Tuesday, March 15, 2011

Southern California Ports Perform in 2010

By Keith Higginbotham, California Contributing Editor

There is a saying in the shipping industry that all things are cyclical. If this is true, then 2010 will be remembered by the ports of Long Beach and Los Angeles as the year the cycle turned decidedly upward and put the effects of the global economic downturn firmly in the rearview mirror.

The two neighboring ports, which together make up the busiest container port complex in the Western Hemisphere, each boasted major cargo volume increases in 2010. The two ports reported a combined increase over 2009 of 2.25 million TEUs. This increase was greater than the total containers handled in 2010 by all but three other US ports.

While the final results for the year reaffirmed Los Angeles’ position as the busiest single port in the nation, number two Long Beach posted the largest single-year gain in total container volume in port history.

Despite the massive turnaround, 2010 was also the year that both ports began to publicly express a serious degree of concern about the looming threat faced by the set 2014 opening of an expanded Panama Canal.

Both ports continued to implement solutions to the Panama Canal problem in 2010, mainly in the form of expanded development of facilities.

In Long Beach, a $4 billion facilities program continued to gain steam, including the securing of funds for the $1 billion replacement of a key bridge, progress on a $750 million terminal development project, continued work on a redevelopment of the port’s bulk terminal facilities, and forward movement on the development of a brand new $650 million terminal.

Across the bay, the Port of Los Angeles began a major roadway rehabilitation project, moved into the final phase of a major dredging project, secured funding to construct an additional railyard, and took steps to bring an iconic World War II battleship to the port as a museum attraction.

In addition, despite the heavy load of development sprouting throughout the two ports, the environment remained a main focus for both ports in 2010.

The two ports’ similar Clean Truck Programs reported significant cuts to air pollution generated by ports-servicing drayage trucks. Various incentive programs continued to promote vessel speed reduction to cut vessel emissions, and both ports sponsored serious pilot programs to test alternative fuel vehicles.

Cargo Rebound
Cargo volumes at the two ports in 2009 were considered to be some of the most dismal in memory. Some terminals reported volume drop-offs of more than 30 percent compared to 2008, with an average decline across the ports of about 20 percent.

At the beginning of 2010, industry analysts did not have good news for the two ports, predicting that at the very most both could expect only a single digit percentage increase by year’s end. Most were predicting further declines.

“Many experts predicted that we might not get close to our peak levels of 2007 until the middle of this decade – or even later,” Long Beach Port Executive Director Richard Steinke said during a speech in January 2011.

In fact, both ports proved the analysts were off the mark by wide margins.

The Port of Los Angeles posted a year-end 16 percent increase in total cargo traffic over 2009, cementing its place yet again as the Western Hemisphere’s busiest container port.

The port handled a total of 7.83 million TEUs in 2010, an increase of more than 1.25 million TEUs over the year-end numbers for 2009.

Of this total, Los Angeles port officials reported handling 3.98 million loaded inbound TEUs in 2010, a 12.8 percent increase over the 2009 calendar year.

The port also handled 1.84 million loaded outbound TEUs, a 10.3 percent increase over 2009. Export volumes in 2010 shattered the previous calendar year export record, set in 2008, by just over 172,000 TEUs.

“The 2010 volume gains far surpass our initial estimates, and we’ve been able to facilitate some export opportunities in the past year through our TradeConnect initiative and increased networking with local business stakeholders,” Port Executive Director Geraldine Knatz said in January.

Next door, Long Beach port officials in 2010 recorded the largest single-year gain in total container volume in port history. The port handled nearly 24 percent more containers in 2010 than the previous year, boosted by 12-solid months of growth in both import and export volumes. The year-end numbers also reaffirmed Long Beach’s status as the second busiest container port in the Western Hemisphere for 2010.

During 2010, the Long Beach port handled a total of 6.3 million TEUs, a 23.6 percent jump over end-of-the-year numbers in 2009. In total, the port handled 1.2 million more containers in 2010 than it did in 2009, the largest single-year gain since the port began tracking TEU numbers in 1971.

Loaded inbound volumes rose 23.4 percent in 2010 to 3,128,860 TEUs, and loaded outbound volumes were up 15.6 percent to 1,562,398 TEUs.

Ending the calendar year, the port handled 523,311 TEUs in the month of December 2010, a 12 percent increase compared to December 2009, and the port’s thirteenth consecutive month of gains. Port officials reported handling 256,889 loaded inbound TEUs in December 2010, a 10.4 percent increase over the year ago period. Total loaded outbound containers were up 14.7 percent in December 2010, to 141,140 TEUs.

“This was a tremendous rebound, and happened much faster than predicted,” said Port of Long Beach Executive Director Richard D. Steinke. “Best of all, the additional cargo has brought back thousands of port-related jobs throughout the supply chain – and we’re very optimistic that the job growth in this industry will continue in 2011.”

Challenges and Solutions
In addition to focusing considerable energy on solving the short-term problem of cargo volume downturns, the ports also spent a great deal of time and effort in 2010 focusing on two long term threats: the impending opening of an expanded Panama Canal in 2014 and continued calls for the two ports to address the environmental impacts of their operations.

