Industry Articles

I recently attended an event sponsored by California State University, Long Beach’s (CSULB) Center for Commercial Deployment of Transportation Technologies (CCDoTT). Titled Delivering the Goods, its goal was to re-think and reenvision the goods movement system in Southern California. Industry leaders, researchers and policy makers came together to discuss the relationship between economy, technology, the environment and the future of international trade in Greater Los Angeles.

Last week’s headlines brought more bad news. They included “Jobless Lose Lifeline,” a reference to the debate in Washington over who qualifies for extended unemployment benefits and for how long.  Will the benefits be extended nationwide? Will there be special consideration given to states with the highest unemployment rates?

The recent decision by the ocean carrier Maersk to launch a national chassis pool is a significant step in the evolution of intermodal goods movement in the U.S. Unlike in the rest of the world, where truckers usually own and maintain the chassis on which containers are transported, in this country, ocean carriers own this critical link in the supply chain.  This has allowed carriers to guarantee the integrity of the chassis and to make sure they are available when demand is greatest. With the U.S. model, however, truckers are required to make a number of non-revenue generating trips returning chassis to their owners, usually at the ports, before picking up or dropping off another container.  A chassis pool theoretically allows the driver to make a number of trips using the same piece of equipment as long as it involves a container owned by another member of the pool. 

Los Angeles has once again been the center of a media storm over the past few weeks, but for probably all the wrong reasons. The Michael Jackson story pushed the budget debate in Sacramento off the front page, although late-night sessions in the Assembly and the possibility of the State issuing IOUs does make for great drama.

Hoping that the worst of the economic crisis is over, many in the international trade community are starting to think about the future. But the truly global nature of the crisis and depth of the recession will also force trading partners to rethink their relationships. For those of us in Southern California, that means first and foremost China.

Earlier this month, the Long Beach City Council unanimously approved the Middle Harbor Project, a $750 million plan to modernize and expand two terminals at the port. The plan increases the size of the terminal complex, in the process allowing for a doubling in cargo volume. The project enjoyed broad-based support from a diverse group of stakeholders, including union members. The promise of thousands of new jobs resonated with a community uncertain about the future of the local economy. The port’s efforts to increase the use of on-dock rail, along with the project’s other environmental benefits, help make the case that the port is committed to growing greener.

Within the next few months, the Ports of Los Angeles and Long Beach are expected to release a Request for Qualifications (RFQ) in conjunction with the Alameda Corridor Transportation Authority. The RFQ identifies firms and academic institutions that can develop and demonstrate a financially self-sufficient, zero-emissions container-mover system for the region. Maglev technology has received the most attention, but the ports seem open to any technology that fulfills the Green Ports mission and helps implement the goals of the Clean Air Action Plan.  

This year marks the 10th anniversary of the State of the Trade and Transportation Industry Town Hall meeting, sponsored by California State University’s Center for International Trade and Transportation and the METRANS Transportation Center.  The Town Hall has been a unique partnership of the university and industry for a decade, and began at a time when goods movement was not on the radar screen for many, even in our region.

In a February 2007 Perspective colum titled Goods Movement and Good Neighbors, we addressed the land use conflicts between trade-related businesses and new business an d residential development in Long Beach.

I recently returned from Washington DC where I attended the annual meeting of the Transportation Research Board (TRB).  This is a gathering of some 11,000 researchers and practioners from around the world, all of whom are involved in one aspect of transportation or another.

A year ago at this time, I attempted to make my best predictions about the key issues which would be confronting the goods movement industry in 2008. This is my own year-end report card. In general, I got the issues right but the emphasis wrong. At the end of 2007, the ports of Los Angeles and Long Beach were looking at a down year in terms of imports. Exports however were a bright spot; and there was some hope that a good Christmas season would help the industry end the year on a positive note.

It is no secret that the economy is bad, consumer credit is tight, and consumer spending is off.  It's also no secret that one of the consequences of these trends is reduced activity at the ports of Los Angeles and Long Beach.  If people aren't making purchases, then there are fewer containers with fewer goods moving through our trade gateways.  Volumes were relatively flat in 2007 (and only because exports were up due to a weaker dollar).  By the end of this year, we should actually see a decline in the number of containers processed through the two ports relative to last year.

