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Friday, June 17, 2011

Port of Long Beach: From Tidelands to Terminals

By Keith Higginbotham
keith@pacmar.com

Just as Southern California evolved from a small network of communities in the early 20th Century to the metropolis we know today, the Port of Long Beach has grown to meet the needs of the time.

Starting as a entrepreneurial venture with one dock in a muddy back channel, the port has moved through an evolution that has seen it take on many roles: a bulwark of national defense, a major jobs and revenue generator, an innovator within the port industry, and a premier national gateway for transpacific trade.

Today, the Port of Long Beach continues to fill each of these roles.

As an economic engine not just for the city and region but for the entire nation, the port generates more than $10 billion a year in local, state and federal taxes and more than $45 billion a year in direct and indirect sales.

As a jobs-creation engine the port accounts for one of every eight jobs in Long Beach, one of every 22 in Southern California, and more than 1.4 million jobs nationwide.

As a cargo gateway, the port handles one of every three containers moving through California, one of every four moving through the West Coast and one of every five moving in or out of the entire nation.

In addition to these long-standing roles, the port has also committed to being a green corporate neighbor – developing and implementing pollution reduction and elimination programs that have already shown tremendous gains in tackling their industrial legacy while setting the environmental bar for the rest of the nation’s ports.

As it moves into its second century, the Port of Long Beach’s history leaves little doubt that its natural evolution will see it continue to develop as a competitive financial powerhouse, an economic engine, and a strong community partner.

The Early Years
The first steps toward the development of a major port at Long Beach began in 1897, when the federal government selected the small, but already successful, port in the neighboring city of San Pedro as the location of a federally-supported deep-water port for Southern California. To this end, Congress appropriated $4 million ($113 million in 2010 dollars) to construct a breakwater to shelter the San Pedro port.

Construction on the federal breakwater began in 1899 and while the first 8,500-foot section would not be completed for more than a decade, Long Beach city officials and businessmen saw the opportunity afforded by the protection of the breakwater, not only to San Pedro, but also to the development of a port at Long Beach.

A $1.5 million ($36 million in 2010 dollars) capitalization by a group of Southern California businessmen in 1905, including future Long Beach Mayor and City Manager Charles Windham, officially formed the Los Angeles Dock and Terminal Company (LADTC) to develop a port at Long Beach. By the next year, the group had purchased 800 acres of west Long Beach marshland, some partly submerged, near the outflow of the Los Angeles River. The LADTC also obtained required federal government approval to move forward with building a commercial port at the site.

However, silting from the river, which flowed right into the marshland and ranged from minor to massive depending on the severity of the rainy season, would become the number one issue, and expense, to be dealt with for decades to come.

Despite the dredging issue, within just a few years the LADTC had lured its first customer, Craig Shipyards, to Long Beach. Construction of the Craig shipbuilding facility along the inner waterways of the ADTC property began in 1907. The Craig yard turned out its first vessel – indeed the first steel hulled vessel built on the West Coast south of San Francisco – on November 13, 1908. Appropriately, it was a 110-foot-long dredger that was immediately put to work by LADTC within the port.

Almost one year to the day from the launch of the Craig dredger, the voters of Long Beach approved the annexation of four miles of waterfront just west of the Los Angeles River outlet, basically forming the seafront boundaries of western Long Beach still in existence today.

By mid-March, 1910, LADTC had completed much the Long Beach port’s inner channel dredging, work had begun on a massive turning basin, and the main channel deepening was entering its final phase.

In early 1911, California Governor Hiram Johnson signed a law ceding “the tide lands and submerged lands of the State of California within the boundaries of the said city,” to Long Beach and officially making the city the state’s trustee of the tidelands.

On June 2, 1911, the lumber-schooner SS Iaqua – the first ship to call at the now-officially sanctioned Port of Long Beach – docked at the port’s lone wharf in operation. Just three weeks later, with the lumber ship SS Santa Barbara docked at the municipal wharf, Long Beach held a day-long city-wide celebration officially inaugurating the port. Festivities, including a parade, attracted more than 3,000 spectators.

However, the financial burden of supporting the constant dredging at the port, exacerbated by repeated seasonal flooding of the river, began to wear on the LADTC and in 1916, the group was finally forced into bankruptcy protection.

The Municipal Port
With private investment in the port coming to an end, in June 1917, City Hall officially formed the Long Beach Harbor Commission as a three-member board of city officials to oversee the development of the port. Just weeks later, LADTC officials turned over title of the firm’s port holdings to the city.

Despite the city takeover of the port, the silting and dredging problems continued to drain resources. The problem would not begin to solve itself until a federal flood control project competed in 1920 diverted the outflow of the Los Angeles River away from the port channels.

In May 1925 the City of Long Beach approved an expansion of the city’s Harbor Commission to five-members, all appointed by City Hall. The move also created the semi-autonomous Harbor Department within City Hall to be headed by the Harbor Commission and formed the Harbor District to encompass the port-area.

In 1926, with cargo volumes surpassing 1 million tons for the first time and more than 820 vessels calling annually, the port was officially recognized by the federal government as a national deep-water port. Combined, the abutting ports of Long Beach and Los Angeles were now the nation’s third busiest port complex in cargo tonnage handled.

Two years later, the port launched a massive building program, including for the first time, construction of landfill areas beyond the inner channels into San Pedro Bay. These areas would come to be called, under the old naming system, Pier A and Pier B.

