including moving evening labor shifts an hour later so cargo handling equipment and radios can be sanitized – Seroka has been involved in an effort to get more medical gear to Los Angeles-area healthcare workers.
Los Angeles Mayor Eric Garcetti recently appointed Seroka as the city's Chief Logistics Officer for the effort, Logistics Victory Los Angeles, coordinating efforts to find and match suppliers of medical equipment and protective gear to healthcare workers in Los Angeles County. So far, 160,000 face shields from Apple Inc.'s Giving program were donated to the cause.
Meanwhile, the port and its partners continue to power through on various projects, some slated for completion next year.
That includes plans to deepen berths and upgrade terminal facilities at Everport Container Terminal at Berths 226-236. The $65 million project, expected to be finished in late 2021, will allow Everport to accommodate larger ships.
The port is also finalizing the designs of new marine oil platforms at the Shell Oil and PBF Energy Oil terminals, proposed projects that would include new 30-year leases.
The $44.8 million project at Shell Oil involves demolishing timber wharves and building and running a new MOTEMS-compliant wharf.
The $25.7 million project at PBF Energy Oil includes a new unloading platform, berthing dolphins, mooring dolphins, catwalks, and access ramp.
Also in the works is a $49.8 million project to expand the Pier 400 rail storage yard to address future rail volumes on Terminal Island. The project, which is slated to begin later this year, calls for a concrete rail bridge with lighting, six new railroad storage tracks, new crossovers and switches, as well as relocating part of the Pier 400 lead track onto Port of Los Angeles property.
Another project deals with closing a gap of track between the port's West Basin and the Alameda Corridor with a new second mainline that will help expedite trains serving WBTC, TraPac, Pasha Terminals and others.
The $14.05 million project will consist of roughly 5,000 track feet of rail parallel to the existing San Pedro Main track and changes to the West Basin ICTF lead track to make way for a second lead.
There's also a $31 million effort to improve traffic safety and efficiency at the State Route 47/Vincent Thomas Bridge & Front Street/Harbor Blvd Interchange. That work, expected to begin in late 2021, will involve replacing the current westbound off-ramp from the Vincent Thomas Bridge with a new off-ramp on the northside, realigning the westbound on-ramp onto the SR 47 and I-110 connector and making the westbound off-ramp onto Harbor Blvd. and the eastbound on-ramp onto the bridge toward Terminal Island.
American Marine Corporation
Thirty-eight years ago, American Marine Corporation opened its Terminal Island office when its first tugboat arrived from Puerto Rico.
The company established a presence in the San Pedro Bay to service the Santa Barbara Oil field, working on many pipeline and platform installation projects for the following decade.
"Our first projects were supplying diving and tug boat services to these oil field construction projects," Robert M. Shahnazarian said. "Eventually this led to a wide variety of other marine construction projects such as offshore ocean outfall installations and repairs."
Operations have evolved from diving and tugboat services to now providing in addition crew boat services, welding fabrication, waterfront facility support services and marine construction services, he said.
Like many businesses, American Marine Corp is feeling the effects of the COVID-19 health crisis and anticipates gross revenues to be significantly reduced as a result, Shahnazarian said.
The company's divers are still working in the Port of Los Angeles and for other government agencies where the infrastructure work is deemed essential, but most of its private work is on hold, he said.
"We are still running our crew boats out to the ships at anchorage, bringing them the vital supplies that they need," Shahnazarian said. "Without our crew boat services, the ships would not get the supplies they need. There are many more ships than normal at anchorage including cruise ships which I have never seen out there before. We hope to see them all moving again soon."
Since it is an essential business that keeps the Port of Los Angeles and Long Beach operational, the company has enacted strict measures to make sure it protects the health and safety of its employees by following the latest health protocols and making sure that employees have the proper PPE and training.
Meanwhile, the company is chugging along, closing out a dive job for the Department of Water Resources at milepost 282 on the California Aqueduct, about 30 miles south of Bakersfield.
Originally a two-day concrete panel inspection, the job evolved into repair work after finding that some of the concrete panels were damaged, causing gaps where water would seep through and erode the soil slope.
The crew boat division grew last year with the addition of a new agency.
AMC recently finished a project with Resolve Marine to support their emergency repair response effort to the oil tanker, Bunga Kastri Dua. The crew boat, Gladys S, delivered Resolve's personnel, fire-fighting and lightering equipment, and vessel supplies in addition to providing some additional in-house response personnel.
On the horizon, AMC divers are starting a $1.6 million job as a subcontractor to Manson Construction at the Evergreen Terminal (Berths 226-236). The work will involve repairs to 1,250 linear feet of fiberglass jacket and 15 broken piles that call for drilling into the above soffit, as well as welding a closure plate between existing and new sheet pile wall, and additional on-call diving work as needed.
As the port develops in the Scientific Research arena, with additions like the Alta Sea facility, American Marine is evolving to make sure that the company can offer the services that this new market will need, Shahnazarian said.
AMC was recently awarded Carl Moyer funding to repower two of their Crew and Supply vessels, which is expected to be done this year.
"We are very excited for the future opportunities in this region," Shahnazarian said. "There is much talk of upgrades, improvements and investment from new users in the ports. As a long term local company with a solid reputation we look forward to participating in the future growth and expanding our operations."