Port of Long Beach Executive Director Chris Lytle will leave Southern California this month to assume the Port of Oakland’s top position. Although the ports are only 400 miles apart, the culture, location and leadership needs in Northern California are so different from the Long Beach scene that Lytle might as well be moving to another state.
In Long Beach, the nation’s second-largest container port, Lytle was in charge of a $4.5 billion capital expansion program that will produce some of the largest, most automated terminals in the nation. Long Beach and neighboring Los Angeles have always maintained a “build it and the cargo will come” mentality.
Oakland has completed most of its terminal expansion projects as part of its Vision 2000 program. The question now is, Where’s the cargo? “The facilities are there,” Lytle told The Journal of Commerce. “Oakland needs to build that base of cargo.”
Although Oakland consistently ranks as the nation’s fifth- or sixth-busiest container port, its location between the Los Angeles-Long Beach load center to the south and Seattle-Tacoma-Vancouver, British Columbia, load center to the north seems to dictate that it’s not meant to be a major gateway for containerized imports from Asia.
With its population exceeding 16 million, and extensive intermodal rail services to the eastern half of the country, Southern California is a magnet for Asian imports, especially for high-value, time-sensitive imports.
Oakland, a gateway for agricultural products and wine produced in the San Joaquin Valley and Northern California, thrives on exports. It handles more exports each year than imports. Given these commercial realities, the rotation for almost every Pacific Southwest service in the trans-Pacific is Southern California inbound and Oakland outbound.
Because containerized imports from Asia outnumber exports by a factor of more than 2-to-1, Oakland won’t experience the rapid increase in cargo volumes that gateways to the south and north will when the eastbound trans-Pacific trade returns to more normal growth patterns.
Asian imports moving through West Coast ports also require frequent and extensive rail service to the eastern half of the country, where two-thirds of the U.S. population resides. Lytle said one of his first tasks in Oakland would be to meet with each of the western railroads to see what the port can do to encourage more intermodal service. “Rail service needs to be better,” he said.
All West Coast ports must live with the reputation of a longshore labor force that speaks of militancy and a willingness to engage in port shutdowns even over issues that sometimes have nothing to do with seaport operations. Oakland, located between San Francisco and another hotbed of political activism, Berkeley, is especially susceptible to port shutdowns.
Longshoremen in Oakland sometimes get caught up in political demonstrations at the port even when they don’t openly support those movements, such as the Occupy Oakland demonstrations that closed the port in 2011.
Oakland’s civic leaders were unable to keep demonstrators from marching on the port that year, and shipping lines, terminal operators and port customers at the time criticized the city leadership for not doing more to keep peace in the port area.
The Port of Oakland had to put out another fire in 2012 when an audit revealed that top port executives had engaged in loose spending habits, including an incident several years ago in which port staff on a business trip to Houston entertained clients at a strip club.
Lytle said it’s crucial that he repairs the port’s relationship with its customers. “We have to build stronger relationships with our customers,” he said. “It needs a lot of work.”
Lytle has plenty of experience bringing port stakeholders together. As a managing director in Long Beach in 2006, he assisted Executive Director Dick Steinke in getting shipping lines, terminal operators, harbor truckers and neighboring communities to buy into the Long Beach and Los Angeles Clean Air Action Plan.
The Southern California ports were in the throes of a seven-year drought at the time. No major expansion project at either port was initiated because of lawsuits and opposition from community and environmental groups.
Having spent his entire career in the private sector, including executive positions at P&O Ports North America, APM Terminals, Sea-Land Service and CMA CGM, Lytle had to quickly form a new mindset in which profit and growth can’t be the only goals of a public sector institution. He learned quickly that listening to the concerns of local residents is the best way to achieve results.
Lytle said that since adoption of the Clean Air Action Plan and clean-trucks plan in 2006, he worked with Long Beach city council representatives, visiting each of the nine council districts to explain how the programs would reduce the impact of port operations in their communities. The community finally bought into the port message. On one recent night, after a slide show with hard numbers demonstrating that the truck plan produced a 90 percent reduction in diesel emissions, he elicited applause from the residents.
As local residents felt more included in the planning process, their opposition to port projects turned to support, especially as they learned about the jobs that would be created in tough economic times. “If we hadn’t done that, we wouldn’t have been as successful,” Lytle said.
The success of the CAAP and the clean-trucks programs in Southern California attracted attention from ports throughout the U.S. and other countries as well, Lytle said.
The Southern California ports, generally considered to be among the most profitable in the country because they charge compensatory lease fees, participated financially in the success of the environmental programs. Each port, for example, contributed $150 million to help truckers purchase clean, compliant trucks, he said.
With much of the terminal expansion work done in Oakland, Lytle will be able to concentrate on projects to expand the port’s cargo base. Redevelopment of the former Oakland Army Base will be an important part of that effort.
The 366-acre site, located in the heart of the port, is designated as the future home of a large logistics hub the port believes can attract warehouses and distribution centers for importers and exporters. The first phase of the redevelopment project, to extend rail service into the base, is under way.
Lytle said the former Army base presents a rare opportunity for Oakland because it’s unusual for major container ports to be able to develop a logistics center on port property. It’s now up to the port authority to zero in on the exact types of enterprises that can profit most from locating at the base, he said.
A major challenge facing all West Coast ports is to work with terminal operators and surface transportation companies to handle the big ships that are becoming the vessels of choice in the trans-Pacific. Vessels with capacities of 8,000 to 13,000 20-foot container units now call regularly at West Coast ports.
These mega-ships strain marine terminals, gate operations and the rail and roadway links leading from the terminals. With each jump in the size of vessels, the port complex must go through another learning curve of dealing with cargo surges, gate congestion, maximizing inland transportation services and ensuring equipment availability, Lytle said.
For example, the first calls in Southern California by 8,000-TEU vessels in the mid-2000s resulted in terminal and roadway congestion because of the 6,000 to 7,000 containers generated by each vessel call. The 13,000-TEU ships can generate 10,000 moves per vessel call. Within three years, the average size of vessels calling at West Coast ports from Asia will settle in at about 10,000 TEUs, he said.
While West Coast ports are learning to deal with these learning curves now, East Coast ports are still working to deepen their harbors and build larger terminals, while adjusting to the arrival of 9,000-TEU ships transiting the Suez Canal. Even larger vessels are expected to call at some East Coast ports upon completion of the Panama Canal expansion project in 2015.
Although some migration of Asian cargo to the East Coast is inevitable come 2015, given the large population there, Lytle said he’s not worried. The longer transit times from Asia, especially through the Suez Canal, and multiple port calls that occur on all-water services to the East Coast, will make it difficult to divert high-volume, time-sensitive cargo away from West Coast ports.
East Coast ports also will experience their own learning curve as the container counts they handle surge. “This could be a challenge,” Lytle said.