On July 4, 1930, President Herbert Hoover approved $7 million ($90 million in 2010 dollars) to construct a 2.3-mile extension of the federal breakwater that would run to a point just east of the Long Beach port entrance. Initial work on the breakwater began in October 1932, with the final stones being laid in December 1937.

In 1936, geologists discovered a branch of the Wilmington Oil Field beneath the port, which immediately began filling port coffers with huge amounts of revenue as hundred of wells were drilled. The oil would set the stage for the next three decades at the port, sparking precedent-setting legal battles, infusing the city and port with massive profits, and literally, almost sinking the port.

War and the Post-War Years
As the clouds of war grew in the Pacific in the late 1930s, the Port of Long Beach and Los Angeles were the center activity for the U.S. Navy’s Pacific Fleet.

By 1939, nearly 20 years after being home-ported there, the Navy’s Pacific Fleet on station at the Southern California ports boasted five aircraft carriers, 12 battleships, 12 heavy cruisers, 15 light cruisers and 68 destroyers. In addition, dozens of submarines were based at San Pedro.

Just prior to the departure of the fleet to its new home of Pearl Harbor in May, 1940, the Navy sought to expand the protected San Pedro/Long Beach anchorage by lengthening the federal breakwater with a 6,000 foot long extension. While work began in 1940, material shortages would halt the project in 1943 and work would not resume until the end of the war. The breakwater extension, now fully protecting the Long Beach port entrance, was finally completed in 1949.

As the nation moved to a war footing, Congress in 1940 allocated $19.8 million ($304 million in 2010 dollars) to build Roosevelt Base on the Long Beach portion of the island.

Just over $3 million of this funding ($46 million in 2010 dollars) went to construct the 29-acre Victory Pier at the port. Completed in 1943, the pier was used to load vast amounts of war material and ammunition for the Allied campaign in the Pacific. The port repurchased the pier in 1947 for $1 million ($9.7 million in 2010 dollars).

Built on land purchased from the city with a $1 check, the massive 400-plus-acre Roosevelt Base was fully completed in 1943. Sitting on the location of today’s Pier T, the base eventually boasted 126 structures, a landing for Navy launches, the ammunition loading pier and a large naval shipyard with dry docks. A long, elbow-shaped Navy mole was also built at the same time, providing a second layer of protection in addition to the breakwater for the naval station.

To provide better access to the growing number of workers at the base, a floating pontoon bridge was opened in October, 1944, offering a direct connection for the first time between downtown Long Beach and the facilities on Terminal Island.

The Navy base drydocks were rushed to completion in early 1942 and put into service in April, 1942. The critically needed facility eventually docked 406 ships, performing 303 major repairs and overhauls including work on nine battleships, 14 heavy and light cruisers, 46 destroyers, 31 destroyer escorts and 30 oilers during the war. By August 1945, a peak of 16,091 civilian employees worked at the shipyard.

The base was later renamed the Terminal Island Naval Shipyard on November 30, 1945 and renamed again as the Long Beach Naval Shipyard in March 1948.

At the close of the war, the port became a major debarkation center, processing hundreds of thousands of US servicemen returning from overseas.

Still flush at war’s end with oil profits worth more than $127 million a year in 2010 dollars, port officials began a series of major construction projects, including: the conversion of Victory Pier back into a cargo facility; development of the Pierpoint Landing sportfishing facility on Pier A; the doubling of Pier B’s acreage; and, the creation of 36-acres of landfill that would become Pier C.

But the oil that permitted this growth came at a price. Near the end of the war, geologists confirmed that the port was literally sinking as the ground collapsed into the emptying Wilmington Oil Field reservoir beneath it. Known as subsidence, the effect resulted in some areas of the port eventually sinking close to 30 feet over the next decade. It would take another fifteen years of effort, and billions in repairs to keep the port above water, before a solution was identified.


Oil Changes Everything
The 1950s came to be dominated by the oil issue.

On May 7, 1951, at the behest of the port, which said it could not use all of the massive oil profits it was receiving, the California State Assembly amended the 1911 Tidelands Grant to allow Long Beach City Hall to use 50 percent of the port’s tidelands oil revenues on non-harbor projects. Prior to this, tidelands revenues were restricted to maritime uses within the tidelands.

In 1951, the city had about $75 million ($623 million in 2010 dollars) in its Tideland’s Fund and tidelands oil profits were pouring in another $24 million each year ($200 million in 2010 dollars).

To solve jurisdictional issues over which part of the tidelands (and their oil) belonged to the federal government and which belonged to the state (and vis-à-vis Long Beach), President Dwight D Eisenhower signed the Submerged Lands Act on May 22, 1953. The federal act reversed earlier court decisions and returned control of the oil-rich coastal waters within three miles of shore to the respective states, including California. Long Beach immediately profited $62 million ($500 million in 2010 dollars) that had been impounded over several years while the federal legislation was being considered.

A 1955 California Supreme Court ruling significantly altered the distribution of profits from the port oil, with the ruling forcing the 50 percent of oil revenue previously going to Long Beach City Hall to revert to state coffers.

The city was forced to turn over to the state $120 million ($965 million in 2010 dollars) of the total $190 million ($1.53 billion in 2010 dollars) in tidelands oil revenues held at the time by the city.

The state high court ruling also set out that the 50 percent of the tidelands oil revenue remaining under Long Beach control must only go to tidelands uses and not municipal uses. These tidelands uses were generally limited to maritime-related navigation, commerce and fisheries.

