California’s “big three” post big numbers in first quarter of 2021
Port of Los Angeles: What a Difference a Year Makes
What a difference a year makes. If anybody knows that, it is the Port of Los Angeles Executive Director Gene Seroka. In his February media briefing Seroka remarked, “One year ago global trade slowed to a crawl as the COVID-19 pandemic first hit China and then spread worldwide…Today, we are in the seventh month of an unparalleled import surge, driven by unprecedented demands by American consumers.”
And, the numbers tell the story. In February the Port of Los Angeles handled a staggering 799,315 TEUs, a 47% increase over COVID stricken February 2020 – the best February in the Port’s history and seventh consecutive month of year-over-year increases.
Of course, the tsunami like surge of imports has come at a price.
Container ships have been riding anchor awaiting berths like the LA freeway at rush hour.
At this writing, 28 containerships are at anchor awaiting berths in LA and the neighboring San Pedro port of Long Beach. The good news is this is a significant decrease over the 40 ships that were piled up in early February but still bad news for consumers awaiting their goods.
The tale in the TEU tally illustrates just how strong the inbound side is running. Loaded imports at 412,884 are up nearly 53% over 2020. The other side of the container import surge is the difficulty in getting containers repositioned back to sourcing sites – largely in Asia – for reload. The number of empties leaving LA is amazing. In February alone the Port handled 285,223 TEUs, an over 104% (editor’s italics) increase compared to 2020. Exports, on the other hand, are down. Loaded exports are off nearly 25%, compared to 2020.
At the moment clearing out the congestion is a priority. Seroka in his February briefing said the backlog of cargo is so intense that it will take months to clear out. One result of this effort, Seroka said, is that CMA-CGM has begun a new service from Asia with Oakland as the first port of call instead of Los Angeles or Long Beach.
The diversions are designed to help relieve the congestion burden on the two Southern California ports and reduce the delays of import shipments when a ship is due to arrive in Oakland and is delayed by congestion at the ports of Los Angeles and Long Beach.
Seroka said he does not believe the diversions will be permanent.
Seroka also noted that one third of cargoes entering the Port are destined for warehouses in the Inland Empire, located in Riverside and San Bernardino Counties, east of Los Angeles County. He expressed the hope that more night time truck deliveries and offers of additional warehouse space will help ease the crush of cargo flows.
To that end, on February 1st the Port of LA launched a new incentive program to move trucks faster and more efficiently through its terminals. The Port’s Truck Turn-Time and Dual-Transaction Incentive Programs offer terminal operators two ways to earn financial rewards: one for shortening the time it takes to process trucks dropping off and/or picking up cargo, and the other for trucks handling both transactions in the same trip. “These best practices are needed now more than ever to relieve pressure on the supply chain due to the ongoing surge,” Seroka said of the program.
One of the biggest programs underway at the San Pedro Bay ports is the Clean Air Action Plan (CAAP) zero emission goals. The CAAP calls for zero emission container handling equipment by 2030 and zero emission trucks by 2035. Seroka said these were “ambitious goals” established by the Mayors of Los Angeles and Long Beach.
Seroka said the effort to achieve the zero emission goals required “a public private partnership” and the ability to drive down the cost of electrically powered equipment and trucks.
To do so, the Ports of Los Angeles and Long Beach had sponsored a number of demonstration programs with cargo-handling equipment and trucks in order to help terminal operators and truckers embrace zero emission technologies. Seroka said there were also proposals to eliminate sales tax charges on zero emission equipment and trucks to make them more affordable.
Port of Long Beach: Big Year Taking Shape
Executive Director Mario Cordero, Port of Long Beach, noted in his February 4th State-of-the-Port address that in 2020 the Port handled over 8.1 million TEUs – a new record. And so far through the first quarter of 2021, it looks like the record will be broken again, as imports continue to surge through the Port’s facilities. The numbers for Long Beach, like neighboring San Pedro Bay, Port of Los Angeles, are extraordinary. In February throughput total topped 770,000 TEUs – the first February for the Port to eclipse 700,000 TEUs. The Port is riding a wave of inbound freight – some of it representing pent up demand from consumers tired of COVID related buys and on a spring buying spree while another portion represents the shift to e-commerce. The Port numbers for “Loaded Inbound” for February hit 373,756 TEUs, up a remarkable 50% over February 2020. Like LA, outbound empties reflect the ocean container carriers near desperation in repositioning boxes back to Asia – with February “Empties Outbound” at 265,431 TEUs up a startling 71%.
