Despite the recent declines in container volumes at the Ports of Long Beach and Los Angeles, Mario Cordero, executive director, Port of Long Beach says he remains “optimistic” about the Port’s future.
In an interview with AJOT, Cordero explained: “We are in the news because we are the most important gateway in the nation. The loss of import volume this year should be no surprise to anyone. This was forecasted earlier in the year. I said earlier this year that in the second half of 2022 we were going to see some semblance of normalization and that is what has happened. In terms of the loss of volume, I’m not too concerned about that. We’ve been here before … I think history has shown that this gateway is going to be competitive again and again. Needless to say, over the years there has been a percentile loss of discretionary cargo.”
Cordero was asked about the delay in reaching a contract covering dockworkers at U.S. West Coast ports by the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). Cordero said he was not worried about the outcome: “There will be a resolution at some point. But let’s keep in mind that 2014 [the last contract negotiation] was a challenging year for the San Pedro Bay complex. We had similar commentary that the cargo was never going to come back. And what happened since? This gateway is going to continue to be a significant gateway. Both ports have had record years in the last couple of years. When you see that the Ports of Long Beach and Los Angeles moved 20 million TEUs in 2021, I think again, we may have a bump in the road but going forward despite this, I am optimistic and as has been referenced, there will be a resolution to the ILWU-PMA negotiations.”
Trade With China
Recent data has indicated that imports from China have declined, but that volume has been compensated for from other Asian markets. Cordero was asked about his expectation for trade with China: “We do have an economic slowdown. Trade between the United States and China has diminished. This has affected all gateways. Just this week, we have read that the conversations between President Biden and China’s President Xi have been very positive in addressing some of the trade issues, such as the tariff obstacles that were put in place by the previous Administration. So, nothing is going to change significantly. Going forward in 2023, you’re not going to have the growth that you’ve had in the last two years. This was an anomaly because of the surge related to the pandemic that we experienced.”
Criticisms Of Zero Emission Goals
Cordero was asked about questions raised by the Pacific Merchant Shipping Association (PMSA) and other stakeholders who worry that zero-emission goals for cargo handling equipment and harbor trucks place an unfair expectation. Cordero has expressed confidence that the Ports of Los Angeles and Long Beach’s Clean Air Action Plan (CAAP) goals for cargo handling equipment and trucks will be met in 2030 and 2035 respectively: “Yes I am confident that the goals will be met. Let’s remember that the Ports of Long Beach and Los Angeles were the first to set zero-emission goals.
In the State of California, we are known as environmental stewards in the issue of climate change. When I say ‘we’ I mean everyone in California, including the port sector … I think there is a lot of expectations that the zero-emission technology is going to be ready … before 2030 as stated for cargo handling equipment and before 2035 for harbor trucks.”
On the other hand, Cordero does not want companies to be penalized if the zero-emission technology is not available: “Unfortunately, there is the expectation that the technology is there and ready to go and the fact of the matter is that it is not … According to CARB’s goals (California Air Resources Board) they have a goal of 570 zero-emission trucks by 2025. And of these 570 trucks, 510 trucks state-wide … will be electric. Possibly, as a State we might be able to get there. But, as I said, it is not going to move fast enough to have any expectation that we are going to have 20,000 zero-emission trucks in the San Pedro Bay complex anytime soon.
Still, Cordero remains hopeful: “Will we have a significant zero-emission option before 2035 as it relates to trucks? I think we will.”
Agriculture Transportation Coalition
The Agriculture Transportation Coalition’s (AGTC) members continue to be very vocal about problems that they are having related to detention, demurrage, and, recently, obtaining space on ocean carriers for their exports abroad. AGTC supported the new Ocean Shipping Reform Act of 2022 (OSRA 2022) that gives the Federal Maritime Commission (FMC) greater authority over areas of concern to importers and exporters, to take a more active role in these issues.
Cordero sees progress in providing exporters with better service from the ocean carriers: “I believe the carriers (have been) very cognizant of these issues for a few years. The White House appointed a Port Envoy to the San Pedro Bay complex… As a result, I think that the work of the Port Envoys (John Porcari and retired General Stephen Lyons) has helped bring the carriers to the table to discuss these issues. Reducing the costs including detention costs and demurrage costs requires a collaborative approach from the carriers, terminals, and Port authorities. I have been very supportive of the Agriculture Transportation Coalition for many years. When Congressman Garamendi proposed the bill to amend the Ocean Shipping Reform Act, I think I was the first executive director of a Port authority to support that. It was a bipartisan movement to ultimately have that bill passed by Congress and signed by the President. I think that signifies how important that issue is. I think we will continue to see progress in 2023 and enter into more conversations about this.”