As if to add insult to the injury of losing oil profits, the subsidence causing the port to sink began to rapidly accelerate in the 1950s.
Now clearly centered on the northeast corner of Terminal Island, by the late 1950s the sinking area radiated outward in a generally circular area of decreasing subsidence just over three miles across. The most severely impacted areas had dropped close to 30 feet by the end of the decade, even threatening the continued operation of the Navy shipyard, which sat within the southern edge of the main depression. By 1958, the Navy has spent more than $23 million ($171 million in 2010 dollars) to deal with subsidence issues at the base and shipyard.

Engineers studying the problem agreed that the only real solution was to re-pressurize the oil reservoirs beneath the port by the direct injection of gas and water.

In November 1958, the city began a $1 million ($7.5 million in 2010 dollars) re-pressurization pilot program at the port. By year’s end, this test program was injecting more than 3.7 million gallons of seawater a day into nine wells around Pier A. Within months of the start of the water injection test program, city officials stated that subsidence in the Pier A area of the port had been halted. The success of the pilot project led to a $30 million ($222 million in 2010 dollars) injection project throughout the port that would eventually stabilize the entire subsidence-impacted area – albeit at the cost of having to maintain the injection system in perpetuity.


The Development Boom
Port staff celebrated the start of the 1960s with the dedication of a new $3 million ($22 million in 2010 dollars) administration building on February 28, 1960.

Despite the 1950s legal cases that cut port oil revenues in half, the port embarked on a massive construction program during the 1960s.

Within the next ten years the port would spend the 2010 equivalent of nearly $250 million on major facility construction, including: the 23-acre Pier E auto import terminal in 1960; the 20-acre Richfield oil tanker terminal in 1961; the Pier A grain terminal in 1961; the Pier A banana terminal in 1965; the 310-acre Pier J landfill project completed in 1965; the Pier B oil terminal in 1966; the Trans Ocean Gateway terminal on Pier J in 1969; and, the 22-acre Toyota car facility on Pier J in 1969.

A nearly 10-year effort culminated in the June 10, 1968 opening of the new $19 million ($117 million in 2010 dollars) Gerald Desmond Bridge replacing the old pontoon bridge as the main connection between Terminal Island and downtown Long Beach.

While development continued apace at the port in the 1960s, the shipping industry was also transforming thanks to the containerization revolution kicked off in the late 1950s by North Carolina trucking mogul Malcolm McLean.

Containerization utilized standard cargo containers and a whole host of specially designed handling equipment to eliminate the need for loading or unloading cargo one pallet or piece at a time.

In September 1962, the port welcomed the Sea-Land vessel SS Elizabethport – the first container ship to call at the Port of Long Beach. With a load of 420 of McLean’s 35-foot-long containers, the vessel was one of four sister ships on the regular service Sea-Land established at Long Beach’s Pier G facility in 1962. The new container system was so efficient at moving cargo that the four Sea-Land ships alone were predicted to increase the port’s total annual cargo volumes by 4 percent.

However, due to a lack of standardized containers among different companies, it would not be until the adoption of international container-size standards in the 1970s that containerization really transformed into the global system we know today.


A Shifting Focus to Containers
Just as the port began the 1960s with a celebratory opening – of a new port administration building – the 1970s also began with a ribbon cutting. The Queensway Bridge, connecting downtown Long Beach to the doorstep of the now decade-old port building, opened in 1970.

Heavy investment by the port in new facilities, now focused on container terminals, continued throughout the 1970s.

The port welcomed Kawasaki Kisen Kaisha Ltd., or “K” Line, one of Japan’s largest shipping lines, and Israeli carrier Zim Container Service, to the newly built 80-acre International Transportation Service (ITS) container terminal on Pier J in 1972. This was followed in 1974 by the opening of a 34.5-acre Pier J container terminal serviced by China Ocean Shipping Co., or COSCO.

In 1975, a $50 million ($200 million in 2010 dollars) extension of Pier J was completed, with Dutch ocean carrier Maersk Line Pacific starting regular transpacific service at the facility the same year. Three years later, Maersk moved its operations to a permanent 29-acre container terminal on the port’s Pier G.

California United Terminals, a long-time tenant at both Long Beach and Los Angeles ports, agreed in July 1977 to consolidate their operations onto Pier C at Long Beach.

In 1978, the port approved the construction of a $15 million ($50 million in 2010 dollars) deep-water terminal on Pier E for Shell Oil and Atlantic Richfield.

A year later in 1979, the port acquired 140 acres on Pier B with plans to build new auto terminals for Toyota and Pasha Industries.

The same year, as the 1970s came to close, the port completed the $20 million ($59 million in 2010 dollars) conversion of Pier C from a handful of outmoded breakbulk terminals to an ultra-modern multipurpose cargo facility operated by former Los Angeles port tenant California United Terminals.

Growing Globalization
Port officials began the 1980s with their first trade mission to the People’s Republic of China in January 1980.

The same month, work began on a 125-acre $36.4 million ($97 million in 2010 dollars) auto terminal on Pier B. Just four months later, port commissioners approved moving forward with the construction of a new 90-acre container terminal on Pier J.

COSCO, now using People’s Republic of China-flagged vessels, began regular service at the port’s Pacific Container Terminal on Pier J in 1981.
Development of bulk facilities also continued and in August 1982, the port commission approved the construction of a $17 million ($38 million in 2010 dollars) cement import facility on
Pier D.

