Friday, January 20, 2012

Port of Los Angeles Sees Modest Volume Growth in 2011

The Port of Los Angeles handled a total of 7.94 million twenty-foot equivalent unit containers in 2011, compared to 7.83 TEUs the year before, an increase of about 1.39 percent, according to newly-released data.

The most significant gain came in exports, which rose to 2.10 million in 2011, a 14.5 percent increase over the 1.84 million shipped in 2010. Total year-over-year imports grew 2.3 percent to 4.06 million in 2011 versus 3.97 million the year prior.

“It’s an example of how our port is prepared to handle a shift in global trade patterns,” port Executive Director Geraldine Knatz said of the export numbers, which set a record for the second consecutive year.

December was a particularly strong month for the port, as volumes showed gains in all categories. Total December volumes, including empties, increased six percent to 649,468 TEUs compared to December 2010’s 612,651 TEUs.

Also, exports increased 9.2 percent to 176,530 TEUs compared to the previous December’s 161,625 TEUs. Additionally, imports increased 6.4 percent to 318,355 TEUs compared to December 2010’s 299,304 TEUs.

“We’re fortunate to have stronger year-over-year results in 2011 but we are not resting on our laurels,” LA Mayor Antonio Villaraigosa said in a statement announcing the numbers. “We are investing $1.5 billion in capital improvements over the next five years. We’re going to create more than 20,000 construction jobs and keep infrastructure at the Port of Los Angeles unparalleled.”

The Port of Los Angeles is the busiest port in North America, just ahead of the adjoining Port of Long Beach. LA’s slight gain in total volume last year was in contrast to Long Beach, which earlier this week reported moving a total of 6.1 million TEUs in 2011, a 3.2 percent drop compared to 2010.

That decline, however, is being attributed to Long Beach’s loss of California United Terminals, which vacated one of the POLB’s seven container terminals and moved to the Port of LA in late 2010. Prior to the move, CUT had accounted for about a tenth of Long Beach’s overall container traffic.

When Long Beach’s annual numbers are adjusted for CUT’s departure, however, the remaining six container terminals actually saw a volume gain of 8.1 percent in 2011, with imports up 10.1 percent and exports climbing 7.8 percent.

Long Beach is currently in the process of finalizing a huge 40-year, $4.6 billion deal with Orient Overseas Container Line for OOCL to occupy the former CUT site and adjacent land, which is currently leased by the Long Beach Container Terminal company and is undergoing renovation as part of the port’s Middle Harbor project.

About $1.2 billion in upgrades to the 300 acre project, located at piers D, E and F, are expected to be complete around the end of the decade.

GreenPacific Conference Completes 2 Day Run

Challenges facing the marine transport industry’s implementation of green technology, and potential solutions to those challenges, were discussed by a wide array of industry experts during the third annual GreenPacific Conference in Long Beach, California this week.

During the conference, which was held Jan. 17-18 and attracted about 100 attendees, the over-arching topic was zero emissions technology. More than a dozen speakers addressed issues associated with it, including its promises and challenges, pending projects, fixed rail applications and legal and regulatory implications.

“What we’re seeing is a march toward zero emissions,” Thomas Jelenic, the assistant director of environmental affairs and planning for the Port of Long Beach said during a panel discussion on container handling and shore power projects at Southern California container terminals.

“We’re looking at a complete shift in the way that terminals do business in the future,” Jelenic said.

Among those in attendance to witness the proceedings was Federal Maritime Commission member Mario Cordero who, before being confirmed to the FMC in the spring of 2011 and subsequently relocating to Washington DC, spent eight years as a member of the Port of Long Beach’s Board of Harbor Commissioners.

“This is now a national discussion about greening the ports, not just Long Beach and Los Angeles,” Cordero said. “For the Federal Maritime Commission, obviously it’s an important issue with regard to not only the environmental aspect, but when we talk about sustainability and efficiency, that’s the mission of the FMC, to have us both competitive and move goods, international cargo, in an efficient manner.”

During his Long Beach tenure, Cordero helped launch and oversee many of the port’s green initiatives, including vessel speed reduction measures and the Clean Trucks Program.

“This is a very important dialogue to continue to be involved in,” he said.

The GreenPacific conference, now in its third year, was produced by Pacific Maritime Magazine in association with the Pacific Merchant Shipping Association. Sponsors included BNSF Railway; Union Pacific railroad; the law firms of Flynn Delich & Wise and Keesal Young & Logan; facility planning and design company Moffat & Nichol; and the ports of Long Beach, Los Angeles and Seattle.