After several years of dismissing any serious threat to West Coast dominance in transpacific cargo posed by the Panama Canal expansion, 2010 became the first year that the canal threat became a commonplace topic in the public conversation by port officials.

In large part as a response to the Panama Canal threat – and the threat of other developing ports, such as Prince Rupert in Canada – Southern California port officials in 2010 began a stepped up campaign of major capital investment.

In Long Beach, a more than $4 billion program to develop terminals and goods-movement infrastructure began in earnest.

The major component of this project is a $1.1 billion replacement of the aging, capacity-limited and height-restricted Gerald Desmond Bridge – a major point of truck ingress and egress for both ports. In 2010, port officials managed to secure the necessary funding for the project and receive approval on the required environmental documents to move forward with construction, set to begin this year.

Another major component of the Long Beach plan – the Middle Harbor Project – also began work in 2010. The 10-year, nearly $1 billion project will transform two smaller odd-shaped and aging terminals into a single geographically efficient mega terminal.

Two additional Long Beach terminals projects saw progress in 2010: the $850 million dollar redevelopment of the Pier G breakbulk facility and the creation of a new $650 million terminal on Pier S.

At the neighboring Los Angeles port, similar efforts to increase the efficiency, capacity and environmental friendliness of facilities also moved forward in 2010.

In March, the port broke ground on a $22 million rehabilitation of a main surface street truck route from San Pedro and Wilmington to State Route 47.

In July, after nearly a five year delay, port officials and the Army Corps of Engineers kicked off the final phase of a $370 million dredging project to deepen the port’s main channel.

“The Main Channel Deepening Project is a lifeline to maintaining our competitive edge during the critical years ahead as we face increased competition on a number of fronts,” the port’s Knatz said.

The main channel project is being conducted in parallel with several terminal development projects.

“We presently have $350 million in terminal expansion projects underway at our China Shipping and TraPac container facilities,” Knatz said. “Resumption of the Main Channel Deepening Project is key to delivering those projects on schedule – a commitment we have made to those terminal operators.”

In October, the port secured $16 million in federal funds to be used to construct an intermodal railyard connecting the port’s on-dock railyards with the Alameda Corridor. The project includes a new railyard for a short-line railroad serving Union Pacific, Burlington Northern Santa Fe, and the two ports.

Port officials also joined an effort to bring the famed World War II battleship USS Iowa to the Los Angeles port as a floating museum. If approved by the federal government, the attraction is estimated to bring between 137,000 and 236,000 visitors a year to the port area.

Environment and Community Efforts
A major focus for both ports over the past five years has been the deleterious impacts the port has on the surrounding communities. In the early 2000s, the two ports were identified by state air regulators as the single largest stationary generator of diesel emissions in the Southern California basin.

Since 2006, when both ports adopted the Clean Air Action Plan to guide environmental mitigation into the future, both ports have achieved some notable successes.

In early 2010, it was revealed that the two ports’ separate Clean Trucks Programs had reduced ports-generated diesel emissions by more than 80 percent, a primary goal of the trucks programs. The early attainment of the goals also prompted the two ports to adopt even more stringent rules for the next several years of the truck program.

Both ports also continued to focus on ship emissions with the main efforts based around the Vessel Speed Reduction program. In 2010, each port’s incentive programs, designed to encourage carriers to slow their vessels down as they approach the harbor, continued to bring in more participants. More than 90 percent of all frequently calling vessels at the two ports now participate in one or both of the ports’ programs.

In addition, both ports have become test beds for advanced emission control technology for goods movement vehicles. State-of-the-art hybrid, electric and alternative fuel vehicles continue to be field tested in either pilot programs or small fleet rollouts at the two ports.

While dealing with the negative impacts of operating major industrial facilities virtually surrounded by residential communities continued to be a primary focus for the two ports in 2010, officials at both ports also continued with outreach efforts to the communities.

“It’s not just about making a difference on the docks,” Long Beach’s Steinke said.

“Of all the port’s many commitments, none is more important than our pledges to our community.”

The Port of Long Beach’s Green Port fest, free harbor boat tours, and numerous public forums continued to draw record-setting attendance. At the Los Angeles port, similar community programs, including the nationally known Lobster Fest also drew large numbers of the community.

In addition, both ports continued their long-standing tradition of providing for education in their respective communities. The Long Beach port provided more than $60,000 in scholarships to area high school and college students in 2010.

In 2010, the governing board for the Los Angeles port authorized $1.2 million for the Port of Los Angeles to sponsor maritime-related educational programs in Southern California high schools to promote international trade and career opportunities. The scholarships will allow hundreds of students to continue to receive classroom knowledge and field exposure to port and maritime business operations, as well as port-related job opportunities.

“Even in lean budget times, we understand how critical it is to educate our youth about the maritime industry and enlighten them to potential career paths,” Port Deputy Executive Director Mike Christensen said. “This investment is well worth it for the dividends that these students produce for our communities.”