In 1986, the port upgraded the ITS terminal with an on-dock rail facility. It is the first dockside rail facility in Southern California for double-stack container trains, a then-new development that allowed two containers to be carried on one rail car.

The same year, the port officially opened the 88-acre Long Beach Container Terminal (LBCT) facility on Pier F, with regular service by Orient Overseas Container Lines (OOCL). Nearby, the port completed an expanded 54-acre container terminal on Pier J for Maersk.

As the number of containers being handled by the port grew in the 1980s, and double-stacked trains now made the Asia-West Coast-East Coast land bridge lucrative, port officials identified the critical need to develop a near-dock rail facility.

The Intermodal Container Transfer Facility (ICTF), located approximately four miles north of the two ports and operated by the Southern Pacific Railroad, opened in 1987.

The next year, Long Beach port officials oversaw the start of construction on the 147-acre final phase of Pier J, known as Pier J South.

In 1989, after more than five years of development, the port-sponsored
and owned World Trade Center opened on a 13.5-acre parcel in downtown Long Beach.


Growth Brings a New Boom
As the 1990s opened, the port completed the full expansion of the Pier B Toyota facility to encompass all 144 acres of port-owned land in the north harbor area.

A year later in 1991, the port completed a 57-acre Pier C container terminal on the former site of a Procter & Gamble plant. The new terminal was leased to the Hanjin Shipping Co. of South Korea. Within 12 months off operation, Hanjin would introduce 4,000 TEU (twenty-foot cargo container equivalent units) post-Panamax vessels into its service – the first vessels too large to fit through the Panama Canal to call at Long Beach.

In 1993, after nearly five years of development, the port completed Maersk’s 107-acre container terminal on a portion of the 147-acre Pier J South expansion. The remaining 40 acres of the Pier J South expansion are incorporated into the Pacific Container Terminal.

The same year, and after more than 80 years of piecemeal construction, port officials decided to rename some of the port piers to make them more geographically logical. As of 1994, the most northern and western pier at the port became Pier A, followed by Pier B in the middle of the North Harbor and Pier C on the northeastern edge. Just east of the Main Channel the piers were renamed in order, D, E, and the former Pier A became Pier F. Piers G and J were left unchanged, while the former Pier E, adjacent to the Navy shipyard, became Pier T.

Also in 1994, Metropolitan Stevedore Co. opened a $20 million ($29 million in 2010 dollars), 175,000-ton coal storage shed on Pier G to permit ships to be filled entirely from dockside storage. The facility is eventually modified to handle petroleum coke and sulfur.

The same year, the two ports and the Santa Fe, Southern Pacific and Union Pacific railroads signed the operating agreement for the proposed Alameda Corridor, a 20-mile train expressway from the ports to the transcontinental rail yard just south of downtown Los Angeles.

The port would close out 1994 with the single largest land purchase since the original forming of the port. Commissioners finalized the purchase of 725 acres of land and water area in the North Harbor area from the Union Pacific Resources Co. Portions of the purchase on the north side of Terminal Island were designated Pier S.

In 1995, the port broke ground on a two-year project to redevelop property on the new Pier A north of the Cerritos Channel into a new larger container facility for Hanjin.

After slowly gaining on the neighboring Los Angeles port for more than three decades, the Port of Long Beach in 1995 became the busiest container port in the United States and the Western Hemisphere, handling 2.6 million TEUs during the year.

The explosion in ship sizes also continued throughout the 1990s, with Hyundai adding 5,551-TEU vessels and Hanjin adding 5,000-TEU vessels to their respective Long Beach services. A year later, COSCO added 5,250-TEU vessels to its Long Beach-servicing fleet.

The port opened its 170-acre, $277 million ($375 million in 2010 dollars) container terminal for Hanjin on Pier A in 1997. The facility was operating at near full capacity the day it opened and Hanjin almost immediately began talking to the port about an even larger facility.

Construction on the Alameda Corridor began in May, 1997. It will be almost exactly five years before the $2.4 billion ($2.9 billion in 2010 dollars) rail expressway opens for business.

In 1998, the federal government decided to shutter the now 500-acre Terminal Island naval base and shipyard and the US Navy agreed to transfer the property back to the city. The port began work immediately on its first megaterminal – a $500 million ($616 million in 2010 dollars) 375-acre container terminal to be built on the former Navy property.

The port, in 1998, became the first port in the Western Hemisphere to move more than 4 million TEUs in a year. A year later, at the end of 1999, the port would mark its sixth year as the busiest port in the Western Hemisphere, handling 4.4 million TEUs.

Pier A tenant Hanjin, also in 1999, became Long Beach’s first terminal to move more than 1 million TEUs in a single year.


The Greening of the Port
The following year, Hanjin signed a 25-year, $1 billion lease with the port for the new Pier T megaterminal being developed for the former naval station site on Terminal Island.

As the Hanjin terminal neared completion in 2001, the US Navy, after 60 years in Long Beach, officially transferred the final piece of its former Navy base and shipyard to the port. The Hanjin terminal is completed and opened for business in 2002.

The same year, on April 15, the $2.4 billion Alameda Corridor was officially dedicated, dramatically speeding the movement of rail cargo out of the port.

However, after more than 50 years of unfettered development, all major construction in the port ground to a halt in 2003, following a tremendously expensive Port of Los Angeles legal defeat over the environmental impacts of a container terminal in San Pedro. The threat of litigation by environmental groups over further development that does not adequately address and mitigate environmental impacts threw both ports into a seven-year self-imposed period in which no major development occurred.