Challenges With UP & BNSF Rail Service
In 2021 and 2022, there were considerable dwell time delays related to congestion encountered by the Class I railroads serving the Ports of Long Beach and Los Angeles: the Union Pacific (UP) and Burlington Northern Santa Fe (BNSF) railroads. The result was delayed moving of containers off the marine terminals and onto railcars for transport to inland and Midwest destinations. In some cases, the dwell times in 2022 were as high as 13 days.
On November 17th, the Pacific Merchant Shipping Association (PMSA) reported that the rail delays at the two ports continue: “Containers leaving on the rail, however, remains very high. Through October, rail-bound cargo remained on terminals for an average of 14.2 days, down from 15.5 days the month before. 63.2% of the rail-bound cargo remained on terminals for five days, and while still high, it is lower than the 66.3% the month before.”
Cordero was asked about his evaluation of the rail service provided by Union Pacific and Burlington Northern Santa Fe railroads: “I have been very critical of the Class 1 railroads (UP and BNSF) during this pandemic crisis. More specifically because of the lack of railcars. For being the largest container gateway in the nation, to me, it’s just unacceptable that we have continued to have equipment issues, whether it’s chassis or in this case railcars. This has been an ongoing issue. We need to ask the question: “Does the nation’s largest port complex in terms of the availability of railcars depend on what happens in Chicago? It shouldn’t. “
Cordero says that a new Barstow International Gateway proposed by BNSF will be a “game changer” for rail service at the two Southern California ports: “The good news is that the BNSF on October 1st, announced a state-of-the-art intermodal facility. The Barstow International Gateway, an intermodal rail facility will be built on a 4,500-acre site on the west side of Barstow, California.”
The facility will consist of a railyard, intermodal facility, and warehouses for transloading freight from international containers to domestic containers. The facility will allow the direct transfer of containers from ships at the Ports of Long Beach and Los Angeles to trains for transport through the Alameda Corridor onto the BNSF mainline up to Barstow: “That is a game changer. Several groups have been promoting inland port rail facilities but the significance of this one is that it is being brought forth by a Class One railroad. That’s been the missing link about why we have not improved inland port rail connectivity.”
Cordero said that he was “confident that the combination of the BNSF endeavor and the Port of Long Beach (Pier B) rail enhancement facility (will) both (be) moving on a path of completion at the same time.”
The result is “when you look at the competitiveness of the San Pedro Bay Port complex and see the completion of these projects in 2030, that’s going to be a game changer.”
He added: “We may not see enhancements of rail capabilities in 2023 but certainly in the first stage of the Pier B enhancement in 2025. So, in the next 8 years, you’re going to see significant progress in the movement of intermodal freight here.”
Cordero noted that intermodal moves at the Port had dropped significantly during the pandemic: “At one point, IPI Cargo (Interior Point Intermodal cargo i.e., inbound freight that moves from a port to a shipper’s door via a domestic or international intermodal movement) was down to 21% and there were a lot of reasons for this…. We have seen a substantial improvement since then and I want to thank the Union Pacific and Burlington Northern Santa Fe railroads for their efforts to make this happen. In 2023, I expect to see a normalization of supply chain issues in Southern California and equipment issues mitigated, but a lot of work still needs to be done with regard to railcar availability.”
Chassis Shortages
Cordero is especially concerned about chassis availability at the Port: “The other issue is chassis and I’m going to be speaking a lot louder about that in 2023. This is another equipment (problem) that should not repeat itself. I am not confident that the chassis shortage that we saw this year and last year is behind us. At the top of the list is the lack of interoperability of the chassis. So, we need to fix this.”
He said the chassis “pools were a great step in 2014. But it’s not the answer. The next step has to be a neutral manager model … That’s the next step that we need to focus on.”
On a broader level, Cordero said: “I hope that as (Port Envoy) General Lyons stated, as we move forward to the normalization of the supply chain we don’t say ‘everything is okay now’ and we don’t discuss the issues that we need to and mitigate potential issues that we may face in the future that has caused this bottleneck congestion.”
Cordero concluded by pointing out that ports are finally getting the respect they deserve: “We had (California) Governor Newsom come here to talk about the supply chain last November. For me that was huge, to have a Governor come to the Port of Long Beach and talk about the supply chain. So not only did the Governor talk about the supply chain, (but) his budget includes funding for ports: This the golden age of ports.”
Watch the complete interview below:
