Thursday, July 14, 2011

City Audit Praises Los Angeles Port, Warns On Project Overruns

Los Angeles Mayor Antonio Villaraigosa on June 13 released the findings of a new internal city audit of the Port of Los Angeles, which while mostly praising the economic and environmental efforts of the port – the nation's busiest – also found that the port "would benefit from process improvements to increase transparency and ensure continued competitiveness."

The 135-page review, conducted through the office of City Controller Wendy Greuel, revealed that the port needs to improve internal processes to ensure that harbor development projects are clearly defined to provide transparency in budgeting and scheduling.

The review specifically detailed six major port projects that were originally budgeted collectively at just under $20 million, but due to changing project scopes and requirements, eventually ran up a cumulative total of more than $116 million.

“The port has done much to clean up the air, reduce traffic congestion, and complete the San Pedro Waterfront project,” Greuel said. “However, the port could do more with greater transparency and process improvements.”

The largest example of changes and overruns cited in the report was the construction of a new headquarters for the port police force. The project, which began in 2003 as a simple expansion of existing facilities with a price tag of about $6.5 million, grew to a $55 million stand-alone police headquarters located adjacent to the port offices. Another example was a park in the port-area that mushroomed from a roughly 3-acre $900,000 green space with no amenities to a 18-acre $9.5 million park with bathrooms and a parking lot.

Villaraigosa and Greuel called on the port management to immediately revisit policies on change orders and project management to minimize costs and delays in the future.

"Over the past five years, we've delivered nearly $1 billion in capital projects on budget while creating tens of thousands of jobs," port executive director Geraldine Knatz told the Torrance Daily Breeze.

"Our competitive advantage is the superior facilities we build. The audit does point out a weakness in our capital budget reporting process that we recognize, and we are working with our board to implement remedies," Knatz told the paper.

In the report, Gruel also highlighted the need for the port to respond to the competitive challenges facing the port.

“In 2014 the expanded Panama Canal will open for public use. This new avenue for Pacific shipping challenges the status of the Los Angeles [port] as the premier destination for Pacific cargo coming into America, so we need to increase transparency and make the Port of Los Angeles as competitive and accessible as possible,” said Greuel.

Trade Groups Oppose Millions in Long Beach Port Funds Going to City Hall

A coalition of trade and transportation groups have joined the political fray over Long Beach City Hall appropriations of millions in Port of Long Beach funds.

In a letter presented to the port's five-member governing board on Monday, the six groups asked the five port commissioners to reject a City Hall request for $16.9 million in port funds.

The signatories to the letter included the Foreign Trade Association, FuturePorts, the Harbor Association of Industry and Commerce, the Los Angeles Customs Brokers and Freight Forwarders Association, the Pacific Merchant Shipping Association and the Los Angeles-Long Beach Propeller Club.

Under the city charter, the City Council is allowed to make an annual request of 5 percent of the port's gross operating revenues. If approved by the port board, these transferred port funds revert to the control of City Hall, but must be spent in the city tidelands areas on specific and well-defined maritime, maritime-related and maritime recreation uses.

The transfer funds are maintained in a City Hall-controlled Tidelands Operations Fund (TOF), but, by law, cannot be co-mingled with the city's general revenue funds.

In the letter, the groups pointed out the port's numerous financial contributions to the city, including covering millions in debt payments for the Aquarium of the Pacific, extending the debt on the Convention Center, providing funds for the multi-million dollar Colorado Lagoon restoration project, as well as paying millions of dollars to local nonprofits.

"In addition, based on the port’s FY 2011 and FY 2012 budgets, the port will have provided the City of Long Beach more than $100 million in oil revenues, oil lease revenues and two annual transfers," said the letter.

"The international trade community appreciates the need for the port to support the City of Long Beach. That support can only exist if the port remains economically healthy and competitive. It is for these reasons that the port needs to use these funds to invest in infrastructure that will generate thousands of new jobs and help the local economy."