While development stopped, the industry continued to expand and the era of megaships began at the port with the 2003 maiden call of the 8,000-TEU OOCL Long Beach at Pier F. A year later, the 8,500-TEU CSCL Asia would call at Pier T and the 8,125 TEU MSC Texas would call at Pier A.

To address the growing concerns of residents over traffic congestion on port-area roads, Long Beach and Los Angeles terminal operators developed PierPass in 2004. A first-of-its-kind program, PierPass was designed to ease traffic congestion and reduce air pollution by using financial incentives to shift a portion of truck trips to nights and weekends. By the end of the decade nearly 40 percent of all cargo truck moves were being handled at these off-peak gates.

An additional effort to address the growing environmental concerns of local residents – and the threatened litigation of environmental groups over port development – the Port of Long Beach in 2005 adopted the Green Port Policy, an omnibus program which aggregated all existing and proposed port environmental programs and set long-term goals to address port impacts to the environment.

A year later, the ports of Long Beach and the Port of Los Angeles jointly adopted the San Pedro Clean Air Action Plan (CAAP), an extensive self-developed strategy to cut air pollution from port related operations.

A major component of the CAAP, the Clean Trucks Program, was launched by both ports in late 2008. The program utilized a progressive ban on older model trucks with the goal of modernizing the entire drayage fleet within five years to 2007 or newer model year trucks. Within two years, thanks in part to a more than $650 million investment in new trucks by the trucking industry, more than 90 percent of all truck moves were being handled by 2007 or newer model year vehicles and as of the start of 2010 the program achieved its primary goal of cutting air pollution from port-servicing trucks by 80 percent.

Another component of the CAAP, ship-to-shore power, also appeared for the first time at Long Beach in 2008, when a container ship plugged into the landside power grid at Pier G. Ship-to-shore systems allow vessels to draw electricity from the landside power grid instead of their auxiliary diesel engines, dramatically slashing emissions while at dock.

As a culmination of nearly eight years of work to bolster port-area security in the post-9/11 world, the port opened its Joint Command and Control Center (JCCC) in 2009. A state-of-the-art security facility, the JCCC centralized port security operations of both the port and numerous law enforcement agencies involved in port security.

The same year, oil giant BP rededicated the T-121 terminal on Pier T, becoming the first oil tanker terminal in the world to feature a ship-to-shore power system.

Development Starts Anew
The end of the 2000s also saw the self-imposed moratorium on development come to an end – spurred in large part by the threat of growing competition.

After several years of dismissing any serious threat to West Coast dominance in transpacific cargo posed by the Panama Canal expansion set for completion in 2014, port officials in 2009 and 2010 began making the canal threat a commonplace topic in public conversations.

As a response to the Panama Canal threat – and the threat of other developing ports, such as Prince Rupert in Canada – Long Beach port officials also kicked off a more than $4 billion program to develop terminals and goods-movement infrastructure.

The Long Beach City Council, in 2009, gave a major component of this development project a major boost with the final approval of the $750 million Middle Harbor Redevelopment Project – a ten-year project to redevelop and combine two smaller aging terminals into a single megaterminal with more than double the capacity (and halve the emissions) of the two former terminals.

To kick off the 2010s, the port in 2010 launched a $950 million project to replace the aging Gerald Desmond Bridge – which now handles 15 percent of the nations cargo – with a more modern, higher-capacity replacement.

Two additional components of the overall development plan also saw progress in 2010: the $850 million dollar redevelopment of the Pier G facility and the creation of a new $650 million terminal on Pier S.

The Future
The port has grown over the past 100 years in a fairly organic manner, with one development leading to the next in a somewhat linear progression. The growing threat of competition from other ports and the Panama Canal expansion project have changed all of that. Port actions such as development and security, once carried out in somewhat isolation and with mainly short-term financial goals in mind, have become part of long-term strategic planning since the mid-2000s.

No longer is the port focused on one major project at a time. The future is a holistic port, where a Harbor Board action or development project not only impacts, but also enhances larger goals. Gone are the days of projects that exist in the void, catered to individual clientele. Instead the port now focuses on the more collective view of a strong port…an efficient port…an effective modern port that can be sold not as individual facilities, but as a whole package.

Like nearly all sectors of the global economy, international trade was severely affected by the global recession that began in 2008 and which led to significantly reduced cargo volumes in 2009. However, trade through both San Pedro Bay ports, Long Beach and Los Angeles, is still projected to grow during the coming decades, with some estimates still suggesting a doubling or even tripling in volume by 2030.

This holistic approach to long-term planning in Long Beach began to take form with the 2006 publication of the port’s first comprehensive Strategic Plan in more than two decades. The 2009 update to this plan incorporated lessons learned through the global recession and set down seven broad goals for the port.

Port officials set out these goals as definitions of priorities designed to move the port toward the single overarching goal of strengthening “the Port’s role as a worldwide leader in environmental stewardship and security oversight while serving as a vital economic resource for the region.”

As set down in the port’s ten-year Strategic Plan, the seven goals are:
  • To implement practices that minimize or eliminate the environmental impacts and health risks of port operations and development.
  • To enhance safety and security within the port and address impacts on the surrounding community in collaboration with outside agencies.
  • To engage the community, international trade industry, elected officials, and government agencies to build positive relationships that foster mutual understanding.
  • To provide infrastructure for an efficient and modern seaport complex and promote innovative solutions for the environment.
  • To facilitate trade and commerce by being a world leader in goods movement and customer service.
  • To ensure that the port is financially self-sustaining and fiscally strong.
  • To operate a safe, effective and efficient organization that fosters an inclusive, open and team oriented culture.

