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Mar 05, 2018

Fraying the Cord

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The Trump Administration wants to reduce the amount of money importers must pay for using US ports, a move that would cut the amount of federal aid those ports get for dredging and jetty maintenance projects.

The US Congress ignored budget proposals from the Obama administration that would have cut annual port funding, and there’s a little chance legislators would have cut annual port funding, and there’s little chance legislators would change course, according to port analysts. The Trump administration’s proposal, however, is illuminating in that it seeks to shift the funding burden to ports and to the initial benefit of importers, even as the president rails against imports exacerbating the US trade deficit. Port would then push for higher tariffs from container lines, which would then try to pass on the additional costs to shippers.

In Trump’s proposed $4.8 billion civil works budget for the US Army Corps of Engineers, the administration proposes reducing “the Harbor Maintenance Tax rate to better align estimated annual receipts from this tax with recent appropriation levels for eligible expenditures from” the HMT fund. The administration didn’t disclose how much the current tax rate of 0.125 percent should be reduced. The tax adds approximately $109 per FEU, according to a 2012 Federal Maritime Commission study.

“Reducing this tax would provide greater flexibility for individual ports to establish appropriate fee structures for services they provide, in order to help finance their capital and operating expenses on their own,” the Trump administration stated in the budget plan.

Under Trump’s budget, the administration recommends that funding set aside for port maintenance work be reduced to $959 million in fiscal 2019, which ends Sept. 30, 2019. If congressional appropriators follow the administration’s guidance, US ports would receive $378 million less than they are set to receive in fiscal 2018 and $146 million less than they got in fiscal 2017.

Reducing the HMT would run counter to a well-maintained port system and the broader push to reform the trust fund by using more of it toward its intended purpose of maintaining ports instead of plugging holes in the general fund, according to the American Association of Port Authorities. Under the Water Resources Reform Development Act (WRRDA), signed into law in 2014, Congress encouraged appropriators to give a larger share of HMT collected back to ports, with a goal of having all money spent on port maintenance projects by fiscal 2025. Before WRRDA, ports received only about half of collected harbor maintenance taxes. In fiscal 20117, US ports got about 75 percent, or $1.14 billion, of the nearly $1.5 billion collected. If Congress were to follow Trump’s guidance for fiscal 2019, US ports would receive only 64 percent of the taxes collected.

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The Trump Administration wants to reduce the amount of money importers must pay for using US ports, a move that would cut the amount of federal aid those ports get for dredging and jetty maintenance projects.

Mar 05, 2018

The high cost of zero emissions

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Does California want international trade, or is the state pursuing a policy to drive cargo and jobs away?

That’s a question marine terminal operators and shipping lines are asking with increased regularity. I’m sure other players in California’s supply chain are having similar conversations.

With the world’s most stringent environmental regulations, California state, regional, and local agencies are proposing new, overlapping regulations that will drive trade and jobs away from California. If that’s the goal of these regulators, then they are sending a strong signal. If not, then these agencies need to step back and develop more holistic plans that continue the environmental progress without making our ports unwelcoming.

The move to zero emissions is a laudable goal, but it’s one constrained by the lack of available funding, a permitting process that takes more than a dozen years to complete, and the lack of commercially available technology and/or equipment that makes economic sense.

Let’s start with the ports of Los Angeles and Long Beach. Both recently adopted a Clean Air Action Plan (CAAP) to require a transition to zero emissions by 2030, without a plan for financing or facilitating such a massive undertaking. The cost of the ports’ and industry’s past efforts to reduce 96 percent of diesel particulate matter from trucks and marine terminal equipment was approximately $2 billion. The ports also have pointed out that it would cost more than $14 billion to eliminate the remaining 4 percent – and according to the ports, these costs would “…place an enormous financial burden on the ports and the goods movement industry.”

