Tuesday, June 29, 2010

Bellingham Port Down To Short List For Exec. Dir. Position

Port commissioners have announced the short list in their search for a new executive director at the Port of Bellingham, moving the port one step closer to filling a position that has sat vacant for nearly a year.

The finalists include the top executive at the Port of Coos Bay, the finance director for the City of Bellingham, a Port of Seattle executive, a former city administrator from Arizona and an international trade executive with the Washington State Department of Commerce.

The $125,000 to $135,000-a-year position is being filled after Jim Darling, who had served as port executive director for 15 years, left in July 2009 for a position in the private sector. Port commissioners plan to interview the finalists in early July, hold a public meeting the next week to introduce the finalists, and make a final selection by the end of the month.

The finalists are:

Jeffrey Bishop has served as the executive director for the Oregon International Port of Coos Bay since 2005. Prior to joining the port, Bishop served as manager of industrial development at the Port of Tacoma and director of properties and development at the Port of Pasco.

John Carter has served as the City of Bellingham finance director since being named to the position in late 2007. Prior to joining the city he served as CFO for DIS Corp. in Bellingham, and in several financial management positions with Sears, Roebuck & Co.

Dwight Rives, an 11-year veteran of the Port of Seattle, currently serves as the port's director of port construction services. Prior to his tenure at the Port of Seattle, Rives served as the capital projects manager for the Seattle Public Library.
Mark Watson recently stepped down after serving five years as city administrator of Yuma, Arizona. Prior to his Yuma stint Watson served nearly 25 years in city management positions in Montana and Texas.

Larry Williams currently assistant director, international trade and economic development, for the Washington State Department of Commerce has served more than 17 years in various international trade-related positions with the state of Washington and previously the state of North Carolina.

Tacoma Port Commission Approves Salary for New Executive Director

The governing board for the Port of Tacoma has approved a $220,000 annual salary for the port's newly selected executive director, John Wolfe.

Wolfe, who beat out a pool of 59 applicants for the job, will also receive a $700 monthly car allowance, four weeks of annual vacation and a typical port employee benefits package.

The port contract also includes a provision entitling Wolfe to six months of severance pay if he is asked to leave without cause.

Wolfe salary, which is the same as previous director Tim Farrell's, was in the middle of the p$200,000 to $240,000 advertised range for the position.

Wolfe has been serving as interim executive director since Farrell resigned at the end of 2009. Prior to his current position, Wolfe served as deputy executive director at the port since 2005. Prior to joining the Port of Tacoma, Wolfe served in several top executive positions at the Port of Olympia, including two years as executive director, and he spent a decade with Maersk Sealand/APM Terminals in Tacoma.

López Mendoza To Leave LA Port Board

Port of Los Angeles Harbor Commission Vice President Jerilyn López Mendoza has announced she will leave the port commission at the end of July. 

López Mendoza was named to the five-member commission in 2005 by Los Angeles Mayor Antonio Villaraigosa. Her official six-year term runs through 2011, but Lopex Mendoza is leaving after taking a position as the California Regional Manager for ICLEI - Local Governments for Sustainability. She is also currently the interim director at the California League of Conservation Voters Education Fund.

During her tenure on the port commission, she has been a key voice in the development of port environmental policies such as the Clean Air Action Plan and the Clean Trucks Program.
Prior to joining the port commission, López Mendoza was the policy director of the Environmental Justice Project Office of Environmental Defense Fund in Los Angeles for nine years. Previously, López Mendoza was the chair of the Steering Committee of the Los Angeles International Airport Coalition for Economic, Environmental and Educational Justice.

Long Beach Port Approves $716 Million FY2011 Budget

On Monday the City of Long Beach Board of Harbor Commissioners approved a $716 million budget for the Port of Long Beach 2011 fiscal year that includes $474 million in development projects and $71 million in environmental programs.

“Despite the global recession, the Port of Long Beach is in a strong financial position,” said Port Executive Director Richard Steinke. “But to remain competitive, we must look into the future. We must continue to invest in projects to modernize and ‘green’ our operations.”