The port is in the midst of a nearly $4 billion ten-year capital improvement plan, with $630 million in capital expenditures planned for FY 2012 alone. The groups pointed out in the letter that in order to fund these 2012 capital expenditures, the port must issue $300 million in new public debt and draw down reserves by $60 million.

In addition, the groups said that current cargo volumes are beginning to soften and the port is facing competitive threats in the shape of the impending 2014 opening of the Panama Canal's expanded locks and the aggressive investments in alternative ports such as Prince Rupert in Canada.

"Based on these risk factors, the fiscally prudent action would be for the Port to retain the $16.9 million and use these funds for infrastructure projects such as the Middle Harbor, Gerald Desmond Bridge and cold ironing," the letter said.

"These projects will create jobs, improve the environment and prepare the port for the future."

The port has yet to receive a formal request from the city regarding the annual transfer, but the City Council has approved the request. Port officials said the actual formal request for the transfer is likely to be delivered to the port within the next several weeks, after which the port board can take up the request for discussion.

Long Beach Port Up 6.6 Percent In June

The Port of Long Beach continued to report solid cargo numbers in June, posting the strongest month of total container moves for 2011 and the strongest June posting for the port since 2008.

Last month also marked the strongest June showing for the port since 2008 on both the import and export side of the ledger. However, June's import and export numbers were both off slightly from those posted in May.

Overall, the port's total container moves were boosted into positive territory for June by a sharp 19.1 percent increase over May in the number of empty containers shipped through the port.

June marked the fourth straight month of increasing empty container moves – strong indication that foreign shippers are staging large numbers of containers in preparation for the traditional peak season increase in Transpac imports flowing through West Coast ports.

The port handled a total of 554,269 TEUs in June, a 3.3 percent increase over May and a 6.6 percent increase over June of last year.

In the import column, the port handled a total of 271,113 loaded inbound TEUs in June, a 1.5 percent decline over May, but a 3.5 percent increase over imports in June, 2010.

On the export side of the ledger, the port posted a total of 126,588 loaded outbound TEUs in June, a 2.7 percent drop over May, but a 9 percent increase over the year-ago period.

Long Beach remains in solid positive territory for the calendar year, having moved a total of 1.48 million TEUs in the first half of the year – putting the port up 6 percent over the first six months of 2010.

California Exporters Shine Through Glum Economic Landscape

Despite growing concerns that the plodding and anemic economic recovery may be stagnating, California exporters in May posted their 19th consecutive month of healthy year-over-year gains.

May shipments by state exporters totaled $13.20 billion, a gain of 10.5 percent over the $11.95 billion reported in May of last year, according to an analysis by Beacon Economics of the most recent monthly foreign trade data released by the US Commerce Department.

California's manufactured exports were up by 6.1 percent in May, while non-manufactured exports such as raw materials and agricultural products jumped 24.2 percent. Re-exports, those goods brought into the US and then shipped out again such as through a Foreign Trade Zone, also posted a strong 17.2 percent increase over re-export numbers in May of last year.

"Adjusting for inflation, California’s export trade is as robust as it was prior to the recession,” Beacon Economics’ International Trade Adviser Jock O’Connell said.
Beacon Economics Founding Partner Christopher Thornberg explained that export activity is a key component of both the US and California recovery.

"We opened up a huge deficit in the boom years," Thornberg said. "To get back on solid footing, exports need to continue to rise."

Looking forward, the Beacon Economics analysis forecasts sustained growth in California’s export trade, particularly in the second half of the year when the pace of foreign trade normally picks up.

"With the dollar as cheap as it is, California as well as other US goods are selling at bargain prices on the world market," O'Connell said.

In addition, the recent reprieve from steadily rising oil prices should help exporters, O'Connell said, by keeping transportation costs in check at least through the summer.

Even as most of the state's chief international trading partners are taking steps to battle inflation or curtail budget deficits, Beacon Economics is forecasting that those foreign economies will continue to grow and continue to draw in imports from California.

On the import side of the ledger, the value of foreign shipments entering the US via California's airports, seaports, and border crossings rose by 14.7 percent compared to May, 2010.