The authors of the Strategic Plan, in order to focus port resources still further, developed an extensive number of strategies for achieving each of the seven goals over the next decade. Each port division was made accountable for implementing one or more of these strategies. The Strategic Plan also developed a series of key performance indicators and periodic reporting that will be used to continuously monitor progress on the overall goals.

Perhaps even more important than the commitment of financial resources to these goals is simply the stated commitment through the development of the Strategic Plan that the port is greater than the sum of its parts.

This strategic focus on the port as a whole, with the implementation of individual projects and actions all working toward the succinct collective goals in the Strategic Plan, promises a future Port of Long Beach that is not only highly competitive, mindful of its place in the community, and flexible in its collaboration with the industry, but also unrecognizable to both observers of the port today and to those founders that scanned those empty Long Beach mudflats more than 100 years ago.

NOL Orders 12 New Box Ships, Upgrades Order For 10 More


Officials from Neptune Orient Lines Group, the parent of ocean carrier APL and the seventh-largest shipping line in the world, announced Thursday that letters of intent had been signed with two South Korean shipbuilders for the construction of 12 new container vessels and that an existing order for 10 additional vessels had been upgraded in scope.

The new and upgraded orders are part of NOL's ongoing efforts to invest in new, larger vessels to reduce unit capital and operating costs, meet future growth needs and replace older and smaller chartered vessels that will be returned to their owners in the charter market.

The Singapore-based NOL Group said that the vessels, all to be built in South Korea, would include ten 14,000-TEU vessels to be constructed by Hyundai Samho Heavy Industries Co., Ltd and two 9,200-TEU vessels to be constructed by Daewoo Shipbuilding & Marine Engineering Co.

NOL officials said the carrier has also upgraded a December, 2010 order placed with Daewoo – originally for ten 8,400-TEU vessels – to ten 9,200-TEU vessels of a "new, more efficient design and technology."

The new vessels and upgrades will cost NOL about $1.54 billion with delivery set for 2013 and 2014. Earlier in June, NOL announced that it had secured $1.1 billion in loan agreements to cover the original order for the 8,400-TEU vessels from Daewoo, as well as two 10,700-TEU vessels the carrier ordered in 2007. 

According to NOL, the ten 14,000-TEU vessels – set for deployment in the Asia-Europe trade – will be NOL’s largest and most fuel efficient to date. The 9,200-TEU vessels in the upgraded order will likely be employed in the Trans-Pacific trade, NOL said.

The new vessels, according to NOL, will allow subsidiary shipping line APL to "provide more efficient, reliable service to customers."

The letters of intent are still subject to contract signing with the shipbuilders.

Green Groups Seeks 10-Knot Speed Limit for Vessels Off California Ports

Four environmental and conservation groups filed a legal petition last week asking the National Oceanic and Atmospheric Administration (NOAA) to set up a 10-knot speed limit for large commercial vessels traveling in and out of the ports of San Francisco Bay and Southern California.

The four groups – the Center for Biological Diversity, the Environmental Defense Center, Friends of the Earth, and Pacific Environment – allege that commercial vessels are afecting marine wildlife in federally-protected marine sanctuaries with vessel strikes on marine life, noise pollution, and greenhouse gas emissions.
The main traffic channels for the Bay Area and Southern California ports pass through the state's four National Marine Sanctuaries, which include the Channel Islands off of Southern California and the Cordell Bank, the Gulf of the Farallones and the Monterey Bay sanctuaries in the Bay Area.

The three Bay Area marine sanctuaries cover the entire entrance to San Francisco Bay, requiring any vessel moving into or out of ports such as Oakland, Richmond, Sacramento, San Francisco, and Stockton to pass through three designated traffic zones that overlap the marine sanctuaries. Near the Southern California ports of Long Beach and Los Angeles, the major shipping traffic lanes located to the northwest of the ports run between the Channel Islands and the Santa Barbara/Ventura counties coast, overlapping the Channel Island marine sanctuary in one stretch.

It is not uncommon for large commercial vessels to travel at speeds much greater than 10-knots in these overlapping areas. According to a January, 2011 study on the Channel Island whale strikes by commercial vessels, NOAA reported that "On average, some 6,500 large (over 300 gross tons) vessels transit through the Channel every year, the majority of them at speeds greater than 14 knots."

Most vessels approaching Southern California voluntarily participate in the Long Beach and Los Angeles ports' Vessel Speed Reduction Program, which requires the vessels to slow to no more than 12 knots within roughly 40 miles of the ports. The Channel Islands overlap area is just outside the 40-mile speed reduction zone for the Southern California ports.

The entrance areas to most of the major ports along the Atlantic seaboard are already covered by a 10-knot maximum speed rule for commercial vessels over 65 feet during NOAA-designated right whale migratory and calving periods throughout the year. Areas around Glacier Bay National Park and Preserve in Alaska and the Hawaiian Islands National Marine Sanctuary also have similar seasonal restrictions to protect humpback whales.

In their petition, the four groups ask United States Secretary of Commerce Gary Locke to take action through NOAA to apply vessel speed restrictions similar to those on the East Coast to the California coastal areas outside the Bay Area and Southern California ports.