The 2011 fiscal year budget represents a 19 percent reduction from the current budget. The budget projects that while container terminal revenues are expected to increase 4 percent in the 2011 fiscal year, other income streams such as interest and revenue from oil operations are expected to decline. A projected net decline in overall revenues will require the port to draw down $343 million from reserve funds. The budget also cuts 12 percent in operating expenses from the previous fiscal year by maintaining current staff levels and reducing non-personnel expenses.

In approving the budget, which begins Oct. 1, the port board also gave tentative approval to a scheduling change in the way 10 percent of the port's annual profits are transferred each year to Long Beach City Hall. The city had requested the change, which will require the port to make two transfers in one year--one for $12.4 million and another for $11.5 million--to come in line with the new schedule. The port, while expressing concern about the one-time hit, said it would likely pull the additional transfer funds from the port's capital projects budget.

The board will make a final decision on the city transfer-related items in the next several months.

Healthy Air: CARB and the Emission Control Area

By Charlie Walther and Mary Frances Culnane
June 2010

The state of California tends to be ahead of the rest of the country when it comes to environmental issues. Most recently, the manner in which California has addressed marine exhaust emissions has evolved into an emission control model adopted throughout the world.

Powerful Environmental Advocacy
Although the California Air Pollution Control Act was passed in 1947, it was the passage of the Mulford-Carrell Air Resources Act in 1967 which gave us the California Air Resources Board (CARB). CARB was created prior to the passage of the federal Clean Air Act, and California was the only state to enable this type of regulatory body; consequently, California is the only state permitted to possess such a regulatory agency. Other states may not set their own standards; however, they may follow CARB standards or utilize the federal standards.

Highlights of the original Mulford-Carrell Act included the creation of a State Air Resources Board to coordinate administration, research, and air conservation activities within the State, and the transfer to the Board of all personnel, equipment and assets of the Motor Vehicle Pollution Control Board and Vehicle Pollution Laboratory.

The act also specified duties to be performed by the new board, including the division of California into air basins and the adoption of ambient air quality standards for each basin.

The board assumed total responsibility for emissions from motor vehicles, and was tasked with the adoption of emission standards for all sources of air pollution and the enforcement of these standards, if, after public hearing and investigation, the Board finds that local authority has not taken reasonable action.

CARB was also tasked with conducting studies and inventories of sources of air pollution, monitoring air pollutants, and evaluating the effects of air pollution, as well as coordinating and collecting research data on air pollution and encouraging a cooperative State effort. Finally, the Board is responsible for reviewing all rules and regulations of local and regional authority, to assure that reasonable provision is made to control emissions and to achieve the air quality standards established by the State. The Act granted various methods to enforce the standards

CARB’s stated mission is to promote and protect public health, welfare and ecological resources through the effective and efficient reduction of air pollutants, while recognizing and considering the effects on the state’s economy.

It appears reasonable for CARB to develop sufficient marine exhaust emissions standards based upon evaluating technical studies, fielding expert advice from the industry and providing satisfactory responses to questions and concerns expressed during established public comment periods. Some have argued that CARB may have pushed beyond their stated mission with the recent passage of the Commercial Harborcraft Rule. Within the parameters of this unfunded mandate, CARB not only establishes air quality standards, but dictates methods to reach said standards while remaining exempt from the responsibility for any of the consequences of implementing such methods.

The concept of the Best Available Control Technology (BACT) is of particular concern, due to numerous conflicts with Federal regulations governing procurement of vessels or engines when using federal aid for purchasing same. One issue is that the federally funded procurement process guidelines require confidentiality during a procurement evaluation process, yet CARB involves itself in this process. Moreover, competitive information provided relative to both the technical and cost proposals may include trade secrets protected by statute. A case can be made for CARB removing themselves from the procurement process and establishing an emission standard, thus allowing industry to meet same, as opposed to CARB approving technology and without responsibility or liability placing the burden on the applicant for any failures as a result of implementing CARB approved technology.

CARB has evolved into an 11 member appointed board with an $860 million annual budget and a 1,200 member staff of administrators, regulators, technicians and compliance officers.

Legislation on the Horizon:
The International Maritime Organization (IMO) agreed to the USA EPA & Canada joint application for a 200-mile range emission control area (ECA) with enforcement commencing in August of 2012. Starting at a sulfur cap of 1%, this ECA will reduce to a 0.10% cap by 2015.

