Tuesday, February 9, 2010

What a Difference a Year Makes: 
The Ports of LA/LB 
Put 2009 Behind Them

By Keith Higginbotham

In retrospect, 2009 may go down as the “year of pain” for the shipping industry. 

While some in January 2009 were looking wearily at the coming year, no one, especially officials at the Southern California ports of Long Beach and Los Angeles, anticipated the truly rough seas ahead.

As the year played out and the global economic crises that started in the third quarter of 2008 spread, the entire industry that the two ports serve contracted violently. Ocean carriers began laying up vessels while reporting loses in the hundreds of millions of dollars, rail traffic reached the lowest point in more than 20 years, and reports of terminals down 30 percent in container moves were not uncommon. Even the usually bulletproof longshoremen experienced such a shortage of work that veteran “A” card dockers were having trouble finding assignments.

But they say “that which does not kill you, makes you stronger.”

Judging by the attitude of officials at the Southern California ports, the saying might be right.
Still, after a year of such struggle, officials at the ports of Long Beach and Los Angeles, the two busiest container ports in the Western Hemisphere, are happy to see 2009 sinking out of sight and 2010 looming brightly ahead.

Mid-way through his first year as president of the Long Beach Harbor Commission, Nick Sramek set down four specific goals for the port in 2010.

“The first is jobs and the economy. The second is the environment. The third is our relationships and the fourth is looking at a future port,” said Sramek.

These are not the single-minded goals of a port fighting for survival, these are the goals of a port who is shouting “we have survived.”

At the Los Angeles port, officials took a more pragmatic view of the future.

“We are cautiously optimistic about 2010, hoping that consumer confidence will start improving inbound volumes and the market recovery overseas will continue to drive our export volumes.” said Los Angeles Port Executive Director Geraldine Knatz.

Despite the weariness that will fill the history books about the past year, the ports did manage some major accomplishments during 2009.

If nothing else, the two ports were consumed during the past year with their so-called Clean Truck Program. The CTP, which took effect in October 2008, was designed to reduce ports-generated diesel emissions from ports-servicing trucks that haul containers.

The original truck plan, developed and envisioned as a single plan for both ports, eventually morphed into two distinct versions, with each port seeking to approach the truck pollution problem in slightly different ways.

However, a federal lawsuit brought by the American Trucking Associations argued that a major component of the plan, an access license system that essentially allowed the ports to determine which trucking firms could and could not service port terminals, violated federal law which takes precedence in matters of interstate commerce.

Early last year the federal courts agreed and injuncted the concession portion of the truck plan, pending a full court hearing on the matter now set to take place in March 2010.

Despite this, the two ports managed to stick to other portions of the CTP not blocked by the court, namely progressive bans on older trucks. By the end of the year the bans had effectively barred close to 6,000 trucks older than the 2003 model year cutoff.

By year’s end, both ports had measured double-digit percentage drops in diesel emission pollutants in the port area, though there is still some doubt if this was due to the CTP or due to the reduction in truck traffic as cargo volumes slowed.

In late October, Long Beach officials determined that their version of the truck plan could move forward without the access license component and still achieve the stated pollution reduction goals, leading to a court-sanctioned agreement with the ATA.

The neighboring Port of Los Angeles, however, refused to disavow the access license component of their plan and maintain that it is critical to their version of the truck plan. And while Long Beach’s agreement removed them from the ATA litigation, official sfrom Los Angeles have promised to continue the fight in court.

Though the first break came in late 2008, last year will be remembered at the two ports as the year that a nearly five-year self-imposed construction moratorium on major projects at the two ports came to its real end.

The moratorium began in 2003 when the Port of Los Angeles settled a lawsuit with the Natural Resources Defense Council over preparatory but required environmental review for the development of the China Shipping terminal at the Los Angeles port.

The 2003 settlement, which wound up costing the Los Angeles port more than $100 million, sent paroxysms of legal fear through officials at both ports. Nearly all construction was halted until Los Angeles finally broke the logjam in late 2008 with the announcement it was moving forward with the TraPac terminal redevelopment, a project that had been held in limbo for nearly a decade.

Last year, both ports rushed through a flurry of new projects, moving to get environmental documents approved and construction under way.

