Tuesday, January 17, 2012

Regional Report: The Ports of LA and LB Push to the Future

By Mark Edward Nero

Four new container cranes were added at the Port of Los Angeles as part of a recent renovation project at the China Shipping Terminal. Photo courtesy of the Port of Los Angeles.

It was German playwright and novelist Johann Wolfgang von Goethe who once said he who doesn’t move forward goes backward. And that philosophy was certainly in play at the Los Angeles/Long Beach port complex in 2011.

Despite flat container growth throughout most of the year, both ports pushed forward with projects and initiatives to literally and figuratively push the future of cargo movement forward on the West Coast.

At the Port of Los Angeles, the year was marked by forward movement regarding multiple projects, including major terminal renovations and rail yard plans.

“Bottom line, our capital plan here is about $1.5 billion over the next five years,” Port of LA Executive Director Geraldine Knatz said.

One project is the Southern California International Gateway Project, or SCIG, under which a new on-dock rail facility would be built on 153 acres of industrial land located a couple of miles north of the port. Some of the land is owned by the LA Harbor District, but other portions of the project would be on private property.

An Environmental Impact Report was issued in October, and the deadline for public comment has been extended to Feb. 1 from the original date of Dec. 22, 2011.

The project applicant is BNSF Railway, which would pay for and construct the $500 million facility itself. BNSF says the rail yard would eventually eliminate more than 1.5 million million truck trips from the Long Beach Freeway by improving rail access to the ports.
But since the proposed facility is off port property, the issue of potential harm to the local environment has become a significant one for the surrounding community.

“A lot of letters have come in,” Knatz said. “We’re having letters that come in that are pro-project and other letters that have raised issues.”

Since the tenant is building the project, the port is taking a less active role than it normally would.

“Our role here is primarily as the administrative lead on the environmental process, and we’ll enter a lease with them assuming the board approves the project,” Knatz said.

If eventually approved by the harbor board this coming spring, construction could begin by 2013 with an opening in 2016.

The Port of Long Beach, like the Port of Los Angeles, also recently finished an EIR for a major, long-planned project. In this case, it’s the redevelopment of 160 acres that make up Pier S.

“There are some alternative-use scenarios in the EIR. One is a two-berth container terminal, one is a three-berth container terminal and one is a container storage facility with no cranes, no berth,” Sean Strawbridge, the port’s Managing Director of Trade Relations, explained.

“There’s been a tremendous amount of interest in Pier S, but right now we don’t have any particular tenant in mind at this point,” he said, “until we get a better sense for which of those development scenarios will best suit our needs, as well as the approval of the surrounding community.”

A cost estimate for the redevelopment isn’t part of the EIR, but Strawbridge estimated the price for the three-berth terminal option at around $650 million.

In other port developments during the year, the Port of LA finished a $47.6 million expansion at the China Shipping terminal in April. As part of the project, it added a new 925-foot section of wharf, 18 additional acres of land and four new container cranes.

“We extended the berth; it now takes two vessels at the same time rather than one,” port spokesman Philip Sanfield said.

Also as part of the latest improvements, an access bridge was built between the China Shipping and Yang Ming terminals to improve the efficiency of trucks’ movement of cargo between them.

Another project that moved into the construction process in 2011 at the Port of Long Beach was the Middle Harbor development, a project to take two smaller, older terminals and combine them by filling in a waterway that separates them today, and make them one larger, more efficient terminal.

Construction began last spring on the two-phase, $1 billion modernization, which is expected to take nine years to complete. The first phase, which consists of renovating the existing Pier E container terminal, widening and deepening one slip while filling another, is expected to be completed sometime in 2014, Strawbridge said.

After that, anchor tenant OOCL is expected to move into the newly renovated portion while work begins on the second phase. The job will be easier since the terminal’s other tenant recently left for the other side of the harbor.

“The north part of the terminal was the Hyundai terminal, and OOCL could not reach an agreement to share the new terminal, so Hyundai moved to Los Angeles and sublet space from APL Terminals,” Strawbridge said.

“What that did, that was a blessing in disguise for us, in that while we valued Hyundai’s business and hated to see them go, from a pier development standpoint, now we don’t have a tenant that’s there having to operate while we’re developing,” he said. “So we can develop unencumbered on that piece of property.”