The current CARB sulfur restrictions that began on July 1, 2009 will decrease to 0.10% commencing in January 2012.

On the domestic side, a final rule was executed in December, 2009. New engine standards include Tier 2 and Tier 3 NOx limits for US vessels harmonized with MARPOL Annex VI, Hydrocarbon, Carbon and CO cap standards for US vessels. New fuel sales standards include a 0.1 percent sulfur fuel limit for use in ECAs (unless equivalent technology is utilized), and allows for 0.1 percent sulfur distillate sales in US for marine use. The new rule adopts Annex VI implementation regulations for all vessels operating in US waters.

Annex VI
New Annex VI Amendments were approved in October, 2008. These included global NOx controls in the form of the adoption of Tier 2 standards for a 20 percent reduction for new vessels built after 2011. Existing engine standards apply.

Annex VI Amendments also call for global PM and SOx controls, with limits in 2010 of 3.5 percent fuel sulfur, lowering to 0.5 percent fuel sulfur in 2020, although this new level could be delayed to 2025, subject to a fuel availability review in 2018.

Finally, Annex VI states a country or countries may propose to designate an ECA where more stringent standards apply.

In March, 2010 IMO adopted the North American Emission Control Area, which calls for 1 percent fuel sulfur between 2010 and 2014, lowering to 0.1 percent fuel sulfur from 2015 onward. An 80 percent Tier 3 NOx reduction for new vessels will be required from 2016.

In August, 2011 the North American ECA goes into effect. The following August will see the start of enforcement. From August 2012 to January 2015, the 1 percent sulfur limit will apply except in California, where lower limits will be applicable. Low sulfur heavy fuel oil (LSHFO) will still be an option, except in California. After January, 2015, 0.1 percent will be the sulfur limit for ALL marine fuels.

Meeting Regulations
Since implementation of the CARB 24-mile diesel rule for oceangoing vessels went into effect the USCG has received an increase in the number of incidents regarding propulsion issues. There is a technical explanation for this, coupled with a solution, although the solution will increase operating costs.

Basically the vessel is operating on heavy fuel, which requires a considerable amount of heat to allow for proper injection properties. Although the changeover process from heavy fuel to CARB diesel may be described as simply pushing a button, the physics of such a process requires more attention to detail. Marine diesel engines are massive hunks of metal. While operating on heavy fuel the overall temperature of the engine, and especially the fuel injection system, is quite high considering the fuel injection temperatures hover around 248 degrees Fahrenheit. If, at 24 miles offshore the engineers simply injected room temperature CARB diesel into this hot, heavy diesel engine the potential explosion could be ferocious, or the injectors could seize, or any other number of catastrophic incidents could arise. Consequently, there is a procedure for changing over fuels. Generally, it takes between 45 minutes and 4 hours to completely change from heavy fuel to CARB diesel for a typical slow speed marine diesel engine. This process requires light fuel to gradually be mixed with heavy fuel in an appropriately termed mixing tank, or a mixing valve system, as the diesel engine temperature simultaneously drops.

The changeover process is when critical issues may occur; therefore, the process, in order to avoid incidents along the piloted transits of California waters, should be entirely completed prior to reaching the 24-mile point. Conversely, the changeover process should not be initiated until the vessel departs the 24-mile boundary as well. Herein lies the expense as the price of CARB diesel is well documented as being much higher than of heavy fuel with an estimated price differential of $200 - $250/metric ton premium for distillate fuels. Moreover, a vessel may utilize up to 5% more distillate fuel to gain the same power as when operating on heavy fuel. Some price comparisons suggest operating costs will increase $18 per container carried or $7 per passenger carried on a weekly Alaskan cruise.

Other areas to consider when operating on the lighter fuel include the effects on injection timing and attention required to cylinder oil Total Base Number (TBN), since utilizing the incorrect TBN cylinder oil for the fuel in operation could actually attack and wear the cylinder liners. Because the lighter fuel possesses fewer BTUs, one may also anticipate slightly less maneuvering power.

With the advent of the recent adoption of amendments to the MARPOL convention to formally establish a North American Emission Control Area, the marine diesel manufacturers are striving to insure that their products meet such standards.