Specifically, the petition calls for: "A mandatory 10-knot speed limit for vessels greater than 65 feet within the Cordell Bank, Gulf of the Farallones, Monterey Bay, and Channel Islands National Marine sanctuaries to protect whales from collisions with vessels and noise pollution, and to provide other benefits associated with reduced speeds that will further protect sanctuary resources."

“Our marine sanctuaries should be a safe harbor for marine life, but instead whales in California are at constant risk of being run over by big ships,” the Center for Biological Diversity's oceans director Miyoko Sakashita said.

The January, 2011 NOAA study found that the most affected whales in the Channel Islands area are fin whales, but strikes on blue, gray and humpback whales have been noted.

“Reducing ship speed is a simple, reasonable way to protect whales and other aquatic life, as well as public health, from risks posed by large vessels that travel through California’s waters," Friends of the Earth's director of the Oceans and Vessels Project Marcie Keever said.

The groups point to at least six whales which have been killed by collisions with vessels in 2010 and more than 50 large whales which have died off the California coast in the past decade.

The groups also allege that noise pollution and engine emissions from increased maritime traffic is impacting marine life in the sanctuaries.

“A 10-knot speed limit seems to be the best practical solution offering the most benefits – such as reducing climate change emissions, air pollution and ever-increasing ocean noise pollution,” Pacific Environment's interim executive director Leah Zimmerman said.

The January, 2011 NOAA study concluded that, "In general, the case studies presented indicate that dynamic management of vessel behavior can reduce the risk of ship strikes. They may also minimize impact on commercial activities by limiting vessel speed or course only during necessary times or in critical areas."

However, the study also pointed out that the examination of existing speed control programs found that, "the creation of these management actions were time and resource intensive."

The NOAA study developed seven recommendations, including: continue and expand research and monitoring efforts of whale strikes; consider the appropriateness of changes to vessel behavior in the Santa Barbara Channel region; explore changes to the Santa Barbara Channel traffic separation scheme; continue and expand education and outreach; explore incentive and mandate-based options for vessel speed reduction; apply an adaptive management approach for the implementation of the recommendations; and, continue to engage and involve relevant agencies, stakeholders and the maritime industry groups in the consideration and implementation of these recommendations.

Northwest Ports Detail Progress on Clean Air Program

The ports of Metro Vancouver, B.C., Tacoma, Seattle, released a report this week detailing the progress the three port authorities have made on the goals of their collaborative omnibus plan to cut port-related air pollution in the Puget Sound and Georgia air basins.

The Northwest Ports Clean Air Strategy (NPCAS), developed jointly by the three port authorities and adopted in early 2008, includes long- and short-term programs to address and reduce air pollution from cargo-handling equipment, harbor craft, ocean-going vessels, rail, and trucks servicing the ports.

The newly released implementation report details the improvements achieved by all three ports through their NPCAS programs as well as their efforts to achieve the NPCAS goals by working with customers, tenants, and air and environmental regulatory agencies.

According to the three port authorities, the 2010 implementation report results mark the end of the NPCAS's first milestone, "showing progress in producing cleaner air for the communities that surround our harbors."

The 2010 results contained within the implementation report include:
  • Cargo-handling equipment: Approximately 62 percent of diesel-powered yard equipment met the NPCAS performance goal through retrofits, replacements and/or use of low-sulfur fuels.
  • Harbor craft: Despite technical challenges, made progress through replaced engines, shore power connections, resurfaced hulls and/or low-sulfur fuels.
  • Ocean-Going Vessels: Approximately 44 percent of frequently calling ocean-going vessels used low-sulfur fuels or electrical shore power to meet the NPCAS performance measure.
  • Trucks: Approximately 98 percent of ports-servicing drayage trucks met the NPCAS goals through outreach, engine retrofits or incentive programs.
  • Rail: Partner agencies replaced rail engines, added idle- and friction-reduction technologies and used low-sulfur fuels.

The 46-page implementation report, available at each port authorities' website, outlines detailed results for each port. The report also details efforts under way to meet the NPCAS' more stringent 2015 standards.

Los Angeles Port Posts Second Strongest May In Port History

The Port of Los Angeles turned in impressive cargo volume numbers for May, posting the highest total container moves of any month so far this year.

Los Angeles, the busiest container port in the Western Hemisphere, reported a 12.3 percent growth in total container volumes compared to April, and slightly surpassed the numbers reported in May of last year.

May volumes at the port were the strongest for any single month since September 2010 and the second strongest May showing for total volume in port history – surpassed only slightly by the record-holding May of 2006.

The port handled a total of 692,933 TEUs in May, a 12.3 percent over April and a 0.5 percent increase over May, 2010.

On the import side, the port handled a total of 360,969 loaded inbound TEUs in May, a 15.6 percent increase over April import box volumes and a 5.5 percent increase over May of last year.

On the export side, the port moved a total of 184,274 loaded outbound TEUs in May, a 10 percent increase over April and a 14.7 percent increase over same month last year.
For the first five months of 2011, the port has handled a total of 3,126,433 TEUs, up 6.6 percent over the January through May period in 2010.

Tuesday, June 14, 2011

Port of Tacoma Receives Federal Approval for Foreign Trade Zone Reorganization

The Port of Tacoma has received approval to reorganize its Foreign Trade Zone 86 under the US Department of Commerce’s new Alternative Site Framework (ASF) program.

The ASF program simplifies the designation process for firms seeking to use FTZ areas, allows firms seeking to use the FTZ to obtain the FTZ designation within 30 days instead of between six months to a year, and lowers the cost of thjavascript:void(0)e FTZ designation process.

