Workin' on the Night Moves

Workin' on the Night Moves

When Wal-Mart Stores announced in June that it would require its largest suppliers to implement radio-frequency identification technology as of 2005, it was considered the official debut of RFID technology in logistics.

Now the nation's largest retailer may have accomplished something similar in another area of logistics - seaports. Inadvertently or not, it has all but kicked off the long-awaited transition to 24-hour operations at the nation's largest seaport, Los Angeles-Long Beach, by committing to move thousands of containers during nighttime gate hours.

The Southern California port community over the past year has been trying in vain to jumpstart the concept of extended gate hours and thereby move trucking to off-peak hours. But the complex effort to coordinate shippers, ocean carriers, terminal operators and truckers had failed to accomplish the goal of meaningfully shifting truck movements to off-peak hours - a political imperative needed to respond to growing complaints that container traffic pollutes the air while clogging highways and making them dangerous.

Suddenly, however, the dynamics changed. At a Nov. 20 meeting of senior transportation executives organized by the port and city of Los Angeles, Stefan Hargrove, general manager of direct imports for Wal-Mart, announced to applause that his company was willing to move at least 25,000 containers in the off-peak hours in the coming year. "That number can grow," he said.

Hargrove's remarks had a galvanizing effect on the 60 participants at the closed-door meeting, according to transportation consultant Don Breazeale, one of the attendees. As a result, a pilot extended gate-hours program at the nation's largest port complex may get off the ground early next year. The benefits are obvious. Moving thousands of containers between 6 p.m. and 8 a.m. the following morning reduces traffic density on local roads and reduces pollution caused by lines of diesel-spewing trucks.

Like in RFID, Wal-Mart may be leading the way, but for a change to be adopted industry-wide, many others must follow.

It will take more than just the cargo commitments of Wal-Mart, however large they may be, for the transportation community to divert enough traffic to nighttime hours to have a meaningful effect on congestion and emissions in Southern California. To convince the 13 marine terminals in Los Angeles-Long Beach to commit the funds for extended gates, many large and small shippers must commit freight to the program. That's easier said than done.

But as container growth continues unabated, the stakes are growing larger, making this an opportune time for Wal-Mart to exert a leadership role.

At least a half-dozen cities, ports, agencies and community groups in Southern California are promoting extended gate hours. California State Assemblyman Alan Lowenthal, D-Long Beach, told a Southern California port group in August that unless the private sector develops its own plan by Feb. 20, he will submit a bill by next year's legislative deadline to force the issue. Because it would cost more than $3 billion to expand the congested

I-710 freeway, the main artery to the Los Angeles-Long Beach port complex, a program that spreads freight traffic throughout the day without costing taxpayers a penny is a politically popular solution. Political pressure to limit port congestion intensified after six people were killed in August in an I-710 accident involving a truck carrying freight that originated in the harbor.

Lowenthal, chairman of the Select Committee on California Ports, successfully sponsored legislation in 2002 to fine marine terminals in Los Angeles, Long Beach and Oakland $250 for any truck that must wait in line for more than 30 minutes. And his leverage is growing: The port complex this year will handle more than 11 million TEUs, a figure that is projected to triple by 2020. The 30,000 truck trips generated each day by the harbor are also projected to triple by 2020.

Lowenthal is not waiting for the private sector. He has already begun to gather information and opinions from the transportation industry, said Josh Tooker, his lead staff member on the legislation for extended gate hours. Lowenthal has not yet determined the details of the bill, or even whether he will submit the legislation by the Feb. 20 deadline. The answer to these questions will become clearer after a public meeting Lowenthal will hold on Jan. 23. "A lot can happen in the next few months," Tooker said.

Still smarting from the truck-idling legislation that was approved last year, shipping lines and terminal operators do not want a program of extended gate hours to be required by the state. Breazeale noted that the maritime industry has hardly been sitting still. During the past year, it has improved the efficiency of gate operations and diverted thousands of potential truck moves to on-dock rail.