In addition to the CAAP (local regulation), the South Coast Air Quality Management District (regional regulation) is proceeding with plans to adopt Indirect Source Rules (ISR) for marine terminals, warehouses, and distribution centers. ISRs hold facilities operationally and legally responsible for emissions from third-party members of the logistics chain (e.g., marine terminals or warehouses will be responsible for the trucks that pick up or drop off cargo). The facility would be subjected to fines and/or limits and caps on business activity.

In the case of marine terminals, an ISR could mean turning away trucks, trains, and ships (with it cargo and jobs) when government-imposed emissions levels are met. Even zero-emission terminals will be fined for emissions from the customers of their customers, companies over which the terminal exerts no control. ISRs represent a backhanded way for regulatory agency to exercise jurisdiction over emission sources that they have no mandate to control.

At the state level, unlick any other industrial sector in California, the California Air Resources Board (CARB) staff is proposing that marine terminals spend billions of dollar to convert their facilities to zero emissions starting in 2022, to be completed by 2031/ The proposal lacks any mention of flexibility or impact to port competitiveness. Further, the compliance time is unrealistic because permits for major projects such as transformation of a marine terminal take years to obtain under the California Environmental Quality Act.

To make matters worse, when combined with an ISR as proposed by the SCAQMD, the CARB proposal would place marine terminals in a position of spending billions on zero-emission technology but would ten subject the terminals to fines, penalties, or operational limits for the air emissions from trucks, trains, and ships – sources they don’t control.

Absent a counterbalancing program of support for California’s ports and supply chain, overlapping regulatory efforts by multiple levels of government to make California’s ports and supply chain, overlapping regulatory efforts by multiple levels of government to make California’s supply chain zero emission will severely constrain everyone who handles or receives domestic and international freight, including warehouses, distribution facilities, airports, ports, trucks, railroads, manufacturers, exporters, importers, and retailers. And if cargo is diverted from West Coast ports to other trade gateways in order to avoid increased costs, California’s regulators will ironically increase greenhouse gas emissions, as a recent study has shown.

Lost in the multijurisdictional regulatory quest to zero emissions is the impact these mandates will have on jobs (one in nine Southern California jobs) and California logistics companies that contribute billions of dollars to the California economy. Having these conversations after the jobs are gone and the cargo has moved to other ports of call is too late.

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Does California want international trade, or is the state pursuing a policy to drive cargo and jobs away?

That’s a question marine terminal operators and shipping lines are asking with increased regularity. I’m sure other players in California’s supply chain are having similar conversations.

Mar 07, 2018

Self-driving trucks are on the road in Arizona

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SAN FRANISCO – Uber has been sending self-driving trucks on delivery runs across Arizona since November, the first step in what promises to be a freight transportation  revolution that could radically reshape the jobs of long-haul truckers.

After testing its technology earlier in 2017, Uber began contracting with trucking companies to use its own autonomous Volvo big rigs to take over loads as they traverse the state, it disclosed.

In Uber’s current program, a trucker meets the self-driving truck at the Arizona state border, which then takes the load across the state before handing it off to a second conventional trucker for the short-haul trip. During the autonomous trip, an Uber employee rides in the driver seat of the autonomous truck to monitor – but not to drive.

If one day both the technology and regulations play out in favor of self-driving trucks, two scenarios emerge. The first would find self-driving trucks handling long-haul highway legs with no one at the wheel as they meet up with conventional truckers, who then drive the deliveries into city centers. The other possibility is Uber could sell its technology to trucking owner-operators, who then use it to sleep while the truck handles the bulk of long-distance driving.

Truckers make their money only when their rigs are on the road. They are also limited by law in terms of how much time they can spend behind the wheel, something a self-driving truck could impact positively. It could also introduce more round-trip hauls that find a driver back home at the end of the day’s journey.

“The big step for us recently is that we can plan to haul goods in both directions, using Uber Freight to coordinate load pickups and drop-offs with local truckers,” said Alden Woodrow, who leads Uber’s self-driving truck effort. “Keeping trucking local allows these drivers to make money while staying closer to home.”

