The Port of Los Angeles on Saturday will launch an incentive program that will reward carriers and terminal operators for sharing shipment information that will help shippers, truckers, equipment providers, and other port users to expedite cargo flow, despite a fair competition objection made by a technology provider.
Advent Technology Solutions, which also offers information-sharing solutions for its customers, charged that Los Angeles intends to use public money to support participation in a private-sector, for-profit venture. The Board of Harbor Commissioners last week approved the incentive program in order to boost participation in the Port of Los Angeles-GE Transportation port portal.
LA-GE Transportation Port Optimizer information portal
Los Angeles and GE Transportation last year piloted the information portal, limiting participation to APM Terminals, Maersk Line, Mediterranean Shipping Co., and a handful of beneficial cargo owners (BCOs) and truckers. By sharing advance information on shipments, the portal’s Port Optimizer product allows port users to marshal their labor and equipment assets before vessel arrival in order to expedite cargo flow and reduce congestion.
Despite the challenge by Advent, the harbor commission voted to move forward with the incentive program. Gene Seroka, executive director of the Port of Los Angeles, said the port always intended for the optimizer to be inclusive for all technology providers. “It doesn’t mean we have to exclude any party. I think we’ll get there,” he said.
Participation in the Port Optimizer this year was extended to all six container terminals in Los Angeles and three of the six terminals in neighboring Long Beach. US ports in general are interested in promoting information portals to enhance cargo handling productivity and reduce trucker gate times. The Southern California experience on the one hand provides a possible template for other ports to replicate, but also highlights the conflicts that are possible when a port authority attempts to act as facilitator in a public-private partnership.
Ocean carriers and marine terminals have the key data elements on shipments that BCOs, truckers, railroads, equipment providers, and other port users require in order to prepare their supply chains for vessel arrival and cargo clearance. At present, supply chain participants must access the websites of dozens of carriers and terminals, or seek electronic data interchange messages directly from carriers and terminals to prepare to take delivery of shipments. The Port Optimizer seeks to aggregate the data and share them with users via a single, secure platform.
Incentives for the sharing of data
The Port of Los Angeles is attempting to accelerate the sharing of data on shipments by offering financial incentives to carriers and terminals. Effective Sept. 1, the incentive is $10 per TEU for each unit that exceeds overall market growth in the trans-Pacific trades. For example, if imports this year increase 5 percent, and a carrier increases its market share 6 percent, the carrier will be credited $10 per TEU for each additional unit about 5 percent. The total maximum the port will grant through the incentives is $2 million.
The Los Angeles-Long Beach gateway since 2002 lost 20 percent market share in the trans-Pacific trades, and the port estimates the region would have 200,000 more jobs today than it has if the port complex had retained its market share, Seroka said. Improved cargo-handling and truck turn-time efficiency is a key driver in attracting and growing the cargo base. The average truck visit time today is 87 minutes, although a few terminals have cut that time in half. Improved visibility to shipment information will assist the ports and their customers in reducing truck visit times throughout the harbor, he said.
Advent Intermodal Solutions also has a common-user platform for shipment information. At a harbor commission meeting on Thursday, Allen Thomas, chief strategy officer, charged that the port incentives offered to carriers and terminals could “create an anti-competitive data monopoly” that could restrict data flow to non-participants and therefore work against a free flow of information throughout the harbor.
Thomas also raised a concern about the use of public money that could end up choosing technology winners and losers in the field of data sharing. “Our other concern is that the GE portal is a Port of Los Angeles-funded, for-profit joint venture. We think tying incentives funded by public money to promote private enterprise raises legal and ethical concerns.”
Seroka said the Port Optimizer is designed to be a “system of systems,” allowing all technology providers, including Advent/eModal, to plug into the optimizer to provide and share data in a secure environment. The Port of Los Angeles has been working with Advent as a “trusted technology provider,” and Seroka said he is scheduled to meet next week with the company’s CEO to discuss Advent participation in the Port Optimizer.
Southern California ports — various subsidy programs for environmental reasons
Seroka also noted that the Southern California ports have various subsidy programs in place for environmental reasons, such as to encourage carriers to plug into shoreside electrical power to reduce emissions at berth, as well as incentives for terminal operators to push more cargo through their facilities above what they commit each year in their leases. These subsidies encourage the private sector to increase cargo volume in Los Angeles-Long Beach while reducing pollution.
Harbor Commissioner Ed Renwick told the commission meeting that Los Angeles is keen on attracting more cargo, and the jobs associated with that cargo, reducing emissions, helping harbor truck drivers earn higher wages through improved turn times, and providing warehouse operators greater visibility into their shipments as cargo flows to and through the ports. That is the goal of the information portal. The bidding process for the project was transparent, and “the Port of Los Angeles is publicly transparent,” Renwick said.
Harbor truckers, while not favoring one platform over another, stress that they prefer a single system in Los Angeles-Long Beach. “We want one system we can go to,” said Weston LaBar, CEO of the Harbor Trucking Association. “This, to me, is an investment in the entire port ecosystem. This can be the best thing a port can do for the good of the entire system,” he said.
Thomas said Advent also seeks growth and success for the port complex. “We are not against incentives or the GE portal so long as it remains non-profit and open for all stakeholders. We simply oppose the use of massive public funds to leverage influence and force adoption in a private enterprise that could then become a monopoly,” he said.
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