The 2013 conference is already being planned for the fall of 2013.

A full wrap-up of the 2012 conference is scheduled to appear in the February edition of Pacific Maritime.

California Gov. Pushes High-Speed Rail Project

California’s governor says his state is within weeks of finishing a modified plan that would enable construction to begin later this year on a long-planned high-speed passenger rail project that’s been met with opposition from Union Pacific railroad.
Gov. Jerry Brown revealed the information during his annual State of the State address Jan. 18.

“If you believe that California will continue to grow, as I do, and that millions more people will be living in our state, this is a wise investment,” he said. “We are within weeks of a revised business plan that will enable us to begin initial construction before the year is out.”

As conceived, the high-speed rail project would initially run from San Francisco to Los Angeles and Orange counties in under three hours via the Central Valley, at speeds of up to 220 mph, and would interconnect with other transportation alternatives. A later addition would reach even further, going from Sacramento to San Diego.

In October, the plan came under fire by Union Pacific railroad, which says the planned Central Valley route encroaches on the company’s property rights and would disrupt UP’s freight operations.

The railroad has also said that long portions of three potential routes would run about 100 feet adjacent to sections of its freight corridor, and that this would create a safety hazard.

Proposed train routes submitted by the governmental entity overseeing the project, the California High Speed Rail Authority, include overlap with both Union Pacific and BNSF rail property. BNSF, however, has already told the CHSRA that it’s willing to negotiate regarding right-of-way privileges.

In his State of the State address, Brown acknowledged that the plan has its critics, but maintained that the project, which would cover 800 miles of track and consist of 24 stations, would move forward.

“President Obama strongly supports the project and has provided the majority of funds for this first phase,” Brown, a Democrat, said during the speech, which he gave before a joint session of the state Legislature. “It is now your decision to evaluate the plan and decide what action to take,” he said.

The state has estimated project’s cost at between $65 billion and $100 million.

New Port of San Diego Lead Commissioner Sworn In

A retired US Navy officer was sworn in Jan. 10 as the 2012 chair of the Board of San Diego Port Commissioners.

In his first public address as chair, Retired Admiral Lou Smith said his theme for 2012 is the “Exemplary Port,” – the concept that the port should be an example for other ports to follow. Achieving that goal comes, in part, from being able to measure and quantify job performance, he said.

Smith, an engineer, also recited the words of an organizational management guru to illustrate his approach: “What gets measured gets done. What gets fed back gets done well. What gets rewarded gets repeated.”

Smith began his service on the Board of Port Commissioners in January 2010. Prior to being named to the board, he was a career naval officer, beginning in the Navy’s Civil Engineer Corps.

He completed three tours in Vietnam, supervising construction facilities for the Marine Corps. Later in his naval career, he was stationed in Washington, DC, where he worked with the Department of Defense and Congress. He retired from the Navy in 2000 as a two-star Admiral.

The Port of San Diego, which was created by the state legislature in 1962, oversees two maritime cargo terminals, two cruise ship terminals and the leases of over 600 tenant and sub tenant businesses around the San Diego Bay.

It’s governed by a seven-member Board of Port Commissioners; three are appointed by the San Diego City Council, and one commissioner each is appointed by the city councils of the cities of Chula Vista, Coronado, Imperial Beach and National City. Smith is the board’s Coronado representative.

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.”

Long Beach Cargo Volumes Drop in 2011

Shipping terminals at the Port of Long Beach moved a total of 6.1 million twenty-foot equivalent containers in 2011, a 3.2 percent drop compared to 2010. Also, imports were down a reported 3.3 percent and exports dropped 3.6 percent, according to the port.

The decline, however, is being attributed to Long Beach’s loss of California United Terminals, which vacated one of the POLB’s seven container terminals in late 2010. CUT, which had accounted for about a tenth of the port’s overall container traffic, now leases about 100 acres of the 512-acre APM Terminals facility at the Port of Los Angeles.

When Long Beach’s annual numbers are adjusted for CUT’s departure, the remaining six container terminals actually saw a volume gain of 8.1 percent in 2011, with imports up 10.1 percent and exports climbing 7.8 percent.