Uber Freight, which launched last May, is an app that matches shippers with loads using technology drawn from Uber’s ride-hailing app. Typically such trucking logistics have been coordinated through phone calls and emails.

The San Francisco-based company isn’t alone in its pursuit of self-driving truck technology, with start-ups such as Embark joining companies such as Tesla and its new Tesla Semi to carve out a slice of a $700 billion industry that moves 70% of all domestic freight, according to the American Trucking Association.

Despite the push, the technology behind self-driving trucks remains in its infancy, with hurdles that include government regulations and trucker buy-in. A truck that makes the long haul between exits, allowing a driver to sleep in the cab, could increase their profit. But they’d have to trust the technology, as well as fork over what premises to be a considerable investment to make their cabs autonomous.

Technology may be for sale

Woodrow says Uber’s trucking plans remains in development, but he does not see the company running a fleet of self driving trucks – which would imply that its technology would be available for purchase from large, established shipping companies.

“Today we’re operating our own trucks, but in the future it remains to be seen what happens,” he says. “Trucking is a very large and sophisticated business with a lot of companies in the value chain who are good at what they do. So our desire is to partner.”

Uber’s current Arizona pilot program does not feature trucks making end-to-end runs from pickup to delivery because it’s tough to make huge trucks navigate urban traffic on their own.

Instead, Uber’s Volvo trucks receive loads at state border weigh stations. These trucks are equipped with hardware, software and an array of sensors developed by Uber’s Advanced Technologies Group that help the truck make what amounts to a glorified cruise-control run across the state. Uber ATG also is behind ongoing self-driving car testing Arizona, Pennsylvania, and San Francisco.

Uber did not disclose what items it is transporting for which companies.

Once the Uber trucks exit at the next highway hub near the Arizona border, they are met by a different set of truckers who hitch the trailer to own their cab to finish the delivery.

The idea is that truckers get to go home to their families instead of being on the road. In a video Uber created to tout the program, the company showcases a California trucker who, once at the Arizona border, hands his trailer to an Uber self-driving truck for its trip east, while picking up a different load that needs to head back to California.

States adapting rules

Autonomous vehicles are being pursued by dozens of companies ranging from large automakers to technology start-ups. Slowly, states are adapting their rules to try to be on the front lines of a potential transportation shift.

Michigan, California and Arizona, for example, have been constantly updating their autonomous car testing laws in order to court companies working on such tech.

California recently joined Arizona in announcing that it would allow self-driving cars to be tested without a driver at the wheel.

Skeptics of the self-driving gold rush include the Consumer Watchdog Group’s John Simpson, who in a recent letter to lawmakers said “any autonomous vehicle legislation should require a human driver behind a steering wheel capable of taking control.”

Uber’s announcement aims to cast a positive light on the company’s trucking efforts and comes a few weeks after it settled a contentious year-old lawsuit brought by Waymo, the name of Google’s self-driving car program.

 

Print Edition

SAN FRANISCO – Uber has been sending self-driving trucks on delivery runs across Arizona since November, the first step in what promises to be a freight transportation  revolution that could radically reshape the jobs of long-haul truckers.

After testing its technology earlier in 2017, Uber began contracting with trucking companies to use its own autonomous Volvo big rigs to take over loads as they traverse the state, it disclosed.

Mar 09, 2018

11 Nations OK Pacific Rim trade pact

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Trade ministers from 11 Pacific Rim countries signed a sweeping free trade agreement Thursday to streamline trade and slash tariffs just hours before President Trump announced his plans to impose new tariffs on aluminum and steel to protect U.S. producers.

Trump withdrew the U.S. from the Trans-Pacific Partnership last year, causing fears that it would not prosper without its most influential country. But the remaining 11 members pressed ahead, saying they were showing resolved against protectionism.

The ministers dropped key provisions that the Americans had required on protection of intellectual property, among others. The renegotiated pact signed in the Chilean capital of Santiago was renamed the Comprehensive and Progressive Trans-Pacific Partnership.

