LA’s Seroka urges calm on ILWU/PMA talks

Eugene Seroka, executive director Port of Los Angeles, remains hopeful that the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) will resolve their differences and avoid a labor disruption to U.S. West Coast ports.

He also assured U.S. East and Gulf Coast ports that, after a temporary decline, Los Angeles would resume its No. 1 port position: “I don’t see that changing anytime soon.”

Seroka was responding to questions from AJOT posed during a presentation before the Propeller Club of Los Angeles and Long Beach on September 28th via Zoom.

In response to a question about press reports warning of the possibility of a West Coast dockworkers strike, Seroka appealed for calm and avoiding paying attention to unsubstantiatedallegations:

“It gets a little more complex in contract negotiations when people start speaking out of school. I don’t like reading articles where it says ‘unnamed sources’ so I let the experts continue to work on this. While those folks are at the bargaining table up in San Francisco, the rest of us are going to move this cargo.”

Productivity

At the Port of Los Angeles, the average exchange of containers that are unloaded and loaded onto a container ship is still “the best in the business:”

“It's 12,000 container units per ship and we have moved on average more than 200,000 container units off the docks and into the American economy for eight straight months. Since January, when we had 109 ships backed up and waiting to unload, we have brought them down to eight ships as of this morning. Truck dwell times are 3.6 days which is near where we were before the import surge. I like where we’re at right now. “

The Port of Los Angeles Leadership Will Continue

Seroka is not worried about predictions that there has been a permanent shift of cargoes away from the Ports of Los Angeles and Long Beach to U.S. East and Gulf Coast ports:

“One month does not make a trend so let those guys have their parades and parties. We have been in the pole position as thenumber one port in America for twenty-two consecutive years. I don’t see that changing anytime soon. There will be movement on a month-to-month basis. In August we did see a drop in our cargo of about 15% for three main reasons. And one of them is that retailers and others brought in cargo much earlier thannormal … thinking that they needed to pad their transits and their supply chains just a bit. We also saw about 10 to 12% of those boxes go to the Eastern and Gulf Coast ports. Folks made those decisions early on because they were tired of congestion and backups. And some hedged on the West Coast labor talks. Thirdly, we had a local issue here at one of our terminals that caused some of our ships to go … into Long Beach … (they) got that fixed. That’s also temporary. So here we are crying in our beer, and we still did 805,000 TEUs!

This high roll of imports wasn’t going to last. The inflation numbers on the wholesale and producer sides remain elevated because we keep buying. Even in the face of the 8.3% inflation that we are facing, we are hungry as Americans to go out and do things and see each other. And you got a job market that looks very different from those inflation numbers. You have the lowest unemployment rate since 1969 and you still have 10.4 million jobs open nationwide.”

An Opportunity to Increase U.S. Exports

Seroka sees the potential for exports to rise:

“I think where we have a real opportunity is to bolster U.S. exports. For the last four years, because of trade policy, the strength of the U.S. dollar and the more recent phenomenon with a focus on imports and hustling these empty containers back to Asia… (we are now seeing) … imports starting to taper.

I think all of us would be pretty sharp if we went back and renewed our interest in that export market, especially with what’s happening with the atrocities in Ukraine and America being counted on more and more to supply some of that of which comes from our breadbasket.

We have been interacting with the International Dairy Foods Association (IDFA). We have doubled dairy exports through the Port of Los Angeles since January. This has been in collaboration with the ocean carrier CMA-CGM. They have increased exports by 50% from the United States through this year alone. We also work with the almond growers and the Almond Alliance, the walnut handlers, the rice coalition, and the wine groups and others. Here in California alone, our idea was simple. We had 500,000 container units that were being emptied, repositioned back to Asia every month.