“Obtaining the ASF designation makes our FTZ a more effective marketing tool,” Port of Tacoma Director of Real Estate and Asset Management Jack Hedge said. “We will now be able to dramatically increase our flexibility and speed in designating and adjusting sites within our FTZ to meet our customers’ needs.”

FTZs provide importers and exporters a flexible way to ship, store, and add value to goods while delaying, reducing, or in some cases, eliminating payment of U.S. Customs duties.

As a result of the approval of the ASF application, the port's FTZ 86 now consists of 11 Magnet Sites (industrial parks or property) that cover more than 2,235 acres of both port and privately-owned land. First established in 1983, FTZ 86 has been expanded three times over the years.

Mazda and Kia both use Tacoma’s FTZ 86 to process imported vehicles. In addition, Puget Sound International, Norvanco International and Pacific Distribution Services all provide FTZ warehousing services to companies involved in the importation and distribution of a wide range of products.

Tacoma’s FTZ ranks third among the 35 West Coast FTZs (behind Long Beach and San Diego), and 18th out of the 272 FTZs in the United States in total dollar value of foreign status merchandise being admitted into a zone. For the government fiscal year 2010 (October 2009 through September 2010), the total dollar value of foreign merchandise that moved through FTZ 86 tripled to $1.3 billion.

Oakland Truckers Warn of Stoppage Over Air Rules

A trade group representing motor carriers at the Port of Oakland has submitted a petition to Governor Jerry Brown warning of a general work stoppage at the port if state air regulators do not reconsider extending deadlines for impending truck emission regulations.

Members of the West State Alliance (WSA), which include about 60 trucking and trucking-related firms, propose a shutdown of all cargo movements at the Oakland port if the California Air Resources Board does not extend the deadline for the next phase of CARB emissions controls for drayage trucks by an additional six years.

On May 16 motor carriers at the Port of Oakland under the WSA banner sent a petition to CARB condemning a December, 2010 decision not to adopt proposed amendments to the drayage truck rule. The groups cited concerns over CARB's Phase II regulation mandating compliance with standards for NOx reduction in diesel exhaust starting in 2014. This measure affects some 4,400 drayage trucks, or approximately 75 percent of the total Oakland port fleet.

According to WSA, Oakland port truckers say they are prepared to assume the cost burden of purchasing PM filters for 2004-2006 engine model trucks required under Phase I of the drayage rule, but only if they are assured these trucks will remain legal until 2020. A proposal to extend the NOx emissions deadline an additional six years, from 2014 until 2020, was rejected by CARB.

This now leaves Oakland port truckers, WSA said, with a short window of emissions compliance before having to incur the expense of NOx equipment upgrades.

Furthermore, according to WSA, there are no after-market NOx emissions reduction filters readily available for diesel trucks to meet ARB emissions standards.

“Come 2014, owners of 1994-2006 engine model year trucks are left with no other option than to dispose of their tractors outside the Port and replace them with 2007 or newer models,” WSA said in a statement. “Current prices range upward of $65,000 for a used truck, and a scarce supply is rapidly depleting the market of available equipment.”

WSA said that one reason cited by Oakland port truckers for a delay in the NOx reduction schedule is a 2010 Bay Area Air Quality District (BAAQMD) study that found an unanticipated 40 percent reduction in NOx emissions at the port due to CARB's Phase I-mandated replacement of older polluting trucks. The WSA claims these reductions put the Oakland trucking fleet well on its way to significant reductions in NOx emissions without the need of imposing the Phase II regulations set to be implemented in 2014.

“Furthermore, Phase I of the drayage truck rule already placed a heavy financial burden on Port truckers,” the WSA said. “Many went out of business, many incurred high-interest loans and large amounts of debt, and state grants were grossly insufficient in number and size to help the majority of truck owners. The seventeen signatories to the petition to the ARB say that in meeting Phase I requirements of the drayage truck rule they have done their fair share and more to shoulder the burden of state clean air regulations. Now, they say, the City of Oakland “can ill afford the certain loss of jobs on the local economy and the devastating social and health impacts that will result from the mandated obsolescence of 4,400 trucks.”

Signatories to the petition include: AB Trucking, Bay Area Container, Fargo Trucking, GSC Logistics, Horizon Freight System, Impact Transportation, Kamal Trucking, Lengner & Sons Express, Mason Dixon Intermodal, Mutual Express, PCC Logistics, Quintero Trucking, Rodgers Trucking, Stockmyer Trucking, VA Transportation, Viper Transportation and Yardell Truckaway.

Long Beach Port Posts Strongest May Cargo Numbers In 4 Years

The Port of Long Beach posted the strongest month of container moves for the year in May, and the strongest May posting for the port since 2007.

May also marked the strongest month since October 2010 for imports at the port. The one downside for the month was a sizable 9.4 percent drop in exports over April's numbers.

The port handled a total of 536,681 TEUs in May, a 1.1 percent increase over April and a 2.3 percent increase over May of last year.

In the import column, the port handled a total of 275,100 loaded inbound TEUs in May, a 1.8 percent increase over April and a 4 percent increase over May 2010.

On the import side of the ledger, the port posted a total of 121,551 loaded outbound TEUs in May, a 9.4 percent drop over April and a 6.1 percent drop over the year-ago period.

The port remains well within positive territory for the calendar year, having moved a total of 1.2 million TEUs in the January to May period – putting the port up 6.5 percent over the first five months of 2010.