It’s time to ask hard questions about LA’s Port Optimizer

It’s time to ask hard questions about LA’s Port Optimizer

At first glance, a $13 million public-private partnership dubbed the Port Optimizer may seem like a win-win deal for everyone involved: port authorities, terminal operators, shippers, and motor carriers. It’s true — such an engagement may drive innovation in landside supply chains. But a closer look into the project details raises worrying questions about data security, misuse of public money, and the overall cost of implementation.

In August, the Harbor Commissioners of the Port of Los Angeles (POLA) approved the Port Optimizer financial incentive program with GE Transportation (GET), a division of General Electric. This engagement, which includes future revenue sharing with POLA, is tied directly to GET selling access to the information within the portal. The deal incentivizes carrier and terminal operators to share key information. However, one of the conditions to qualify for such incentives is that ocean carriers and terminal operators are required to provide key operational data to GET through the portal.

Although the program is touted as a way to expedite cargo flow, the business and revenue models for the POLA/GET joint venture remain largely unknown to the public. The total financial incentives involved could cost taxpayers tens of millions of dollars of public money.

POLA must prioritize transparency, safety, data security, oversight

This partnership sets a dangerous precedent for our nation’s ports, marine terminal operators, the beneficial cargo owners (BCOs), and other stakeholders moving container cargo through the supply chain. Increasing innovation benefits everyone, but POLA must prioritize transparency, safety, data security, and oversight on this massive investment project.

Devoid of transparency, public oversight, and typical “checks and balances,” the very nature of the commercial partnership could easily create a data monopoly for GET. The current model puts GET in charge of deciding who gets access to the data collected and on what terms. The port has no control or stewardship to prevent misallocation or unintended use of the data. Any innovator working within POLA will be required to work based on GET’s terms and conditions (not the port’s) to participate in the program.

Any approach that puts a single, for-profit entity in charge of a publicly funded data program is unacceptable. Further, when organizations are incentivized with public money to submit data to a for-profit company for the sole benefit of that for-profit entity versus the public good, a clear conflict of interest is created.

We are hearing concerns from terminal operators wondering who will pay to maintain such a system after the pilot-phase funding ends and exactly how existing terminal processes could be impacted and controlled.

It is also unclear who will pay for the IT personnel needed to create the new, custom data integration required with the portal. Finally, there are questions about the open admission by POLA leadership that for such a portal to be effective, it must “control the execution” of cargo flow.

Stakeholder participation should be voluntary

It should be incumbent upon the port to maintain oversight and stewardship of the data it is “incentivizing” stakeholders to provide. If the port believes that sharing such data will drive innovation, then all stakeholders should have the ability to participate on a voluntary basis, without coercion or strings attached.

In today’s world, investments in connected port-community portals are vital. Such portals can play a key role in extending cargo visibility and providing new tools to connect, collaborate, and streamline day-to-day operations.

We recommend that POLA transform the current port portal program into an open model that spurs innovation but still ensures transparency, safety, and authorized use of the data collected within the program.

  • A port-managed technology governance group should be created, where POLA could assign stewardship of the data collected from all stakeholders, including not just POLA and GET, but also the shippers, terminal operators, and other technology providers.
  • Guidelines should be built into the group’s charter to approve and regulate the use of the collected data by any entity.
  • All data collected by the GET portal should be publicly available to all qualified solution providers.

A publicly funded entity such as POLA should refrain from picking winners and losers within the private sector and focus instead on setting standards that encourage free market innovation. A business model focused on transparency among all stakeholders in the container supply chain builds trust and will simply create the fastest path to sustainable success.

Parvez Mansuri is co-founder and CEO of Advent Intermodal Solutions.