Since the start of 2009, Long Beach currently has either finished or started work on more than half a dozen major projects throughout the port. These include: A new administration complex for Pier G terminal operator International Transportation Service; a $70 million soil cleanup at Pier A West; Ship-to-shore power development at Matson’s Pier C container terminal; port-wide storm-water runoff control improvements; a recently completed refrigerated shipping container project at Pier G; the $750 million Middle Harbor Redevelopment Project that will modernize two older shipping terminals into a single mega-terminal; a new maintenance/repair facility at Pier G; and renovations to improve Pier G’s on-dock rail capacity.

The port of Los Angeles moved forward on several major projects in 2009, including: the $64.3 million TraPac terminal expansion; a $17.5 million upgrade to the China Shipping terminal; a modernization and expansion project at the Intermodal Container Transfer Facility; a major repair project of the 15-acre New England fishing village located along the Port ’s Main Channel; a million square-foot, $9 million solar panel installation atop a port cruise terminal; and, a $105 million development of the port’s public waterfront area.

Federal dollars, often matched with port funds, continued to flow into both ports in 2009 for security upgrades and development.

In early 2009, Long Beach port officials dedicated a $21 million Security Command and Control Center, a 25,000-square-foot facility that serves as the communications hub and headquarters for the Port of Long Beach Security Division and Harbor Patrol.

The state-of-the-art facility also houses security units from the Long Beach Police Department and the Port of Los Angeles. In addition, offices and facilities in the three-story structure can also accommodate members of the US Coast Guard, US Customs and Border Protection, and Southern California Marine Exchange during an emergency.

The Center, paid for by the United States Department of Homeland Security and the Port of Long Beach, is designed to be a regional resource, housing emergency management facilities including a Department Operations Center for use in coordinating law enforcement response to emergencies anywhere in the Long Beach/Los Angeles port complex.

Across the bay at Los Angeles, port officials approved new security projects including a new $21.9 million Port Police Headquarters and various security-related transportation projects totaling $27.7 million.

Despite both ports postponing the collection of per-TEU infrastructure fees originally set to begin in 2009, Long Beach and Los Angeles officials both moved forward with infrastructure projects.

In Long Beach, plans moved forward on the $1.1 billion replacement for the Gerald Desmond Bridge, the major point of egress into the Terminal Island portion of the port complex. The 40-plus year old bridge was originally designed to have a lifespan through the 1990s, but funding and development problems have prevented the replacement project from leaving the conceptual stage until recently.

Another point of egress to Terminal Island, the 60-plus year old Commodore Heim Bridge, has apparently found adequate funding but was stopped by a lawsuit almost before it began.

In Los Angeles, port officials capitalized on a $21 million federal stimulus grant to begin work on a 1.3-mile segment of Harry Bridges Boulevard in Wilmington that circles the port.

Cargo Volumes
Despite some good news, 2009 was dominated by dramatic declines in cargo volumes handled by the ports and contracting business levels throughout the supply chain.

In 2009, the Port of Long Beach handled 5,067,597 TEUs, a decline of 21.9 percent compared to 2008. Total loaded inbound box volumes for 2009 dropped 20.5 percent and total loaded outbound box volumes fell 19.9 percent.

Next door, the Port of Los Angeles ended 2009 with 6,748,994 TEUs handled, a 14 percent decline over the previous year. Total loaded inbound box volume also dipped 14.9 percent during 2009 with loaded outbound box volumes falling 6.4 percent.
However, both ports reported marked improvement in December, with Long Beach up 8.7 percent for the month compared to December 2008 and Los Angeles up 3.5 percent over the year-ago monthly period.

While December did little for either port to erase the declines during the rest of the year, they were the first monthly total container volume increases for more than a year.

Despite the tumult and the pain for 2010, both ports, as mentioned earlier, have entered 2010 with smiles on their faces.

“These [December] numbers are far better than expected, and may very well be the first signs of an economic recovery,” said Port of Long Beach Executive Director Richard D. Steinke. “That’s great news for our region and the nation. We are cautiously optimistic that this marks the beginning of an ongoing, upward trend.”

So while the smiles are there, they are perhaps not a measure of some hope for the coming year’s high points, but instead for having already survived the past year’s low points.