Also like the Port of LA, congestion has been a major problem but many of the Port’s major infrastructure projects have either just been completed or are nearing completion. For example, the replacement of the Gerald Desmond Bridge was opened in October 2020 [see AJOT Oct. 2020 Grand Opening]. The newly opened Port of Long Beach Bridge is designed to eliminate bottlenecks and reduce delays of truck traffic between the Ports of Long Beach and Los Angeles and to Southern California freeways. The new bridge, which cost nearly $1.5 billion, increases the number of lanes in each direction to 3 compared to the 2 lanes on the old Gerald Desmond Bridge. The new bridge adds an emergency lane in each direction.
Another major port project is the Long Beach Container Terminal (LBCT). The LBCT is part of the $1.5 billion Middle Harbor Redevelopment Project which is combining two aging box terminals into one highly automated facility. LBCT is in its final stage of construction before becoming fully operational sometime in 2022. LBCT operates electronically with zero emissions. At total capacity, the terminal can handle 3.5 million TEUs.
Tackling emissions is a Port [and State] mandate and in March SSA Marine began operating the first of nine electric container yard cranes at the Port of Long Beach’s Pier J, marking a significant milestone in a goal to transition to zero emissions terminal equipment by 2030.
The demonstration of the electric rubber tired gantry cranes is part of the Zero-Emissions Terminal Equipment Transition Project, which is funded in large part by a $9.7 million California Energy Commission grant. The Port, the CEC and Southern California Edison are partnering on the project to bring 25 vehicles that are zero- or near-zero emissions to three of the Port’s marine terminals and logistics truck provider Total Transportation Services Inc. to test their performance in a real-world setting.
“Imagine a port where a ship slows down on approach to reduce emissions, plugs into the electrical grid at berth instead of burning fuel to run vital systems, and is worked by zero-emissions cranes, yard vehicles and trucks,” said Cordero. “That’s our reality in Long Beach, and the goals of our tests and demonstrations are to eventually make it possible to do everywhere.”
Port of Oakland: Port of Balance
It is sometimes forgotten that the Port of Oakland is a different type of port than the southern Californian ports of Los Angeles or Long Beach. It’s not just that the Port is located nearly 400 miles north of the San Pedro ports – 5 hours and 40 minutes by vehicle on a mythic I-5 interstate often jammed with traffic moving only slightly faster than the State’s tectonic plates. And not only because of its size – Port of Los Angeles handles over 9 million TEUs and the Port of Long Beach over 8 million TEUs annually – whereas the Port of Oakland’s throughput is around 2.4 million TEUs a year. But the real difference for ocean container carriers is the balance. While containerized freight at LA and Long Beach are heavily weighted on the inbound leg – the Port of Oakland’s throughput is relatively balanced. For instance, back in 2018 before the pandemic skewered the global box traffic, the Port posted 965,000 TEUs full inbound to 897,804 TEUs full outbound. Given the high volume of Asian imports, notching nearly 900,000 TEUs of exports is special. The exports are largely drawn from Northern California and include a considerable amount of agricultural goods and other heavy commodities, whereas most of the inbound freight is high value, low weight consumer goods – which typifies U.S. ocean trade – freight cubing-out on the high value inbound leg and weighing-out on the export side.
Nonetheless, the relative balance is important for Californian exporters whose main markets are in Asia and ocean carriers whose goal of repositioning boxes back to Asia – ideally with paying freight – is all best served by the balance of the Port of Oakland.
Partially, because of this import/export dynamic, the import surge that has overwhelmed the San Pedro ports has not had the same impact on numbers in the Port of Oakland, which through February was marginally off pace (-0.5%) from 2020 posting 389,650 TEUs. Although February’s total of more than 80,000 import TEUs was a record.
Because of the congestion in the San Pedro ports, it was an interesting development that CMA-CGM began a new service from Asia with Oakland as the first port of call instead of Los Angeles or Long Beach. While the Port of Los Angeles’ Seroka believes that the “diversion” is short term, it does illustrate the value of the Port.
And the Port of Oakland is working to capitalize on its position. Recently, the Port of Oakland recently finished erecting three new gantry cranes at Oakland International Container Terminal (OICT). Stevedoring Services of America (SSA) operates OICT and ordered the cranes from Shanghai Zhenhua Heavy Industries Company Limited (ZPMC). The cranes are the tallest in North America at a 174 feet from the deck and will improve the Port’s efficiency and competitive position.
But the largest challenge to the Port of Oakland, will likely not come from other West Coast ports but rather from the Oakland A’s baseball team. The Oakland A’s have proposed to turn Howard Terminal into a ballpark and condominium complex. The stadium would hold around 35,000, with up to 1.77 million sg/ft of commercial development, a 400 room hotel and performance venue with a capacity of 3,500 and 3,000 residential condo units.
The proposal has been widely attacked by both waterfront labor and management, shippers and local residents as being detrimental to the Port and for safety concerns. Nevertheless a showdown on the future location is shaping up over the location of the new stadium.
