The arrival in Long Beach of Mediterranean Shipping Co.’s Fabiola earlier this year, with a capacity of 12,500 20-foot-equivalent container units, followed by MSC’s even-larger 13,798-TEU Beatrice, signaled a profound challenge to California’s container ports.
To handle such mega-ships, which will only get larger in the future, the ports of Long Beach, Los Angeles and Oakland must become the most efficient intermodal gateways in North America.
California’s ports already have prepared for the era of big ships by dredging their harbors to 50 feet or deeper and constructing large container terminals and on-dock railyards of 250 to more than 400 acres.
But building the infrastructure necessary to accommodate large vessels won’t be enough to guarantee load-center status in this new era. The ports now must turn their attention to increasing productivity in terms of container moves per hour and TEUs per acre. They also must improve truck access to their facilities and provide more on-dock and near-dock intermodal rail capacity so containers move seamlessly from the ports to destinations throughout the country.
Chris Lytle, executive director at the Port of Long Beach, told the Intermodal Association of North America’s annual transportation conference in Anaheim, Calif., last month that his port’s action plan is moving ahead at full speed. “Our strategy is focused on building an infrastructure that is second to none,” he said.
California’s container ports will invest more than $8 billion over the coming decade to build this maritime infrastructure. And that’s just the first step in the estimated $50 billion the region must spend on roads, bridges and rail to expand its already formidable goods-movement infrastructure into a world-class gateway for freight, according to estimates by the Southern California Association of Governments.
The battle for international cargo has never been more intense. With the Panama Canal expansion project set for completion by mid-2015, California’s ports will compete directly with East Coast ports for freight moving to and from Asia. Because two-thirds of the U.S. population resides east of the Mississippi River, California’s ports must be at least as cost-efficient as their East Coast competitors if they are to maintain and possibly increase market share.
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The battleground region for East and West Coast ports will be along a line extending from Detroit to Atlanta, Dave Howland, vice president for land transport at APL Logistics, told the Society of Industrial Realtors conference in Los Angeles in October. Cargo interests will determine which ports handle their freight based on the total delivered cost of ocean, rail and truck transportation, including the all-important inventory-carrying cost of cargo.
Referencing the need to reduce inventory costs through speed to market, Michael DiBernardo, director of business development at the Port of Los Angeles, told the same conference that transit times from Asia through Southern California to that inland region are 17 to 18 days, compared with 25 to 26 days through the East Coast.
Those times are only assured, though, if the supply chains work smoothly. That’s why building a first-class infrastructure is only a start. The ports must maintain congestion-free gates at marine terminals, and provide seamless connectivity from their facilities to inland population centers via efficient intermodal rail.
Railroads play a key role in this supply chain. The final mile from the intermodal rail hub to retailers’ distribution warehouses is the most crucial mile in the supply chain, Pat Kinne, general director of international marketing at BNSF, told the real estate developers conference. Large importers with distribution centers at rail logistics hubs in Chicago, Dallas, Kansas City or Memphis can save millions of dollars a year in drayage costs, he said.
The Port of Oakland is compressing the final mile even tighter with its Oakland Army Base redevelopment project. That site, located on port property, will be transformed over the next decade into an import-export complex with container, bulk and breakbulk facilities, direct rail access and intermodal rail lift capacity.
Bids for a design-build contract are due in mid-January, said Mark Erickson, senior maritime projects administrator in Oakland. Construction of the transportation component will begin next summer, with completion scheduled in mid-2015. As work progresses, the port expects operators of distribution and trans-loading facilities to stake out property on the former Army base, Erickson said.
Oakland is already ahead of the game in terms of building and redeveloping container terminals. Most of its container terminals have been modernized, expanded or combined with other terminals under the Vision 2000 project launched more than 10 years ago. That effort included expansion of intermodal lift capacity for Union Pacific Railroad and BNSF Railway.
Oakland also is moving quickly to provide electrical capacity so vessels at berth will reduce harmful diesel emissions by operating from shore-side electrical power. Oakland will be ready ahead of time to meet the cold-ironing requirements established for California’s container ports by the California Air Resources Board, Erickson said.
In Long Beach, Orient Overseas Container Line will set a new standard for automation in North America with construction of its $1.5 billion Middle Harbor project. Construction has begun on the 3 million-TEU terminal that will feature automated guided vehicles to move containers from the dockside cranes to the stacks, and automated stacking cranes that will place containers in the stacks and retrieve them for trucks calling at the facility.
The TraPac terminal under reconstruction in Los Angeles will take automation a step further by automating the movement of containers from the dockside crane to the on-dock railyard. Also in Los Angeles, the expanded APL terminal will include the latest features in marine terminal automation.
To increase productivity, expand terminal capacity and establish a truly seamless movement of containers, most terminals in Los Angeles-Long Beach eventually will automate their operations. Christopher Chase, business development manager at the Port of Los Angeles, said each of the 14 container terminals in the Southern California port complex would partially automate or fully automate as dictated by cargo volumes and operational needs. The entire effort will take at least 10 years to complete, he said.