The project’s second phase, which will be to connect the Pier E and Pier F container terminals and expand the on-dock rail, is expected to commence in 2014, with completion slated for 2017 or 2018, Strawbridge said.

And last February, the Port of Los Angeles became the first facility of its kind to provide shoreside electrical power to three separate cruise lines.

The Port of LA’s cruise center is also the only port where two cruise ships can be connected simultaneously. Cruise ships utilize either 6.6 kV or 11 kV electrical power distribution systems to plug into shore side power; the Port of Los Angeles can now accommodate either.

“Not all types of cruise vessels can use the same power load, so we’re the only terminal in the world that’s been able to add three different cruise lines,” Knatz said.

Also throughout 2011, the Port of Long Beach continued its efforts to move forward with the replacement of the Gerald Desmond Bridge, the 5,100-foot through-arch connector on Terminal Island that links the LA and Long Beach harbors.

The bridge, which was built in the 1960s, was not designed to handle today’s traffic volumes and has been deteriorating for some time. The Port of Long Beach is partnering with various government agencies on a $950 million replacement plan.

“The Port of Long Beach is paying for some, the federal government is paying for some and there’s some state funds. It’s a myriad of funding sources, and we’re very fortunate to have had the ability to attract the necessary funding and be able to execute on the contracts,” Strawbridge said.

The original budget has been fully funded, and last October, a pre-proposal conference was held at the port for interested subcontractors. Currently, there are four shortlisted bidders whose build designs will be received and evaluated during the first half of 2012, Strawbridge said. The current plan is to select a bid design sometime during the second half of the year.

An issue that both ports dealt with last year was the reduction of air pollution caused by drayage trucks and other sources on the docks. 2011 represented the fifth year of the ports’ joint Clean Air Action Plan, which is a concerted effort to monitor and reduce harmful emissions, such as particulates.

As part of the plan’s Clean Truck Program component, drayage trucks built before 1993 were banned from port service at the start of 2010. As of Jan. 1, 2012, pre-2007 trucks are also banned. Knatz says the program has made a noticeable difference in air quality.

“We released a report card (in 2011) that basically showed that from 2005 to 2010 we had reduced particulate emissions by 69 percent,” she said.

However, a sticking point throughout the year was a Los Angeles mandate that all drayage truck drivers had to be employees of the companies they hauled goods for, and not contractors. Long Beach does not have a similar rule.

Last September, the US 9th Circuit Court of Appeals ruled that Los Angeles can’t mandate the employment status of drivers, but upheld most other aspects of the program, however, including truck maintenance regulations and rules against certain types of off-street parking.

However, the executive committee of American Trucking Associations, which opposes the Clean Truck Program, voted in October to take the case to the U.S. Supreme Court. Knatz said all parties should know sometime early in 2012 if the Supreme Court could be interested in hearing the case.

“The interesting thing is, most of the customers here, the terminal operators will say the truck drayage system is better today than it was five years ago, and so it’s unfortunate that they’re going to try to take away what’s remaining in place to affect the program, because the customers like it,” she said of the ATA.

Another significant development at the Port of Long Beach came last April, when Knatz’s counterpart across the harbor, Dick Steinke, announced that he was retiring after 14 years as executive director. He officially stepped down at the end of the year.

His replacement, who was named in November, is Chris Lytle, who had been the port’s deputy executive director and Chief Operating Officer since March 2008. He joined the port as a managing director in September 2006.

Lytle, a former vice president with the French-based shipping line CMA CGM, also held executive positions at P&O Ports North America, Sea-Land Service and Denmark-based APM Terminals.

“Not only does he, with his recent experience with the port, bring a lot to the executive director position, but he brings a tremendous amount of knowledge, experience and relationships,” Strawbridge said. “And relationships are important; the Port of Long Beach has valued the relationships that it’s had over the years, and that’s why Chris Lytle was the right guy for the job, to be able to carry on those relationships uninterrupted.”

Strawbridge said he didn’t anticipate any major changes in direction at the port.

“Dick has left the port in a great position, even in these troubling economic times,” he said. “The port is better suited than most, and I think Chris, as the experienced visionary that he is, recognizes that, and has no plans to radically modify that.”