The pact covers 500 million people; it includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam which together account for 13% of the global economy. Its success highlights the isolation of the U.S. under Trump’s protectionist rhetoric on trade and his “America first” philosophy.

“It leaves the U.S. at a disadvantage from both a trade and a broader strategic perspective,” said Joshua Meltzer, senior fellow in the global economy and development program at the Brookings Institutions. “It is now a trade bloc that discriminates against the U.S.”

Meltzer said the United States’ ability to shape the rules of trade in the Asia-Pacific region “is very much diminished”

The U.S. originally the biggest Trans-Pacific Partnership economy, was one of the trade deal’s strongest supporters before Trump took office. Trump has said he prefers country-to-country deals and is seeking to renegotiate several major trade agreements, including the North American Free Trade Agreement, which includes the U.S., Mexico and Canada. This is “a strong sign against the protectionist pressures, and in favor of a world open to free trade , without unilateral sanctions and the threat of trade wars,” Chilean Foreign Minister Heraldo Munoz said.

The original Trans-Pacific Partnership was conceived by the U.S. as a counterweight to China’s growing economic influence through a robust trading bloc that excluded the Asian giant. The thinking was that China would have an incentive to open its market and liberalize its policies in an effort to eventually qualify for membership.

Without the United States, it doesn’t serve that purpose,” said Edward Alden, senior fellow at the Council on Foreign Relations. “It becomes a modest liberalization measure.

Print Edition

Trade ministers from 11 Pacific Rim countries signed a sweeping free trade agreement Thursday to streamline trade and slash tariffs just hours before President Trump announced his plans to impose new tariffs on aluminum and steel to protect U.S. producers.

Trump withdrew the U.S. from the Trans-Pacific Partnership last year, causing fears that it would not prosper without its most influential country. But the remaining 11 members pressed ahead, saying they were showing resolved against protectionism.

Feb 26, 2018

Long Beach City Council Takes On Port Truck Driver Misclassification

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The Long Beach City Council took unanimous action on February 20 to address the misclassification of port truck drivers as independent contractors, rather than as employees, by trucking companies operating within the Port of Long Beach.

The issue of port truck driver misclassification has been gaining increasing visibility in the past few years, culminating in a series of national articles by USA Today last year that documented cases in which truck drivers working at the San Pedro Bay Ports were misclassified as independent contractors and forced to make payments toward their trucks with their wages, working long hours for little take-home pay. The publication compared the practice of indebting these drivers to indentured servitude.

At the meeting, Mayor Robert Garcia, who brought the agenda item to the council, pointed out that the California Labor Commissioner has received more than 900 complaints about port truck driver misclassification and has upheld more than 500.

Garcia’s request, which was co-authored by Vice Mayor Rex Richardson and Councilmembers Lena Gonzalez, Jeannine Pearce and Al Austin, included multiple directives to address the issue. The council unanimously approved the following:

• Adding language to the council’s state and federal legislative agendas to support legislation that would improve working conditions for port truck drivers;

• Requesting the city attorney to work with the offices of the California Labor Commissioner and Attorney General “to explore options to support regulatory efforts;”

• And requesting the Long Beach Board of Harbor Commissioners and the council’s Harbor and Tidelands Committee to hold hearings on the issue “with the goal of finding solutions that protect the Port of Long Beach’s proprietary interests.”

“We have some great both large and independent trucking firms. . . . But we also have a situation at the port where there are many trucking companies that quite frankly are taking advantage of the workers,” Garcia said. “It is clear to me and to many others that truck drivers at the Port of Long Beach are often misclassified as independent contractors, which results in them working poverty level wages and denies them the protections guaranteed by state and federal laws.”

Garcia said that legislation has been introduced to Congress to address the issue, and that he expected state legislation to be introduced within days. By approving his proposal, the council decided to support and align with such legislation.

Truck drivers, union representatives, community members and clergy representing various religions testified in support of the mayor’s proposal at the council meeting. Justice for Port Truck Drivers, an arm of the International Brotherhood of Teamsters, sent out a statement praising the city council the following day.