As the nation’s primary gateway to the Pacific Rim, California derives ample economic benefits from the import trade.

"As much as we might like to reduce our dependence on imported goods, it’s worth emphasizing that moving imported goods to markets throughout the nation represents a vital source of jobs – many of them well-paying – in a state where unemployment rates remain perilously high," O'Connell said.

Tuesday, July 12, 2011

India Tango

By Jordan May

Although some of us went to school to become sailors, most people don’t become sailors to go to school. The term “sailor” in general doesn’t conjure up a picture of the academic type, studious and disposed toward a formal education. More likely we picture the hard-working, hard-drinking salts of days gone by. To move forward onboard today’s maritime industry however, it’s inevitable that you will need to spend a significant amount of time undertaking formal training in some type of classroom or facility. It’s a part of doing business and some of the material can be utilized towards safer and more successful operations.

Many of these schools were created or expanded to meet the growing requirements of the STCW Convention and the associated months of mandatory formal education. Since STCW was developed for oceangoing ships, there are certain elements of the required training, which are sometimes difficult to integrate onboard a small tug or vessel. Mariners spend plenty of time debating the value and effectiveness of classroom training, however there are a few areas I rarely hear anyone bellyaching about – fire fighting and first aid, for example.

If you are in this industry long enough you have seen a fire onboard and you have seen a few injuries. If you are just entering the industry you’ve already heard the stories and realize that if you stick around long enough you will see both.

People tend to retain material more effectively when it means their butt is at risk and serious injury to them, their vessel or their survival is at stake.

Being a good procrastinator I had somehow put off marine firefighting for the last 25 years of my maritime career. I just never had the time until last March. Finding myself unemployed with the opportunity at hand, I started looking at basic and advanced firefighting classes on the West Coast. Seattle is not far from home, and I had good feedback on Fremont Marine and their India Tango Marine Fire Training Program.

My previous employer had utilized Fremont and their portable unit for teaching a BST Refresher Class in San Francisco Bay last year. The Fremont instructors delivered a truck and all necessary equipment right to the dock in Alameda. By improvising what the company had onsite they were able to carry out the basic fire practices in the parking lot using the hose and extinguishers on live propane fires. For the classroom side of the program a good-sized conference area in the office was set up with tables and chairs.

Day 1
As hard as the material is to present while keeping tug sailors engaged, I was impressed by how our instructor was able to stay fresh and keep the class moving. Let’s face it: mariners are a tough lot to teach. If you sail for a career you’re already fairly competent at something and posses a few skills. Most mariners are not going to sit still with a straight face and listen to a landlubber drone on about everything a textbook says you need to know for working onboard. If the instructor can portray real experience and has a few scars or broken bones to share, it makes a big difference in gaining buy-in from the class. By engaging the students and utilizing some of the actual stories and experience sitting right there in the classroom, an instructor has a much higher chance of getting people to consider the material and maybe retain a good percentage of what they should be getting from class.

Monday morning in Seattle started in the classroom with the basics: fire theory and how the presence of fuel, oxygen and heat combine and support each other. We covered the equipment and gear we would be using over the week and the commands, co-operation and teamwork, which would be critical in getting through the class. I was a little surprised after lunch when we met down at the ship mock-up, jumped into the gear and donned the SCBA. I was more surprised when I found myself in a live fire with a water hose trying to put it out.

Day 2
The first half of the day we went over fuels and fire prevention. The point impressed on us was how to assess and eliminate fire hazards to minimize the potential in work we do every day. Being hyper-aware and informed on what to look for paves the way toward the ultimate goal of actually “avoiding a fire” in the first place. Contemporary fire detection equipment, fixed fire systems and methods of use were covered well and detailed in our workbooks. The importance of having an organized plan, a Station Bill and a Chain of Command was impressed onto us with real examples of fires going badly when nobody sticks to the plan, which is the most common reaction.

I wasn’t as shocked when after lunch we met down at the mock-up ship again and got into the gear. We started with a search and sweep for victims in the zero visibility, smoke-filled ship. Next we went after a live fire of propane and kerosene in the mock-up engine room and overhead. When we weren’t part of the direct attack team we practiced supporting the team inside doing the hot work. We were in and out of the gear more than a few times.