Wärtsilä and ABB Turbo Systems developed a joint program, which includes two-stage turbocharging on large diesel engines coupled with advanced engine technology resulting in reduced fuel consumption and resultant engine emissions reduction. MAN B&W are working on a scrubber system to remove the sulfur from the exhaust. Other examples of innovations in emissions technology include EMD’s catalyst that fits in the manifold, thereby reducing the footprint of emission equipment. The GE Jenbacher biofuels engine uses biogas from anaerobic fermentation or organic waste from agriculture, foodstuff or feed industries, which can be a substitute for fossil fuels.

Current generation workboat engines are EPA Tier 2 compliant, with the EPA mandates being the driving force behind engine sales. The next generation engines will meet Tier 3 standards, largely with changes in engine architecture (injection and timing changes) while meeting Tier 4 standards will require some form of after treatment.

Clearly, changes are coming to marine fuels, and industry should be ready for them. Vessel Routing will need to be optimized to minimize distance traveled in the ECA, considering the area’s impacts on vessel schedule and the operating cost of any deviations. While there will be some impact on operating costs almost immediately, when 0.1% sulfur fuel is required, starting in 2015, per-voyage fuel cost impacts (into and out of the ECA) could be between $10,000 and $80,000 depending on the port, the route and the ship’s daily consumption.

The effect on annual fuel cost could reach $900,000 for ships on regular voyages into and out of the ECA, starting in 2015. For ships with multiple port calls in the ECA or in coastwise trade fuel cost impact will be higher.

To meet coastal fuel requirements, the “unifuel” ships of the recent past will have to become the dual fuel ships of the future.

Substantial increases in ECA-compliant fuel storage capacity will be needed on most ships, both existing and new, and changes will be needed to most ships’ fuel transfer, purifying and service systems to operate on the newly required low sulfur, low viscosity fuels.

At the end of the day, the rest of the US and Canadian ports will adopt the California model, and the air around the country’s ports will be that much cleaner.

Charlie Walther is a graduate of California Maritime Academy, who served as a Lieutenant, US Naval Reserve and in the US Coast Guard as Chief Engineer, followed by 20 years at Crowley Maritime in engineering and operations, the last five as Corporate Director of Engineering. He started Walther Engineering Services in 1989, and provides engineering and project management for ferries, tankers, tugs with emphasis on diesel propulsion. Some of Charlie’s past projects have included the US Navy X-Craft, where he was the senior tech rep for construction, test engineer and crew training, as well as the construction management of two new WETA ferries.

Mary Frances Culnane is a Chief Engineer who worked for Exxon Shipping Company, Chevron Shipping Company, Military Sealift Command (MSC) and the Bay Area Water Emergency Transportation Authority (WETA.) She currently is self-employed via Culnane Maritime Consulting. A 1980 graduate of the US Merchant Marine Academy, she has dedicated her life to maritime pursuits including shipping out, repairing/overhauling vessels, constructing new vessels, revitalizing classic wooden boats and collecting nautical antiquities.

Thursday, June 24, 2010

Major U.S. Ports to Spend $8.5 Billion On Development

As global containerized cargo traffic begins to slowly return after the global economic meltdown of 2008 and 2009, the nation's major ports are planning or under way with major infrastructure development to beat back competition, according to a new report by Chicago-based commercial real estate management firm Jones Lang LaSalle.
“According to the American Association of Port Authorities, in the last 50 years U.S. seaports have invested more than $34 billion in capital projects to enhance their facilities,” said John Carver, head of the Ports, Airports, and Global Infrastructure group at Jones Lang LaSalle. “By our estimates, the top 13 ports alone will pour nearly a quarter of that amount, roughly $8.5 billion into container terminal and harbor dredging projects in just the next five years. This ratio clearly demonstrates the major efforts being made to ensure that U.S. ports remain competitive and efficient in the fight for global market share.”

The Virginia Port Authority, the Port of Long Beach, and the Georgia Ports Authority topped the list of the nation's major port areas planning development. The VPA has plans to spend just under $2.5 billion, Long Beach has plans for $2.4 billion in development and the GPA plans to spend $1.2 billion at the Port of Savannah.

