June 23, 2004 - From the February, 2001 issue

Regional ImPORTance of Long Beach's Port: Roy Hearrean Elaborates

What goes on in the Ports of Long Beach and Los Angeles-which together constitute the world's 3rd largest container port-is of great significance to the region's 17 million residents and to manufacturers and consumers across the continental U.S. During the Port of Long Beach's fiscal year 1999-2000, $89 billion in trade-the equivalent of 4.5 million 20-foot cargo container units-moved across its wharves. And as growth continues at a clip far greater than projected, the Port is faced with the mammoth task of making the necessary infrastructure improvements, including rail and freeway projects and environmental mitigation. MIR was pleased to speak with Long Beach Harbor Commissioner Roy E. Hearrean about the Port's priorities and vision.


Roy Hearrean

Roy, why hasn't Long Beach sold its port to Los Angeles? Why haven't you accepted Mayor Riordan's often voiced proposal to combine the ports into one?

Simply put, that would be a huge mistake. The level of competition that has existed between Los Angeles and Long Beach has been healthy for both boards. If the two were combined, that competition would disappear as 50% of the goods go to the local market and the balance goes elsewhere. The competition is friendly, but it's still competition-and it keeps both of us on our toes.

Roy, taking a half-step back, what's the importance of the Port to the economy of Long Beach and this region? Is there a payoff for the investment of dollars in new infrastructure?

Our overall mission at the Port of Long Beach is to create jobs-not only for our region, but for the entire country. And we've accomplished that.

Importantly, these jobs are very high paying too. The minimum salary for an ILW worker in our Port is $80,000 a year. A crane operator with 15 years' experience makes $150,000 a year. That's close to double the average salary within our City and region.

Twenty-five percent of the State's growth is in trade. As a result, as long as all the ports in California continue to produce goods, the State will continue to grow and benefit.

And what are the tradeoffs and challenges for the surrounding community and the City of Long Beach to have this economic engine in its backyard? Where does the tension arise? What are the politics of dealing with expansion and growth and trucks and pollution? And what are the priorities?

Citizens always have an interest in terms of "lifestyle." If the 710 Freeway doesn't allow our citizens to travel in both directions at a reasonable speed, that is a problem and the Port needs to correct that.

Overall, however, the truth is that most of the residents of Long Beach know very little about our Port. We've been trying to educate them, but they really have no concept of what we do-how much we help our City, how many jobs we provide, what our income does for our local economy and the surrounding cities. In that regard, one of the Port's main challenges is to educate the public as to how important this Port is to our City and our State.

Larry Keller, Executive Director for the Port of Los Angeles, recently gave an address entitled, "Gathering Steam After the Global Recession." He talked about L.A. Harbor's trade relations with various countries, including NAFTA and its continuing impacts on the region, as well as the boom in growth at the Port of Los Angeles. Is the same boom happening in Long Beach?

The boom is occurring all along the Pacific Coast because of what's happening in Asia. While our growth numbers have retracted slightly-we're now seeing single digits in volume versus recent double-digits-it's still consistent growth. And we've exceeded every projection we've ever made.

To accommodate such expansion, the Port has been doing a great deal in terms of infrastructure improvements. We've almost completed the project that will keep our roadways from interfering with our rail lines-trucks will be able to exit the Port without running into train traffic, and vice versa.

Our next challenge is clearly the 710 Freeway. The projection is that in two years traffic will slow to 17 miles per hour, and that is unacceptable. So we're working at both the state and federal levels to mitigate this congestion.

In that context, what will be the impact of projects like the Alameda Corridor and the Orange County Gateway (OCG) on the Port of L.B.'s Plans? How do you see these infrastructure investments impacting the capacity and growth of this Port?

All of these projects are one big family. We may be competing for certain types of business, but infrastructure-wise, we're one group. If the Port of Long Beach is looking to solve its infrastructure problems-either inside or outside its borders-there is a clear benefit to L.A. And the same is true for Long Beach when L.A. improves its facilities.

The overall plan-in its most basic form-is to improve our region, and all of these efforts ultimately contribute to realizing that goal. While we may not agree with the exact direction of each project, we all have the same purpose in mind.

Roy, if you could, elaborate on the Orange County Gateway Proposal. In October, MIR interviewed Christopher Becker, the project's Executive Director. In your view, does this project fit with your agenda? Is it realistic? And how much coordination has there been with the ports?

SCAG's overall idea for OCG is a very good one, although I predict the plan will require some tweaking.

With a projected cost of $20 billion (not an easy sum to raise up front), we recommended that they take a phasing approach. If the project is divided into three phases-where the 710 is the first phase, the 60 is the second, and the 215 is the third-it has a much better chance of success than if

attempted all at once.

We also need to get the State's trucking industry to buy in as well. It is imperative that this project be a public-private partnership similar to the Alameda Corridor Transportation Authority (ACTA). There is no way that we can do that large of a project and get all the money from the government. We'll need to secure financing, and we'll need the private sector-including the trucking industry-to help in some way.