Day 3
With the first two days covering basic, the third day we started the advanced portion of the class with the addition of a few new students. We covered the importance of an organized plan and stringent drills and evaluations onboard. Damage control, fire boundaries and methodology were discussed with more detail. After lunch we found ourselves in the gear again, inside the ship, and the fires we faced were getting a little more intense. A rolling, overhead flame inside the ship put us as close to 1,200 degrees as I ever want to be and standing up at that point could have been the last thing I ever did. It was around this point where I realized that the exposure to these fires was going to leave some kind of impression on everyone involved and that exposure is what makes this training worthwhile.

Day 4
In the suits again and now descending down a ladder into an engineroom fire. By this time I could get in the gear in under a minute with help from a team member. The fires we faced also started to look different. While not necessarily predictable, I now had a better idea what was sustaining the fire and what would stop it from working. They didn’t have the original shock value that sends people scrambling in all directions like my first instinct on day one. The emphasis on an organized plan is stuck in your head and you find your hands doing what they are supposed to do with less thought and more automation.

By the fifth day the students had developed a routine for dealing with various fires and situations. Getting in and out of the gear, preparing the hose and supporting the other teams was a standard exercise. Approaching a surprise fire, planned by the other teams without any idea of the scenario, meant relying on what we had learned. The three teams tried hard to develop some curveballs to challenge each other. A mock heart attack, zero visibility, a helicopter fire and an unexpected search and rescue were some of the hurdles encountered by the teams. I think the different exercises allowed each of us to realize that we now possessed at least a couple of tools which would aid in dealing with the unpredictable and dynamic circumstances found during a real fire onboard a vessel.

The class time on our final day covered vessel stability and where it goes when you start flooding a vessel with water during a fire. De-watering is not something typically considered when you first see a fire. Neither is documentation of events or reporting and investigation; however these all come into play at some point in a serious fire onboard and taking these factors into consideration as they unfold was stressed into the routine we had developed. We also carried out and presented investigation and analysis of several historic onboard fires and the methods used in confronting those fires. By studying the reactions and accounts of other people and how they dealt with onboard fires we learned a lot about ourselves and how people will typically react.

Command and Control are the keys to effectively dealing with a fire onboard. With a station bill designating duties for each crewmember, with a systematic and organized method of training and drills and with an actual plan that people will practice and retain some hope of fulfilling, we gain a much better chance of controlling and recovering from an onboard fire. It makes our approach to something we rarely have to deal with much more effective.

Many of the instructors for India Tango are off-duty fire personnel from the Seattle area. By serving in this major port they’ve had the benefit of exposure to various marine fires and are well versed in utilizing shoreside and onboard resources, which we could relate with. The mock-up ship onsite is laid out well to mimic a common vessel arrangement. A large percentage of the time was spent in the ship and in the gear with live smoke and fire. Is it real? Well, it’s as close as you're going to get without setting your own boat on fire. Textbooks have value, the classroom has value but most mariners tend to be the type of people that learn something most effectively by doing it with their own hands. Get in and out of the gear enough times and you actually develop a routine. Get face-to-face with live flame and you actually develop a technique for holding the hose, applying water and thinking on your feet with a practiced technique. This hands-on learning is what makes this class valuable and it instills lessons which simply can’t be learned by watching a video or reading a textbook.

Jordan May is a seasoned tug skipper who has taken a break from the towing sector and finds himself running a fishing boat in Alaska for the summer.

Los Angeles to Host IAPH World Ports Conference In 2013

Los Angeles has been selected as the host city for the International Association of Ports and Harbors’ (IAPH) 28th World Ports Conference, set to be held at the JW Marriott Los Angeles at L.A. LIVE in downtown Los Angeles on May 6-10, 2013.