The report also found that the main driving force behind the increases in domestic spending on ports infrastructure remains the planned 2014 opening of the Panama Canal.

East Coast and Gulf ports are investing in anticipation of diversions from West Coast ports, said the report, while West Coast ports are looking at infrastructure investments as a means of retaining and attracting new customers following the opening of the expanded Panama Canal. The report concludes, however, that LA/LB will not suffer major diversions due to the opening of the Canal.

In addition, the report also introduced the new Jones Lang LaSalle Port Index, which ranked the nation's top 13 seaport hubs on their desirability for industrial development and investment. The ports were ranked on the basis of seven criteria: TEU volumes; TEU growth trends; labor costs; local industrial property vacancy rates; on-dock and near-dock rail availability; ratios of land value-to-lease rates, and, planned infrastructure investment. Several of the ports, such as Los Angeles and Long Beach, were combined into single entities for the rankings.

"Not surprisingly, Los Angeles/Long Beach tops the Index," said the report, "followed by New York/New Jersey and Savannah which have all performed above the national average and have committed to substantial infrastructure investment in recent years."

The LA/LB port area topped the index with a score of 91.4. New York-New Jersey came in second at 89.5, followed by Savannah, 86.3; Virginia, 85.8; Houston, 84.8; Seattle-Tacoma, 82.0; Jacksonville and Miami, tied at 79.8; Oakland, 78.0; Baltimore, 73.8; and Charleston, 73.0.

Gregoire Kicks Off Washington State Export Initiative

Washington state Gov. Christine Gregoire visited the Port of Seattle Tuesday to introduced her plans for a new state export initiative aimed at complimenting the Obama Administration's National Export Initiative intended to double domestic exports within five years.

“As one of the nation’s leading exporting states, Washington State has the ability to act as a testing ground as the United States Department of Commerce develops new programs to move the National Export Initiative forward,” Gregoire said. “Washington is the gateway to Asia, and those trading partners have not been hit as hard as other areas around the world. We need to continue to increase our efforts to reach out to those trading partners. When our companies have more opportunities to do business, they can expand and create more good jobs for our communities.”

The governor's five-year six-point plan includes:

  • Working as partners with the U.S. Department of Commerce to identify new opportunities for Washington businesses, serving as a pilot state for “field testing” new programs and tools the federal government develops as a part of the National Export Initiative;
  • Directing the Community Economic Revitalization Board (CERB) to dedicate $3 million in funding toward export counseling assistance to companies seeking to export for the first time;
  • Implementing a “Farm-to-Market Initiative” to reward ambitious and achievable proposals to enhance the competitiveness of the state's agricultural enterprises in the global marketplace.
  • Enhancing the state's standing as a destination for foreign students who invest in the Washington economy through tuition, lodging and entertainment and encourage Washington students to study abroad; and
  • Strengthening and expanding relationships with overseas trading partners;
  • Engaging with the federal government to ensure a fully-funded federal transportation re-authorization act that includes a national freight program aimed at infrastructure investments that enhance the state's ability to efficiently move goods.

Gov. Gregoire said she expects the state export initiative to increase the number of Washington state companies exporting by 30 percent over the next five years and help 5,000 Washington businesses achieve $600 million in new export sales.

“Increasing the export of American products and services to global markets can help revive the fortunes of U.S. companies, spur future economic growth and support jobs in the U.S.,” said U.S. Commerce Secretary Gary Locke. "I applaud Governor Gregoire and Washington State for partnering with us on the National Export Initiative, and look forward to working with the state."

With 8,000 Washington companies currently exporting, the state is the largest U.S. exporter on a per capita basis. Approximately four percent of Washington companies export, compared to a national average of one percent. One in three jobs in Washington state are tied to trade, either directly or indirectly.

“Taking the lead among all states with this early commitment to the National Export Initiative is good for Washington because it builds on our core strengths,” said Washington State Commerce Director Rogers Weed. “Expanding opportunities for our state’s current exporters will generate growth in the near term, while future sales and jobs will come from a new focus by the Small Business Development Centers and other key partners to find and help some of the 96 percent of other Washington companies reach international markets with their products and services.”