We argued that we should offer these boxes for export to people who could really turn the boxes fast, load up, and get back to the Port. And we’re starting to see that pick-up steam. We’ve got to do a lot more. We’ve got to help out with the specialty green folks, the wheat people and so many others in the Midwest and work very closely with the Agriculture Transportation Coalition(AGTC) and their executive director, Peter Friedmann who is a friend to a lot of us. So, there’s a real opportunity here. It’s been the age-old dilemma for our industry. How do you create those great round trips in triangulated economics of containers, truck and rail to make sure that we can spin these exports back and keep the supply chain velocity high? Much more work to do but I like where we stand at right now.”

Containers Provide Lower Costs & Improved Delivery Times for Some Bulk Carried Shipments

Seroka said there is a shift of agricultural exports moving from ocean bulk carriers to container ships: “(This) begins with the identity preserve products which don’t like to see a lot of motion or a lot of transloading or rehandling because they bruise. Secondly, looking at direct service from the United States main ports to receiving customers located in Asia, it is key to avoid those relay marks. A … study we did showed that we had some 33 to 34 different services out of here and along the West Coast that go directly to those customer bases in the Asia-Pacific trade. So, a lot of this has to do with the convenience of those containers off loaded from the import side and brought back through the great rail service that we offer in this country. It’s not always cheaper per pound or per kilo going by (bulk carrier). Our container guys and ladies have done a pretty good job of being competitive and while it may not always be dollar for dollar, those other variables I just mentioned when these guys and ladies are evaluating what kind of service to use … (find) time to be one of those advantages going by container. Time would be an advantage going by container if you factor the cycle of money and interest rates going up. Then the quicker you get the product to your customer, the better you’re going to be monetarily so absolutely saving time is an advantage.

Rail Dwell Time Is Improving

Seroka said that a published report that rail dwell times reached 13.5 days this summer are not true, the delay time of containers being loaded on to rail at the Port is actually half that number:

“We have been monitoring rail dwell times for some time through our Port Optimizer with direct data feeds from just about everyone in the supply chain. As of this morning in Los Angeles we stand at 7.2 days rail dwell time and that has been slowly declining over the last 34 weeks. We reached a peak of 13.4 days dwell time last year… and in normal times that dwell time is about 2 days. With the benefit of history, it is fairly explainable today. Our inland rail terminals look a lot like our port terminals did last year. They’re filled to the gills with containers. The Western railroads have shared with me that they are stacking containers, as opposed to running purely wheeled operations, because of this deluge of cargo. … And it’s been a challenge to keep up with that velocity because if one node slows down then the rest of it backs up to the Port. If we can get cargo off those facilities… and I’m talking to people who are in this space such as …. West Memphis, Memphis, and even Kansas City… they’re pretty full. But we’ve got to get that cargo off so we can build the next train and bring it in. I can assure you that this problem has the attention of people at the highest levels in Washington and Sacramento. On the rail side, we have seen a decline of 25 to 30% of idling rail cargo at the Port of Los Angeles and that segment that we look most closely at, the segment that has been idle for 9 days, is down 35% for one carrier and 25% for another. We’re starting to see that momentum pick up. And we are seeing more of that cargo getting into the interior.

Improved Data Projection Through Port of Los Angeles ‘Optimizer’

To keep cargo flowing efficiently through the Port of Los Angeles, the Port and Wabtec Corporation in 2017 launched the Port Optimizer, a first of its kind information portal designed to digitize maritime shipping data for cargo owners and supply chain stakeholders through secure, channeled access:

“We go back to the early days of COVID and then as the import surge started to take shape… we have had to anticipate better and figure things out quicker. Last October when people were screaming from the mountain top that they couldn’t get cargo out of the Port of LA… we now see cargo coming in 40 days before it lands. We are able to segment cargoes better… but (what) we have done is that if you don’t need your cargo now, we’re just going to separate it out. Manufacturing parts and components make up a bigger share of imports than finished retail goods … and by enlarge those people aren’t ordering just in case, they are ordering just in time to get those products and components to the factory floor. We are able to dissect that through the data as well, but there is much more to learn. We have better… anticipatory skills thacn we had a year ago.