Founded in 1955, the Tokyo-based IAPH is a nonprofit global trade and advocacy group with members representing roughly 200 ports and 150 maritime companies and institutes from nearly 90 countries. The IAPH is dedicated to fostering cooperation among ports and harbors and promoting the vital role they play in creating a peaceful, more prosperous world. IAPH member ports handle about 80 percent of the world's container traffic and more than 60 percent of all international maritime trade.

The Port of Los Angeles is the official conference host and port staff have already begun preliminary work on the event. Working through a non-profit 501c4 entity approved in May by the Los Angeles Board of Harbor Commissioners, the port will make the upfront investments to promote the conference and reserve facilities, as well as coordinate and solicit sponsorships.

Planners predict that as many as 1,000 IAPH member delegates and guests will attend the biannual conference – most of whom will travel to Southern California from destinations beyond North America. IAPH was formed nearly six decades ago due, in part, by a convening of members from the global port community in Los Angeles in 1955.

It is estimated by organizers that the conference will generate more than $3.6 million in economic activity in Los Angeles and surrounding areas.

“The City and Port of Los Angeles are pleased and honored to host the 28th World Ports Conference that will generate millions of dollars for our City by spurring two of our largest industries: trade and tourism,” said Los Angeles Mayor Antonio Villaraigosa. “With the largest shipping container port in the country, the City of Los Angeles is uniquely qualified to host this forum for the global port community to discuss common industry issues such as safety, climate change and clean technology standards.”

Vancouver USA Rail Project Funds Threatened

Federal transportation stimulus funding that was redirected to a Port of Vancouver USA rail project earlier this year may be on the chopping block if Congressional Republicans have their way.

In May, the United States Department of Transportation announced that the Washington-state port was selected to receive $15 million for the port's West Vancouver Freight Access (WVFA) rail modernization project. The funds were to come from the $2.4 billion in high-speed rail funds that Florida Governor Rick Scott rejected in February.

However, Congressional GOP members led by Rep. Rodney Frelinghuysen of New Jersey have pushed forward an amendment to the Energy and Water Development Appropriations Bill that would eliminate $2.3 billion in federal stimulus dollars, including $1.6 billion of the Florida high-speed funds that have now been promised to 15 states.

The amendment, which would have to receive approval from both the House and Senate, seeks to eliminate all stimulus funds that are yet to be officially allocated – referred to in the amendment as 'unobligated funds.'

The $15 million in stimulus funds for the Vancouver rail project remains classified as 'unobligated.' If the classification of the funds is changed to 'obligated' before the amendment passes, the port would still receive the funds.

Since first proposing the amendment, Rep. Frelinghuysen has added that he wants to see the 'unobligated' stimulus funds shifted to pay for federal expenses related to the floods, tornadoes and other natural disasters recently in the Midwest.

Vancouver port officials had planned to invest the $15 million windfall in the construction of a rail access point at the east end of the port that is separate from the BNSF mainline. The $38 million project – part of the overall $150 million WVFA plan – is set to start by April 2013, with scheduled completion in January 2016. The port had planned to pick up the remaining $23 million cost of the project after applying the federal stimulus funds.

Divided into 20 project elements, the overall WVFA project includes construction of a new dual carrier rail access into the port, enhancement of the port’s internal rail system, relocation of port facilities and utilities to accommodate track realignment, and improvements to port roadways.

The WVFA, the largest capital investment in the port's history, is at the heart of port officials' efforts to attract new business and retain existing businesses.

"We needed to increase our rail capacity. We needed to handle unit trains that are more than 100 rail cars long and unclog a bottleneck caused by trains coming into the port, stalling national rail lines to the west coast," port Executive Director Larry Paulson said in April.

In July 2010, the port completed a rail loop project as the final phase of its $66 million Terminal 5 rail upgrade project – itself the first key component of the larger WVFA project. Completed ahead of schedule and on budget, the rail loop marked the first major milestone under the West Vancouver Freight Access and Industrial Track Agreement, a deal reached between the port and BNSF in 2008 that provides the overall blueprint and timeline for the WVFA project. The entire WVFA project is set for completion some time in 2017.