Going back to the $2.4-billion, 20-mile Alameda Corridor, when MIR interviewed CEO Jim Hankla last year, he said completion was scheduled for 2002 and the project was still on budget. Can you give us an update on how it's progressing? As a financial contributor to that investment, how has the ACTA relationship performed for Long Beach?

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We are very pleased. We're on budget, on time, and we don't have any problems to speak of. Considering where we started with this project, this is a phenomenal feat.

Let's turn to the environmental issues that challenge the Port's plans for expansion. What programs-including recycling of supplies or building materials, enhancing marine water quality, reducing the air pollutants, or incorporating clean fuels-has the Port considered and undertaken?

The Port's most recent environmental undertaking was to enclose all of our petroleum coke. Because of the light nature of that material, it's easily blown around by the wind, and the dust was affecting some homes in the area. So we spent $18 million to put all our coke under a roof.

In terms of air quality, we've run a series of pilot tests regarding the operation of engines. While we still have significant problems associated with diesel trucks, we've made some dramatic improvements.

And from a water quality standpoint, our runoff systems are now specialized to contain most pollutants.

The Port has earned environmental credits to build approximately 270 acres of landfill within the Harbor, expected to take three to five years to complete. The credits were earned by contributing $39 million towards the expansion of the Bolsa Chica wetlands. What do you envision as the nature of this landfill?

We are currently using those infill credits to build mega-terminals. We have a design for a 320 to 400-acre terminal, but we do not have the credits to build it at this time. Therefore, we're aggressively looking for additional credits.

The L.A. Harbor Commissioners recently approved a recommendation that allows the Executive Director to sell annual excess NOx for AQMD Reclaim credits and put those proceeds towards a State matching program for improving marine, clean air and fuel technologies. Does the Port of Long Beach have any program like that?

L.A.'s move was very good, and we're currently looking at doing something similar. But we haven't made any decisions yet. We want to find ways to improve upon L.A.'s program and get additional air quality credits. We looked at the Alameda Corridor as a possibility, but determined that under current conditions, it is not possible to qualify for credits.

Give our readers an update on the 375-acre container terminal project at the former Long Beach Naval Complex.

That 375-acre terminal is now leased to Hajin Shipping Company from Korea, and the project is moving along on schedule. Because the site was previously a naval station, there were a lot of pollutants, both on the land and in the surrounding water. So the first phase-preparing the soil and cleaning up the pollutants-is just about complete, and we'll soon begin construction.

The Governor has created a Blue Ribbon Infrastructure Task Force at the state level, which should be releasing its findings this spring, as well as a Commission on Building for the 21st Century. What can you provide in the way of policy insight for both commissions? What should they be addressing? What should the State be doing to incentivize or encourage the kinds of investments you're making here at the Port of Long Beach?

The focus for the State needs to be infrastructure. They need to concentrate on ways to help the ports move this cargo. The Alameda Corridor is a good example of a very successful program, but the State needs to look at other areas in terms of how this growth will impact its freeway systems.

In addition, the State needs to consider making it easier for the ports to get landfill credits, as well as providing more economic support for infrastructure investments.

In general, the State needs to recognize how important the ports are to its future, and be willing to work with them hand-in-hand. Fortunately, the Governor seems to realize this. While all of the things on our wish list may not be fulfilled quite yet, we believe Governor Davis understands the importance of trade infrastructure for the State.

In December, Metro Investment Report ran a roundtable on the soon-to-be-republished "60 Mile Circle" report by the LAEDC, whose board you sit on. What are your hopes for that document? What do you see as its purpose and mission, and what can it contribute to this focus on infrastructure?

Importantly, the LAEDC realizes this is a regional effort, whereas in the past, many cities have refused to look past themselves. The "60-mile circle" (defined as the area where the regional economy has the greatest impact) faces many challenges, especially with regard to transportation and infrastructure. We believe that if we can melt together the efforts of all the different cities, businesses and government agencies within this region, we'll be able to produce a focused and successful vehicle to plan for the future of the entire area.

You've been involved in these issues for a long time, Roy. In your opinion, do we have the regional governance structures necessary to accomplish our goals and visions for the region? Do we really have incentives in place to foster cooperation among cities and counties, across borders and boundaries? What do we need to do the job?

Actually, we don't. We have some of the governance to accomplish this collaboration, but there are many items that we don't have. For example, it's currently more important for a city to get retail as opposed to manufacturing because of the municipal dependence on sales tax revenue. However, manufacturing is a tremendous source of jobs. So we really need to change the old adage of: If I can't get retail sales, I'm not interested.

Lastly, how do we measure the success of the Port of Long Beach if we come back to you in a year? What are the benchmarks that our readers should use?

First of all, have we improved our infrastructure within the Port? Second, have we been successful in building our larger terminals? And third, have we defined a plan for the 710 Freeway? All of these accomplishments will be necessary in order to achieve our goals for the next year-as well as the coming decade.

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