Federal Maritime Commissioner Benzel’s Proposed Data Sharing Initiative

Seroka supports the proposal by Federal Maritime Commissioner Benzel for supply chain performance data sharing through his proposed Maritime Transportation Data Initiative:

“It is absolutely an idea whose time has come. There are information sharing systems in Germany, Belgium and Singapore just to name a few that have been around for decades and support information sharing systems to allow people to start seeing what the traffic is going to look like and how to prepare land machinery and skilled labor to handle it. We don’t. We’ve been fearful that the data would be sold and shared with competitors and God Forbid, if a rising tide lifts all boats, there are worries that ‘my company might lose the competitive advantage to companies that don’t have the same access I do.’

I really credit Commissioner Benzel. I met with him at IANA(Intermodal Association of North America Expo) a couple of weeks ago, and he is proposing to put accountability into the marketplace. His call to action is simply: ‘communicate and share this data so we can get better every day.’”

California Clean Truck Mandates on Harbor Trucking

The new California Air Resources Board rule is going to eliminate pre-2010 trucks and older and will impact somewhere around 25% of the trucks that serve the Southern California ports:

“You have about 20,000 trucks registered… the percentage of older trucks has been depleting over time. But these regulations are going to impact somebody and that somebody is going to be putting dinner on the table at night. So, we have got to find a way to get these folks in the older trucks into the more modern trucks that are cleaner. It continues to be a very polarizing discussion. We’ve got to accelerate the technology and make it commercially affordable. About 45% of the truckers in the Southern California ports are classified as small businesses with five rigs or less. A diesel truck that they buy on the tertiary market costs about $50,000 dollars. A Low NOx (i.e., for nitric oxide (NO) and nitrogen dioxide (NO 2)) truck, which has been a loser all along, in a zeal to get to zero emissions, costs about $225,000. Battery electric trucks can be anywhere between $350,000 to 450,000 dollars. The hydrogen fuel cell truck which has a duty cycle and better torque and can be filled up in 20 minutes is a lot more than that and is in its prototype status… even with a grant that we give to a trucker they still have to pay income tax on that dollar value. Even with the grant they have to pay the federal excise tax on the full sticker price of that rig. So,there’s no way we’d get these guys and ladies whole. We’ve got to get into the business of accelerating the technology and making it available to all.

Clean Air Action Plan: Zero Emissions for Cargo Handling Equipment by 2030

While the Ports of Los Angeles and Long Beach may be able to meet zero emission goals for trucks and cargo handling equipment, a national regulatory framework is needed to apply to all ports:

“The Ports of Los Angeles and Long Beach ‘Clean Air Action Plan’ mandates that all cargo handling equipment should be zero emission by 2030. To achieve that goal, we’ve got to hustle. We’re testing right now about 200 pieces of equipment whether they be on a container yard or with heavy duty trucks. We’ve got to get these national and global brands into the game. The daysof building something on top of a garage with a student that was at the university are over. We’re talking about a real leap into the future that cannot be done without the proper financial framework and the knowledge of engineers and scientists to take us there. There is no broad stringent framework for the regulation of ports. Why not have a nationwide standard for emissions? Without the national framework, ports outside of California will say: ‘Watch what LA and Long Beach is going to do, watch what Oakland is going to do. Bring your older trucks to us.’ Now in the end that’s not going to do anything for climate change, sea level rise, or impacted communities in underservedneighborhoods. We’ve got to find a way to do this on a national level that’s better.

Los Angeles-Shanghai Green Ship Corridor

Seroka said he is very optimistic about a green shipping collaboration between the Port of Los Angeles and the Port of Shanghai:

“When Los Angeles Major Eric Garcetti was Chair of the C40 group of cities, we put together a coalition of experts to create a green shipping corridor with the Shanghai International Port Group, Shanghai Municipal Port, Port of Los Angeles, and shipping lines Maersk, MSC, CMA, and ONE. And more carriers are being added every day. The idea is to deliver one container in Asia from the Shanghai metropolitan area and deliver it to its final destination in a zero-emission green way. That means all of us have got to get to that point…

While China and the U.S. cannot agree on too much today, we sure are doing good work in our space of the supply chain. “