The California Trucking Association (CTA) contends that the California Department of Labor has been unfair and prejudicial in deciding misclassification claims against trucking companies. The organization filed suit in December 2016 challenging the fairness of the “Berman hearing process,” which it says the California Department of Labor’s Division of Labor Standards Enforcement has been using to adjudicate these misclassification complaints. Berman hearings are a type of administrative hearing used by the California Labor Commissioner to resolve wage claims.

Because the suit is ongoing, representation from the CTA said the organization could not comment. But a CTA press release announcing the lawsuit indicated that it found the Berman hearings process to be unfair. CTA CEO Shawn Yadon stated: “We believe the Labor Commission and Division of Labor Standards Enforcement, for more than four years, have been intentionally ignoring their statutory obligations to be neutral and fair and are, instead, abusing their authority in order to drive a particular agenda – to undermine the many small business trucking companies that operate under the legal independent contractor relationship with other, larger companies – by forcing predetermined results from labor hearings.”

The statement from the CTA also claimed that the International Brotherhood of Teamsters and affiliated groups had sought the assistance from state and federal agencies in “cracking down” on trucking companies using independent contractors, and that those agencies then “assisted in efforts to stimulate misclassification claims by owner-drivers.”

The City of Los Angeles has also taken up the issue. In January, the Los Angeles City Attorney filed lawsuits against three trucking companies operating in the ports, arguing that they misclassified truck drivers as independent contractors and thereby avoided providing benefits and paying associated taxes.

At the council meeting, Garcia indicated that hearings on the matter by the council’s Harbor and Tidelands Committee and the Long Beach Board of Harbor Commissioners would result in collection of information and data to be brought back to the council at a later date.

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The Long Beach City Council took unanimous action on February 20 to address the misclassification of port truck drivers as independent contractors, rather than as employees, by trucking companies operating within the Port of Long Beach.

Feb 27, 2018

New Innovation Institute Hopes to Build Up Economic Entrepreneurial Foundation

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On the heels of the city’s adoption of the 10-year Economic Development Blueprint last year, faculty at California State University, Long Beach, founded the Institute for Innovation and Entrepreneurship to foster startup businesses.

“Whether it be a nonprofit, a social enterprise, private sector for profit,” Wade Martin, director of the institute and CSULB teacher, said. “What we try to do is make sure that they have the support necessary to open a business, preferably in Long Beach or the Greater Long Beach Area.”

The official beginning of the institute was July 1, 2017. The initial proposal was presented by Ingrid Martin, a professor of marketing and director of graduate programs for the College of Business Administration; Michael Solt, dean of the College of Business Administration; and Martin. An anonymous donor supplied an annual fund of $75,000 per year for up to five years to sustain the institute’s administrative costs during its infancy. During that time, Martin said the goal is to become an endowed institute, which would provide a more stable financial situation.

Martin said there have been pockets of programs and support for entrepreneurs and innovators on campus for years but there has never been an umbrella organization to bring them together and support their activity. One such program is the university’s Innovation Challenge, which has existed for eight years and awards up to $50,000 to the winning senior to support the opening of his or her business.

“About three years ago, some MBA students thought they would create an incubator. It still exists and meets every Tuesday night to support businesses in the community and support students in the Innovation Challenge,” Martin said. “They are now alumni and work in the community but come back every Tuesday night to support and provide programming.”

Seeing the commitment made by students and alumni, Martin and these counterparts believe there was an interest and need, an institutional void, which is now being filled by the institute. Like the city’s blueprint, the institute’s core belief is that the local economy is and will continue to be driven by entrepreneurs and small business, which may need support.

Martin explained that, in the case of Long Beach, relying on large companies such as Boeing Company as the economic foundation is dangerous because if they leave the city the economy takes a huge hit. However, if the foundation is built on small business and entrepreneurs that are tied to the city, with an ecosystem of support and resources, they can grow and flourish, providing a more stable foundation for the city’s economy.

