May 5, 2004 - From the March, 2003 issue

Port Of LA Executive Director Larry Keller Opines On Port Development & Environmental Concerns

Along with the LADWP, the Port of Los Angeles recently introduced the Alternative Maritime Program (AMP), which will have ships plug into cleaner land-side power once they reach the harbor. "Cold ironing," as it is referred to in the industry, is one of the innovative ways the Port is addressing environmental concerns and remaining competitive. MIR is pleased to present this interview with Larry Keller, Executive Director of the Port of L.A., in which he talks about the significant issues facing the port, including terminal development, pollution mitigation, and port security.

Larry Keller

Last week, the city, the port, and China Shipping reached a settlement on the construction of a container storage facility. Why don't you talk about the settlement itself? How does the agreement address the relationship between the port and the neighboring community?

To begin with, let's talk about how the deal affects our business relationship with China Shipping. We were supposed to have opened that terminal in November, and the fact is that now we will open it in the earlier stages of April. However, we have preserved a very large and growing customer-one of the best customers any port would want. In addition, we have preserved about 300 jobs that will be associated with that terminal on any given shift. That is enormously important for the neighborhood and it is enormously important to keep the trade business growing in Southern California. With the state of the economy being what it is, this is a terrific statement to make.

With regard to the community, this creates a significant opportunity. If the community at large has concerns about the port and what its impacts might be, this deal essentially has codified the "side letter," which included a number of the mitigations, including "cold ironing" and alternative fuel use. This allows a new relationship to begin, not with the whole community, but with the segment of the community that was the most concerned. We have a real opportunity to change the model within which we do business.

You mentioned cold ironing in your response. In this issue of MIR, we are featuring an interview with David Wiggs of LADWP in which he discussed the opportunities presented by the Alternative Maritime Power program. Perhaps you can discuss the status of the program? How many shippers have committed to cold ironing? What have been the key negotiating points coming from the shippers to make this work in a business sense?

Currently, we have seven MOUs with the shipping companies. When the mayor's office talked to us about finding a way to expand our business without increasing our emissions, one of the first plans we put forward was the use of low-sulfur fuel, which has the effect of cleaning fine particles from the air by not producing them. When we presented this to our clients, a number of them responded with interest in looking at the feasibility of cold ironing.

Twelve years ago, a battle was fought here over cold ironing. We took it rather seriously that they were willing to look at this. Because we do have sufficient power in the basin, the mayor's office convened a meeting with us and DWP to explore this opportunity. Rather than exporting the power, we can use it beneficially for the harbor, the DWP, and the environment. The MOUs we signed agreed to study the feasibility of doing it. Globally, this is something that has been done on an extremely limited basis. The only place in the U.S. where this is practiced is in Juneau, Alaska, where some of the cruise ships plug into Alaska Light and Power.

We held a workshop last month with all of the lines that had signed up-they sent their technical experts in from all over the world to begin studying this. Very frankly, it was encouraging. We know now that it is possible. The issue is the variety of power generation standards of the various vessels. But, at least we now know what the universe looks like.

We have been working that plan since last year. In terms of making a mandatory cold ironing site at China Shipping, it allows us to look at the true feasibility with one of our best clients, one that is willing to be progressive, and one that is building ships that could be adapted in the shipyards for this practice.

Assemblyman Lowenthal put forward legislation that would fine terminals every time a truck idles for more than 30 minutes while waiting to load cargo at the port. How will this legislation impact landside operations at the port? Does the port have a position on the legislation?

We went to Assemblyman Lowenthal and discussed our concerns with him. We did that in concert with our customers and other associations, including the Port of Long Beach and the Port of Oakland. There was a real concern about how this will work. In the first writing of the legislation, there really was no exception-it went from a 15-minute idling period to a 30-minute idling period. The next point was that it allowed those terminals that stayed open on a multi-shift basis an exemption, because it was a demonstration of their willingness to spread the traffic out over the day. There was another exemption that was allowed for those who would use a terminal scheduling system, where the trucking lines could call for an appointment. While we still have concerns, particularly as we get into high season and the volumes begin to pick up, there are some realistic provisions written into the legislation for terminals to help themselves avoid fines. It's a far more realistic and workable piece of legislation than it was previously.

What else can the port do to make more efficient the loading of cargo onto trucks and to mitigate the significant air and noise pollution?

One of the options we prefer is not having the trucks come at all. I say that because half of the cargo leaves the basin and goes beyond the Rockies. To that end, one of the primary investments is in on-dock rail. Rather than have trucks pick up that 50% of the cargo load, we're loading as much of that cargo as we can on-dock and making it unnecessary for the trucks to come and get it. Trains are more efficient at moving cargo than trucks. For every train that we load, we remove a significant number of truck trips from the road.

We opened our first on-dock facility at American President Line. In their first year of operation, they eliminated an estimated 375,000 truck trips. Since then, we have opened four more railyards.