Any discussion of goods movement in Southern California starts with Los Angeles and Long Beach.  When we talk about global gateways, we talk first and foremost about the San Pedro Bay Ports and LAX.  They dominate the discussion given their size and scope of operations.  We shouldn't forget howver that global gateways are just that- portals that lead to a vast network of people, places and services that make the region a center for trade and logistics.  This includes manufacturing locations, warehouses, and distribution centers.

October 1 is looming large at the Ports of Los Angeles and Long Beach.  On that day, the two ports are determined to begin implementation of their Clean Trucks Program.  The first phase of the program denies access to the ports to older, dirtier trucks with model years before 1988.  A number of other key provisions of the plan are being tested in the courts, including the highly controversial decision by the Port of Los Angeles to deny access to independent owner operators.

The transportation indsutry is facing a workforce development crisis.  the aging baby boomer generation is affecting workforce trends in all industries; but the impact on the public sector, including transportation agencies, is even more pronounced. 

The path to a clean truck agreement goes through the Federal maritime Commission in Washington DC.  The FMC is an independent regulatory agency which administers the Shipping Act of 1984 and the Ocean Shipping Reform Act of 1998.

The last few months have seen some significant progress on the approval of new projects at the San Pedro Bay ports.  In early April, the Port of Los Angeles announced an agreement with a coalition of environmental and community groups which would allow for an expansion of the Trapac terminal.  The proposal includes new on- dock rail facilities, deeper berths, and improvements to Harry Bridges Boulevard.  It also allows for a tripling of container cargo throughput.  The Los Angeles Board of Harbor Commissioners certified the Final Environmental Impact Report in December of 2007; but the project was appealed by the coalition.  The April agreement however allows for a $50 million community benefits package to mitigate the environmental impacts of port- related projects like this expansion.  It also formalizes the review process for future projects for the groups involved in the appeal.  Trapac officials are happy if only because the agreement removes the uncertainty which had surrounded the terminal's future.  trapac's lease with Port expired in 2002 and the company has lost business in the intervening years to facilities with greater capacity and newer facilities.  it will now have a new 30- year lease.

Next week will see the start of World Trade Week activities for 2008.  When it comes to trade, there is so much to focus on here at the local level (the Ports' Clean Truck Program, the Trapac expansion, the proposed Southern California Intermodal Gateway), that it is easy to forget that much of what happens here is driven by events somewhere else along the global supply chain.  World Trade Week is a good reminder that trade occurs in a complex regulatory environment involving not only local, regional and state officials but national and international players as well.

In  the  run-up  to  the  February  5  Super  Tuesday  primary  in  California, both Hillary Clinton and Barak Obama went on the record in support of the Ports of LA  and Long Beach’s  clean  truck program,  including  the controversial proposal to grant employee status to truck drivers. 

If there is one thing that political pundits have learned from this election cycle, it is this: Things don’t always appear as they seem. Polls and predictions can be wrong. Politics is a roller coaster and sometimes you just have to ride it out.

With the holidays fast approaching, we will once again be reminded how much we rely upon freight-related businesses to literally “deliver the goods” during the season. The air quality and congestion problems associated with trade are so great because the demand for goods and services is so great, particularly at this time of year.

The controversy over the San Pedro Bay Ports’ Clean Truck Program is a reminder  that  so  many  of  our  goods  movement  solutions  are  locally driven, even if the problems are national (or even global) in scope. The decision to pursue a concession program for drayage drivers is one that will  affect  only  the  Ports  of LA  and Long Beach,  although  others  are
closely monitoring or, in the case of Oakland, developing their own approach.

Since  the  completion  of  the  interstate  highway  system,  transportation has  increasingly  become  a  local matter. Without  a  program  of  truly national  significance  like  the  highway  system,  which  was  designed with  both  interstate  commerce  and  national  defense  in  mind,  the  federal government has been  content  to offer policy direction  and  some  funding  to
state and local governments.

We’re  in  the midst of  the peak  season  at  the ports of LA  and Long Beach, but not all the activity has been on the docks. Some of it has been  around  the  negotiating  table.  Last  month,  port  observers anxiously awaited word on a contract agreement between terminal operators  and  marine  clerks.