LA-LB look to collaborate to stop Asia cargo bleed

LA-LB look to collaborate to stop Asia cargo bleed

The ports of Los Angeles and Long Beach have lost more than 20 percent market share to competing North American ports since 2002, according to LA

The ports of Los Angeles and Long Beach are looking to collaborate on supply chain optimization initiatives to prevent further loss of market share in the competitive trans-Pacific trades. 

“We want to ensure we are the gateway of choice,” Gene Seroka, Port of Los Angeles’ executive director, told the harbor commission last week, noting the Southern California gateway has lost more than 20 percent market share to competing North American ports since 2002. 

The ports since 2013 have collaborated on environmental and port infrastructure programs under a cooperative working agreement approved by the Federal Maritime Commission (FMC). They are now seeking approval from their respective harbor commissions to enter into a memorandum of understanding (MOU) between their home cities to promote collaboration. If a deal is reached, the ports will file it with the FMC to ensure the updates are compatible with the agreement on file. 

The cooperative working agreement has enhanced the ability of the ports to implement environmental programs under their joint Clean Air Action Plan and clean trucks program, and to work jointly on infrastructure projects to enhance access to the sprawling port complex.   

In today’s digital environment, the ports intend to cooperate on strategies to enhance cargo transfer predictability, supply chain connectivity, workforce development, cyber security, and the use of metrics, Seroka said. 

Seroka presented a broad framework for the ports’ MOU to the Los Angeles Board of Harbor Commissioners. The port staff in Long Beach will present a similar request to its harbor commission after Labor Day. 

“We see value in exploring ways to build on the collaboration we have established with the Port of Los Angeles over the years,” said Noel Hacegaba, deputy executive director and COO in Long Beach. Both ports then intend to build out details of their joint program and present their plan to their respective harbor commissions.

The loss of market share of US imports from Asia, the most highly competitive trade lane in North America, has plagued all West Coast ports. Their share of Asian imports declined from 71.9 percent in 2013 to 64.2 percent last year, according to PIERS, a JOC.com sister company within IHS Markit. 

Addressing LA-LB’s higher costs

Seroka said the Southern California gateway’s loss of total market share for all cargo since 2002 was 22 percent. The two ports’ challenges include higher costs due to environmental requirements, a supply chain that includes a dozen container terminals spread out over 3,400 acres, the processing of 60,000 truck moves and 100 train departures a day, and servicing the needs of some 200,000 beneficial cargo owners (BCOs) with industrial and distribution facilities totaling almost 2 billion square feet. “It’s the most complex port infrastructure in the world,” he said.

To improve the gateway’s competitiveness, reduce operational costs, and increase cargo velocity, the ports intend to focus on service enhancements at landside transfer points. That involves the use of today’s technology tools to improve predictability and reliability of freight movement throughout the port complex. Their efforts to encourage and assist in the development of port information portals is an example of where collaboration on a port complex-wide basis can be effective, he said. Similar efforts are needed in cyber security,  Seroka said. 

The Los Angeles-Long Beach port complex last year handled a record 17.5 million loaded and empty TEU, according to the ports’ statistics, easily maintaining its position as the largest container gateway in North America. Nevertheless, with two-thirds of the US population residing east of the Mississippi River, and the 2016 expansion of the Panama Canal that allows vessels of 14,000 TEU capacity to serve the East and Gulf coasts, the Southern California ports will continue to lose market share of discretionary cargo under their current operating conditions, Seroka said. 

“We have to work a little bit smarter and faster,” he said.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.

Comments

No mention of the labor cooperation - or lack thereof. The biggest migration away from the West Coast was caused by the ILWU, forcing BCO's and carriers to change their plans and strategies to avoid the West Coast. Other issues are important, biggest one is being addressed by who??

The smarter comment I understand! The part I don't understand is faster... Maesrk is keen on implementing automation and reducing the need for labor. It has been proven that automation is much slower than human labor. They speak about the ability to work around the clock, well labor could do the same utilizing a 4 shift day instead of 2-3 shift days.