The other option to reduce negative impacts from trucks is to spread them out over at least two shifts during the day. Previously, there was a criticism that the ports weren't open long enough and the terminals weren't willing to be open. However, during the day, some of our terminals are doing about 4,000 gate-moves. When they open at night, they're getting about 150. The reason is not that they are not advertising enough or that truckers don't want to drive, but rather the fact that the receiving points-the distribution houses and secure yards-close at 6 pm. Part of the next push is to bring in all of the supply chain providers who are benefiting from this growth and changing the practices of all of them so we can move forward with the existing infrastructure.

With the re-authorization of TEA-21 coming up this year in Congress, what does the Port of LA see as the top priorities for inclusion in that bill?

In ISTEA, there was no recognition of infrastructure for freight. Yet, we know that infrastructure is infrastructure. In many cases, there are real improvements that are necessary to expand, for instance, existing roadways, access ways, and connectivity pieces. And we have been doing some of this. We have let the federal government know that, as the United States becomes a major player in the global sourcing of goods, this is something in which we must invest. We, in this region, are particularly conscious of it because the Ports of LA and Long Beach move about 42% of the nation's containers. We believe that there are some natural imperatives here. There is a great need to expand the infrastructure to accommodate these goods flowing from what we consider to be America's ports.

The second part of this is that, prior to 9/11, U.S. Transportation Sec. Mineta was very bullish on what he called SEA-21. This would have added the "first mile component" outside the port gates. This is something that was missing in the previous authorizations. This is the connectivity piece that allows us to effectively work our way into the existing infrastructure-we're talking about off-ramps, cloverleafs, and other ways within which freight would move in the same way that cars do. We realize now that they are both going to move at the same speed unless we do some of these things. The new approach would be to bring in signals and intelligent transportation systems and to address impediments to movement, including the removal of stop signs and the lowering of bridges where necessary.

What is the fallout from the labor negotiations with the longshoremen's union? One of the central issues of the negotiation was the introduction of new technologies that would make the ports more efficient while arguably replacing some union jobs. Now, there is some talk that shippers are looking at the east coast ports as a more profitable alternative. How do you see the west coast ports competing with the east coast ports going forward? Did the union negotiations negatively impact the position of the west coast ports?

I don't think the negotiations hurt the west coast ports, but I do think the lockout did. We're still trying to determine the financial impact of those 10 days of closure to the west coast ports. There's been a lot of talk about diversion and there certainly was some diversion during those 10 days. There are people who are suggesting that the west coast may not be as dependable. The fact is that people use the west coast ports, particularly the Ports of LA and Long Beach, for very solid logistical and economic reasons-we're closer to Asia, in particular China, where a lot of our products come from.

In the logistics chain, and in the retailing and manufacturing chain, cost control is paramount. The ability to move goods inexpensively, keeping the cost to the consumer low is critical to anyone selling anything these days. Moving cargo through the west coast, even to east coast points, saves about four days of travel time. That means the product is in the hands of the consumer, saving the manufacturer four days of interest or carrying costs while the product is being warehoused on a flat car or in a container or on a ship trying to get through the Panama Canal. The alternatives are becoming a bit limited. It's incumbent upon us to make these ports and this system work as well as it can.

And, I must add that I was very encouraged by the settlement labor and management entered into. One, they did agree to technology. It is arguable that there will be a loss of jobs simply because of the growth of this industry and the sheer numbers of people that are needed to handle the cargo on the docks. The second part is that they signed a six-year agreement. This indicates that they have a longer planning horizon, which turns everyone's eyes towards making the system stronger through technology and through better agreements, where we aren't finishing one three-year agreement and anticipating the disruptions that may accompany the next negotiation. Right now, we have six years of stability to work these things out. I am very encouraged.

MIR recently published an interview with Oregon Congressman Earl Blumenauer in which he re-framed the strategy of Homeland Security as "Hometown Security," recognizing that local response units dominate our national preparedness for terrorist activity. Where is the leadership coming from with regard to port security? Is it coming from the federal government? Or, is it locally driven?

We know that we have a strong federal responsibility. Our Captain of the Port is from the Coast Guard, which was just taken into Homeland Security. Basically, the federal government leads the effort here. While the Congressman's concerns are well taken about all of these concerns being locally impacted, inherently we import and export goods. Our reach has to be farther-we have to take a more integrated and global approach because our goods and our ships are coming from abroad. U.S. Customs officers will be working in foreign ports. We've begun a series of protocols with the Ports of Hong Kong and Singapore to assist them in assessing their security needs. Hopefully, part of our appropriations will support the procurement of inspection equipment for them as well.

On the local level, the mayor just put together a new task force of city departments-police, fire, DWP, airports, and ourselves-to address issues of security. This is something we work on to ensure that goods will continue to move. Again, as a result of the 10-day lockout, we know what will happen if the goods don't move. We want to know that if there is a red alert or if there is an incident in our port, we are back in action as quickly as possible. We cannot afford to stay closed for 10 days or three days. Too much depends on us in this country.


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