“What we have found is that our model to be able to provide the support is to partner with existing organizations, making sure we’re not duplicating programs, but complementing existing programs,” Martin said. “The university has expertise that we can bring to the table, and that’s what we’re trying to do.”

The institute has already partnered with various organizations throughout the city, including the Downtown Long Beach Alliance, Centro CHA, the Aquarium of the Pacific, Long Beach City College and Molina Healthcare, among others. Through these partnerships, the institute is assisting in providing various workshops and events to support entrepreneurs at all levels. Thus far, all programming has been free.

The next institute-sponsored event is CSULB VR Day on March 9. The event will use virtual reality to “highlight intellectual, gender and racial diversity” in the workplace. The event includes a keynote address, faculty and practitioner panels, workshops, and demonstrations from faculty and student research collaborations, NativeVR and Arvada Labs. NativeVR’s demonstration of UTURN, developed by Dr. Nathalie Mathe, “is an immersive live-action virtual reality film where viewers experience both sides of the gender divide in tech.”

To spread their presence to downtown, the institute is working with Shooshani Developers, which is planning a mixed-use project at The Streets (formerly City Place) for CSULB students and employees. Martin said the hope is to include coworking and innovation space within the project to support their efforts.

Recruitment for the institute’s board of directors is underway, according to Martin. He said it will consist of 15 members who are internal to the university and 15 members from off campus, such as partners, entrepreneurs, alumni and those committed to the institute’s mission.

“We believe we will help strengthen the ecosystem and support the city’s efforts to have this solid foundation for economic development,” Martin said. “We strongly believe in the 10-year Blueprint and the idea of diversity and inclusion as central to our mission.”

Print Edition

On the heels of the city’s adoption of the 10-year Economic Development Blueprint last year, faculty at California State University, Long Beach, founded the Institute for Innovation and Entrepreneurship to foster startup businesses.

“Whether it be a nonprofit, a social enterprise, private sector for profit,” Wade Martin, director of the institute and CSULB teacher, said. “What we try to do is make sure that they have the support necessary to open a business, preferably in Long Beach or the Greater Long Beach Area.”

Mar 06, 2018

IBM, Maersk in Blockchain Tie-up for Shipping Industry

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IBM and Danish transport company Maersk said they were working together to digitize, manage, and track shipping transactions using blockchain technology.

The technology, which powers the digital currency bitcoin, enables data sharing across a network of individual computers. It has gained worldwide popularity due to its usefulness in recording and keeping track of assets or transactions across all industries.

The blockchain solution being built by the two companies is expected to be made available to the ocean shipping industry later this year, according to a joint statement from International Business Machines Corp and the container unit of A.P. Moller-Maersk. It would help manage and track the paper trail of tens of millions of shipping containers globally by digitizing the supply chain process from end to end.

This will enhance transparency and make the sharing of information among trading partners more secure.

When adopted at scale, the solution based on the Linux Foundation's open source Hyperledger platform has the potential to save the industry billions of dollars, the companies said.

"Working closely with Maersk for years, we've long understood the challenges facing the supply chain and logistics industry and quickly recognized the opportunity for blockchain to provide massive savings when used broadly across the ocean shipping industry ecosystem," said Bridget van Kralingen, senior vice president, industry platforms, at IBM.

IBM and Maersk intend to work with a network of shippers, freight forwarders, ocean carriers, ports and customs authorities to build the new global trade digitization product, the companies said.

The product is also designed to help reduce or eliminate fraud and errors and minimize the time products spend in the transit and shipping process.

For instance, Maersk found that in 2014, just a simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organizations, including more than 200 different communications among them.

The new blockchain solution would enable the real-time exchange of original supply chain transactions and documents through a digital infrastructure that connects the participants within the network, according to IBM and Maersk.

Online Edition

IBM and Danish transport company Maersk said they were working together to digitize, manage, and track shipping transactions using blockchain technology.