For the month of December, the port moved 509,944 TEUs, a 2.6 percent decrease compared to the same period a year ago. Imports were down 3.2 percent to 248,609 TEUs and exports were down 8.4 percent to 129,229 TEUs.

But again, when adjusted for CUT’s departure, overall container traffic at the remaining Long Beach terminals was up 1.7 percent in December 2011 compared with the same month the year before. Imports were up 1.8 percent; exports, however, declined 4.5 percent.

CUT left Long Beach in part due to concerns over the port’s Middle Harbor Project, which is an effort to combine the land the California United terminal leased with another facility in order to create a larger, more modern and streamlined facility.

The port says the project will double the facility’s capacity while reducing related pollution by half. Middle Harbor is part of more than $4 billion in capital improvement projects planned for the POLB in the coming decade.

Disney Cruise Line Possibly Departing Port of LA

Disney Cruise Line has canceled its late 2012 tours originating from the Port of Los Angeles, and is expected to leave the port altogether after its two-year contract is up at the end of the year.

The company says it plans a Jan. 18 announcement regarding “fleet expansion and new itineraries,” giving rise to speculation among cruise industry observers that the company will move its 964-foot, 2,700 passenger Disney Wonder ship from the Port of Los Angeles to Miami.

The speculation began after four cruises from LA to the Mexican Riviera aboard the Wonder that were originally planned to depart this December were canceled by the cruise line.

The canceled dates were Dec. 9, 16, 23 and 30. Passengers already booked for those dates have been given the option of rescheduling for a different date or receiving a full refund.

It was just a year ago this month that the Disney Wonder had been repositioned in LA from its former base in Port Canaveral, Florida under a two-year deal with a three-year option. Under the pact, which was much ballyhooed at the time, the port was required to make $2.5 million in renovations to the ship’s terminal.

The expected move is being blamed on a continued decline in interest in cruises to Mexico. The country has suffered from widespread violence over the past five years, caused mostly warring drug cartels.

Royal Caribbean and Norwegian Cruise Lines discontinued trips to Mexico from LA in 2010.

If the port loses Disney, it would still have three other companies with ships homeported at Los Angeles: Carnival Cruise Lines, Princess Cruise Lines and Norwegian Cruise Lines. Overall, more than a dozen cruise lines call at Los Angeles’ World Cruise Center throughout the year, according to the port.

Alaska Shipping Companies Merge

Tacoma-based freight transportation services company Pacific Alaska Freightways has acquired Southern Alaska Forwarding, effective Jan. 2, 2012.

“This is a great acquisition for us,” Pacific Alaska Freightways CEO Ed Fitzgerald said. “We know the SAF business model and we expect a seamless transition.”

The two companies have an intertwined history that dates back decades. Pacific Alaska Freightways was founded in Seattle, Washington in 1961 as Pacific Alaska Forwarders. Southern Alaska Forwarding was started in 1979 by the two eldest sons of the couple that founded PAF.

In 1993, one of the sons, Alain Smith, left the company he co-founded to work for Kodiak-based Pacific Alaska, which provides various freight transportation services, including steamship, barge, rail, air, intermodal, less-than-truckload and truckload.

But despite being two separate entities, the companies had partnered on picking up freight from Anchorage and transferring it to SAF for delivery in Kodiak, as well as providing support for each other into their respective service areas.

Smith said the merger should be complete during the spring. Despite the merger, the companies say the entire Southern Alaska Forwarding team, which is based in Kodiak, is expected to remain in place under the Pacific Alaska name.

Port of Portland to Begin Auto Exports

The Port of Portland, which for years has had a thriving business importing autos from Asia, is now preparing to send cars back the other way.

The port has confirmed that it’s expected to begin exporting American-made vehicles to South Korea later this month under a recently-signed deal.

Under the contract, Tacoma-based shipper Auto Warehousing Co. will send about 10,000 Ford vehicles to South Korea this year, with the amount possibly increasing in subsequent years. The port also has preliminary plans to upgrade its Terminal 6 vehicle handling facility, which Auto Warehousing manages, to accommodate the expected increase in traffic.

Portland is the fourth largest auto import gateway in the U.S., according to the port, and up to now, it has only imported autos, particularly ones from Asian countries. Through the first 11 months of 2011, it handled 208,900 imported autos, putting it on pace for a decline from the 264,400 it handled throughout all of 2010.

The port processes imports of Honda, Hyundai and Toyota vehicles from Japan and South Korea.