"I personally don't feel that further legislation and/or fines-penalties are the answer to congestion relief," Breazeale said.

But while progress has been made in some areas, extended gate hours have been slow to catch on. The private sector has failed to develop a program that satisfies the commercial requirements of shipping lines, terminal operators, truckers and cargo receivers. Last year, the Waterfront Coalition, which represents some of the largest U.S. importers and retailers on port issues, attempted with some fanfare to launch a pilot project for extended gate hours. But after polling 1,600 cargo owners, the coalition could not receive enough commitments to make the program cost-effective for terminal operators.

Terminal managers say they need at least 400 truck moves to justify the $15,000 to $20,000 it costs them to run a night gate or early morning "hoot owl" gate, a 3 a.m.-to-8 a.m. shift. Ideally, the terminals would like to have commitments of 1,000 truck moves for a second shift. During the normal daytime gates, terminals in Los Angeles-Long Beach handle about 2,000 truck moves.

The busier terminals in Los Angeles-Long Beach are already running second gates on some days. Evergreen America Corp. averaged three "hoot" gates per month in the first 10 months of the year, handling a total of 75,000 moves, said Wesley Brunson, senior vice president.

The Wal-Mart commitment to move at least 25,000 containers a year in the off-peak periods is significant because it brings in cargo through only a few terminals in the port complex, such as APM Terminals' Pier 400. Wal-Mart's volume might therefore be sufficient to support an extended gate hour program at the terminals it uses.

But turning that into a bustling nighttime seaport is another matter. Seen through the perspective of harbor truckers, it's clear why. Harbor truckers, speaking through the California Trucking Association, say they can support an extended gate-hour program only if all or most of the 13 terminals are open at the same time, not just a few heavy-volume facilities.

It's logical reasoning: Many of the trans-Pacific shipping lines participate in vessel-sharing alliances. A vessel will carry containers booked by three or four lines, each of which has its own terminal. Intra-port drayage is therefore a fact of life in the harbor, for example, when containers are moved from one terminal to another for loading at an on-dock rail facility, or empties are repositioned. Harbor truckers will often carry an export load or an empty container to one terminal, and proceed immediately to another terminal to pick up an import load.

Truckers also insist that the terminals offer a full menu of services, which means that they must keep open their trouble windows for trucks, accept returns of empty containers and offer equipment maintenance and repair services.

The sobering reality is that even in the nation's largest port complex, no terminal generates enough cargo volume to warrant extended gates every day. Most proposals for extended gates have therefore centered upon choosing one or two work shifts per week during which all of the terminals would agree to remain open, such as a second shift on Mondays or a day shift on Saturdays.

But even that option has complications. With dozens of trans-Pacific shipping services, vessels carrying the cargo of hundreds of importers arrive at different times throughout the week. That makes it difficult for shippers, carriers and terminal operators to agree upon a day or days when all of the terminals should run an extended gate.

Robin Lanier, executive director of the Waterfront Coalition, said the group has realized that in Los Angeles-Long Beach, even the big importers are not big enough to satisfy the volume requirements of all of the terminal operators.

Both terminal operators and truckers say that an extended gate-hour program will work only if enough importers and exporters keep their facilities open in tandem with the terminals. But since the largest importers cannot generate enough cargo volume on their own, hundreds of small and midsize shippers, as well as cargo consolidators and third-party logistics companies, must also commit volume to such a program.

Here again, Wal-Mart is taking the lead. Hargrove said that by committing 25,000 containers, Wal-Mart hopes small and midsize shippers will also see the benefits of extended gates and keep their warehouses open longer. Wal-Mart's distribution center in Mira Loma, Calif., unlike many similar facilities, is open 24 hours a day, seven days a week, so the retailer is flexible in supporting whatever day or days the transportation community chooses for an extended gate program. Large importers such as Mattel Inc. and Wal-Mart that are already moving cargo in the off-peak periods report that their distribution operations have been improved. Mattel moves about 25 percent of its imports at night.