The technology, which powers the digital currency bitcoin, enables data sharing across a network of individual computers. It has gained worldwide popularity due to its usefulness in recording and keeping track of assets or transactions across all industries.

Apr 02, 2018

12 Terminal operators will decide soon whether to incorporate a lower, flat pricing structure on the LA-Long Beach extended-gates program

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Cargo intersts and truckers should know by early April if the PierPass extended-gates program in Los Angeles-Long Beach, now in its 13th year, will be restructured to incorporate a flat fee coupled with trucker appointments.

PierPass has its supporters and detractors, but port users agree that the largest US gateway couldn’t handle 17 million TEU a year without a regular schedule of night and weekend gates. Because many ports also struggle to handle record cargo volumes carried by 10,000 to 14,000 TEU mega ships, a successful program in Southern California could serve as a template for other ports seeking to establish a cost-effective program of extended gates.

The 12 container terminal operators in Los Angeles-Long Beach are assessing the options contained in a study released in early March by Tioga/WCL Consulting. The report followed months of meetings with terminal operators, truckers, beneficial cargo owners (BCOs), and cargo intermediaries that analyzed the pros and cons of the PierPass off-peak program.

Tuckers bear the brunt of delays at marine terminals, and they generally agree that the report, which leans toward a lower, flat fee, a portwide trucker appointment regime, and greater BCO participation in container peel-off programs at individual terminals, addresses most of their goals. “It’s much of what we’ve been asking for the past three years,” said Weston LaBar CEO of the Harbor Trucking Association.

Container terminal operators who are members of the West Coast Marine Terminal Operators Association must make the final decision on how the off-peak program will be restructured because the association’s agreement with the Federal Maritime Commission specifies that the terminal operators can only discuss matters involving rate setting among themselves and not with outside parties such as BCOs and truckers, PierPass President John Cushing said.

Cushing noted that since 2005 the off-peak program has accomplished its major goal of helping the ports handle growing cargo volumes and larger vessels while mitigating congestion on local freeways through a regular schedule of four weeknight gates and one weekend gate. A traffic-mitigation fee of $144.14 per 40-foot container covers about 81 percent of the additional costs terminals face for running five off-peak gates each week, according to the study.

Despite mitigating traffic impacts and allowing the ports to grow without having to build costly new terminals, periods of congestion are common daily. The study found long truck queues at the beginning of the first shift and especially in late afternoon when the first shift ends at 5 pm until the second shift begins at 6PM on weekdays, and it contributes to congestion and trucker delays in two ways, LaBar said. Some truckers enter the terminal as early as 4 PM and remain inside until the fee is no longer charged at 6 PM. Many truckers simply line up at the terminal gates in late afternoon and park there for an hour or two until 6PM.

The study lists a proposal to replace the traffic-mitigation fee that BCOs pay only for peak-period moves with a lower, flat fee that would be charged on all truck moves, day and night. The study didn’t recommend what the lower flat fee should be. When Oakland International Container Terminal in 2016 established its extended gates program, it assessed a flat fee of $30 per container whether the containers move during the day or night.

Mandatory trucker appointments would accompany the flat fee proposal to ensure truck traffic spreads out over 16 hours each day. Under the current arrangement, which disincentives peak calls, 42 percent of truck traffic moves during the day shift, when the fee is charged, and 58 percent at night, when the fee is waived, according to the study. Because terminals can only handle a certain number of moves each hour, appointments would be made on a first-come, first-served basis, thereby spreading the available slots throughout the day.

The study floated the concept of a portwide peel-off program in which containers consigned to particular BCOs, normally larger ones capable of aggregating a critical mass, are segregated into their own piles. When truckers serving a particular BCO arrive at the terminal, they proceed immediately to the designated pile and containers are peeled off from the top. This eliminates the need for each trucker to proceed deep into the terminal in search of a specific container.

