Rich Dines wants more reefer cargo moving across the docks in Long Beach.
Dines, a member of the Long Beach Board of Harbor Commission and a longshoreman, says San Pedro Bay ports aren’t as competitive as they need to be to grab the increased business, and he supports fee adjustments that would attract more perishable shipments now routed through Oakland.
“It’s my belief that certain costs prevent more ag exports from leaving our port,” Dines told Cool Cargoes. “PierPass is very cost-prohibitive for ag exporters. We need to look at that policy again, because more California produce should be shipped through our port.”
One emerging trend in the maritime industry will naturally boost traffic through San Pedro Bay ports, Dines said.
“I think that as the mega-vessels get larger and larger, carriers will really think about tightening their schedules,” Dines said. “Right now, Oakland is the last port before vessels head back to Asia. But with a 16,000-TEU ship, will they want to call fewer ports? I think so. I think we’re going to end up the last port on more services, and that will mean more reefer exports.”
To take advantage of the trend, Dines said Long Beach not only must reduce handling time in the port and lower fees but also reduce the amount of energy used to maintain refrigerated containers. “There is going to be an increase in the number of reefers we handle, so we have to address our electricity use.”
Electric consumption — and paying for it — soon could become a serious problem, Dines said during a panel discussion at September’s Port Tech LA Expo in Los Angeles. Port Tech LA, which is funded by the Port of Los Angeles, provides startup help and an incubator program for companies developing new technology for ports, especially pollution-busting gadgets and processes.
At Port Tech LA, panel participants focused on energy use and conservation. “Our clean air programs and our clean ports programs were revolutionary, and they are working,” Dines said. “Our pollution levels are down significantly. But we achieved a lot of that by plugging things in. Now we need to figure out where the power comes from and how we’re going to pay for it.
“We have the vessels plugged in when they are in port, we make sure the cranes are electric and reefers on board and in the terminals are plugged in,” he said.
Because reefer containers are nothing more than 40-foot-long refrigerator-freezer combinations, it’s not surprising that they account for a significant percentage of electric power used at the port. “Right now, we have a $50 million electric bill each year for the Port of Long Beach, and 15 percent of that power is used by the reefer plugs on the terminals,” Dines said. That means the current cost of plugging reefers in while on port property is $7.5 million annually.
That percentage could go up if the port is successful in attracting more reefer cargoes. “What we do know for certain is that the cost of electricity is going to soar and we are constantly increasing our demand,” Dines said.
A conservative estimate is that electric rates will increase tenfold and the port’s power bill will be $500 million a year by 2030, he said. If the reefer percentage of usage remains stable, the cost will be $75 million.
One reason for the sharply increased power rates is the unexpected decommissioning of the San Onofre Nuclear Generating Station south of San Pedro Bay in Orange County. The facility, owned by Southern California Edison and San Diego Gas & Electric, provided 22 percent of the total electricity used in Southern California. Not only will that generating capacity have to be replaced by importing power from other regions of the country, but shutting down the nuclear plant also is expected to cost about $1 billion.
The Port of Long Beach is Southern California Edison’s second-largest customer. The city of Los Angeles owns and operates its own utility company, which provides electricity to the Port of Los Angeles, but costs and rates are expected to increase for the city utility as well, because the overall supply of available power will be tighter.
Southern California’s electric rates are already higher than the national average. The Bureau of Labor Statistics reported that the 20.3 cents per kilowatt that Los Angeles-area households paid for electricity in August was 48.2 percent more than the nationwide average of 13.7 cents per kilowatt.
By contrast, the agency reported that residential customers in the Pacific Northwest paid 9.6 cents per kilowatt in August. That differential could grow if the power grid in the Pacific Northwest is expanded to allow all available energy generated there to enter the grid and be stored or shipped. Last spring, operators of wind farms in Oregon and Washington were ordered to shut down because spring snow thaws produced too much electricity in the region’s hydroelectric generating plants. Ironically, that surplus of power is costing consumers as the power companies are forced to compensate the wind farm operators for lost revenue.
A steep differential in electricity rates could prove an incentive for some cold-storage operations to move to less costly regions. “Ten years ago, it was unthinkable to the industry that our ports would require policies and equipment to cut pollution,” Dines said. “Now it’s a given. But as policymakers, we didn’t ask where the electricity was going to come from to do all this. It’s time to figure it out.”
So, will the future in the Los Angeles-Long Beach port complex include a policy mandating conservation techniques as a prerequisite for terminal expansions or improvements? “This isn’t something that is coming in a few years,” he said. “It’s here now. As a policymaker, you can expect me to ask about energy conservation measures at the next project proposal.”
Dines said he has spoken with new Los Angeles Mayor Eric Garcetti to schedule a joint commission meeting for the two ports. “Within the next couple of months, you can expect us all to sit down together and work on a comprehensive energy plan,” he said. Like the clean trucks program and the clean ports program, the ports don’t have to do the exact same thing, but we should have a joint template for where we want to go.”
Dines said it’s too early in the process to say how the program will be funded or what will be on the regulatory checklist, but for reefers, he has a beginning idea. “For all the new terminals, we’re building reefer racks and stacking them. I think we should build a solar canopy structure over the racks.”
The idea would help on two fronts. “If the boxes are shielded from the sun by a canopy, it won’t take as much power to keep them cool,” Dines said. “And as long as we’re building a canopy, let’s put solar panels on the top and generate at least part of the electricity.”
Contact Stephanie Nall at email@example.com.