When completed, the WVFA is expected to triple the rail car capacity of the port-area BNSF tracks.

FMC Set To Discuss SoCal PierPass Rate Hike

The five-members of the Federal Maritime Commission on Wednesday are set to discuss plans by terminal operators at the Southern California ports of Long Beach and Los Angeles to implement a $10-per-TEU increase on the PierPass Traffic Mitigation Fee (TMF).

Last month, members of the West Coast Marine Terminal Operators Agreement, which formed PierPass six years ago, said they would delay the previously scheduled July 4 implementation of the TMF hike until Aug. 1. The increase would be the first since PierPass started.

The delay, according to the WCMTOA, "is in response to feedback from customers and other partners in the goods movement industry, and is intended to provide more time for cargo owners to prepare for the adjusted TMF."

The FMC has agendized a closed-session staff briefing and discussion of the topic for the July 13 meeting.

PierPass is a not-for-profit company created by marine terminal operators at the ports of Los Angeles and Long Beach in 2005 to address multi-terminal issues such as congestion, security and air quality. Under PierPass, all international container terminals at the two Southern California ports established five new off-peak hour terminal gate shifts per week.

As an incentive to using the off-peak gates and to cover the labor costs of the added gate shifts, PierPass charges the TMF against most cargo movement during peak gate hours of 3 a.m. to 6 p.m., Monday through Friday. These collected peak-hour fees are then used to offset the costs of operating the off-peak gate shifts.

Currently, about 55 percent of all drayed container traffic moving in and out of Los Angeles and Long Beach terminals is handled during the off-peak gate shifts.

A major concern among many in the industry is that the TMF has never fully covered the terminal operators' costs to run the extra gate shifts.

According to WCMTOA members, in 2010 there was a $52.3 million shortfall between TMF revenues and the costs of running the off-peak gates.

The additional $10-per-TEU TMF increase, based on current PierPass volumes, would only generate enough revenue to cover between 50 and 60 percent of the shortfall experienced in 2010.

The July 13 FMC meeting will also be the second for former Port of Long Beach Harbor Commissioner Mario Cordero, who was sworn in as the newest FMC commissioner on June 3.

Long Beach Port Staff Still Looking For A New Home

In a closed door session with Harbor Commissioners, Port of Long Beach officials on Monday discussed the possibility of moving the port's roughly 475-member staff from their 52-year-old administration building to one of several prominent downtown Long Beach office buildings.

Port officials, headed by executive director Richard Steinke, had previously discussed a move to the Long Beach World Trade Center, but other options now include the Union Bank Building and the City National Bank Building.

For nearly a decade, the port had been slowly moving forward with plans to build a $300 million state-of-the-art environmentally friendly showcase administration building on port property adjacent to the current administration building.

While the port planned to use no tax revenue or city funds for the new building, Long Beach Mayor Bob Foster last year vetoed funding for the new port building, questioning the wisdom of the semi-autonomous port authority constructing a new headquarters while his City Hall administration has struggled with city budgets racked by deficits and dwindling revenue streams.

Since the mayor's veto of the new port building, port officials have been looking at various locations throughout Long Beach that could be leased or purchased to serve as a replacement for the current six-story headquarters. Reports over the years have indicated that the current port building would not fare well in a major earthquake as it was built to late-1950s building codes and has not received seismic retrofits.

In addition, the port staff has grown by more than 100 positions in the past five years, severely pushing the capacity limits of the existing building and at times requiring temporary offices to be utilized.

The current seven-story port building, located in the port on a 10-acre parcel at the southern end of the Queensway Bridge, was completed in 1959 at a cost of just over $3 million.

The 27-story WTC, located just blocks north of the port, was opened in 1989. It is one of the premier office towers in the downtown Long Beach skyline and was heavily sponsored by port funds during construction. It was sold to current owner Legacy Partners in 2007 for $149 million.

The 14-story Union Bank Building, completed in 1976, is located just south of the WTC.
Also located just south of the WTC is the six-story City National Bank Building, which opened in 1982.

The port would require about 100,000 square feet of office space to match the current administration building.