Although BCOs and truckers said a portwide peel-off program could be cumbersome to manage, they encouraged individual terminals to have their own programs. LaBar said peel-off would be even more effective if the West Coast Marine Terminal Operators Association set a reduced fee, or no fee at all, to participate. Many larger BCOs today pay no traffic-mitigation fee because they keep their warehouse gates open all night and send most of their trucks to the terminals in the off-peak hours, he noted. Under a flat-fee arrangement, they would have no incentive to patronize the night gates, but they would continue to do so if they incurred little or no cost by participating in the peel-off program.

Nine of the 12 terminal operators have trucker appointment systems. Truckers would prefer a single portwide program with standard rules covering all terminals. The technology is available, they say, to enable a portwide trucker appointment program if all parties could agree on the particulars. As appointments become more sophisticated, LaBar said, predictive elements could be added to enable dual transactions for truckers and to help terminals and truckers manage the return of empty containers and loaded containers, which terminals still struggle handling at times.

Cushing said members of the terminal operators association will decide on a finally model for the restructured off-peak program by late March or early April.

 

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Cargo intersts and truckers should know by early April if the PierPass extended-gates program in Los Angeles-Long Beach, now in its 13th year, will be restructured to incorporate a flat fee coupled with trucker appointments.

Apr 02, 2018

Weighing the impact of slow-steaming

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Talks beginning this year among member states the International Maritime Organization (IMO) will broach the subject of regulating vessel speeds, a proposal that would be pricey for vessel owners while slowing shipper supply chains.

“It’s something we’re going to be spending a lot of time looking at from a carrier perspective, and encourage shippers to look carefully as well,” World Shipping Council vice President Bryan Wood-Thomas told the 18th Annual TPM Conference in Long Beach, CA, in early March. “This is the time to look at it, because if you begin to look at it after most governments in the world have made a decision as to which direction to go, it will be too late.”

The IMO’s Marine Environment Protection Committee (MEPC) is working on a strategy to reduce greenhouse gas emissions from ships, which includes a list of short- and long-term measures. A proposal requiring ships to limit their speeds is “one of the few measures that will deliver emissions reductions in the short-term” according to the Clean Shipping Coalition, an environmental group with “observer” status at the IMO. The MEPC is scheduled to include the proposal at its April meeting.

While there is no question that reducing vessel speeds cuts emissions from individual ships, “even at a 10 percent speed reduction, you can’t do that across the world’s fleet and (compensate) by (putting into service) idle capacity, operators, would still have to build new ships,” Wood-Thomas said. “If you go to 20 percent, you have to build a lot of new inventory to the equation. And a 30 percent reduction would require a tremendous capital investment to move the same amount of material around the world.”

Franck Kayser, an independent shipping consultant, told the audience that such a proposal, if it were to be formalized into regulation, also would mean – at least in the short term – tighter capacity as volume from idle ship fleets is absorbed into service. “And that means demand for space increases oversupply, so if this speed scheme goes forward, shippers will see a significant increase in costs.”

Slow-steaming is typically used to lower operating costs when shipping is struggling. IMO studies have shown that total greenhouse gas emissions from international shipping decreased 10 percent between 2007 and 2012, in part because of more efficient vessels, but also a result of slow-steaming.

Many carriers, however, have abandoned the practice since the 2017 recovery in the dry bulk and container freight markets.

Shipper supply chains, particularly those that trade in the refrigerated markets, would be at risk as well,” Wood-Thomas cautioned. “You start to have to grapple with issues of how increased transit times affect the world’s trade lanes, and how it’s going to affect the shipment of perishables. It gets complicated quickly.”

Instead of regulating vessel speeds, there should be government incentives to help vessel owners retrofit or build new ships, said Kevin Mannix, director of Oregon Shipping Group, which supports developing marine and over-the-road shipping in Oregon. “The government,” he said, “doesn’t have to choose winners or losers, but make determinations using engineering and economics, what type of technology is working out there, and then apply financial incentives to help try these things out.”

 

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Talks beginning this year among member states the International Maritime Organization (IMO) will broach the subject of regulating vessel speeds, a proposal that would be pricey for vessel owners while slowing shipper supply chains.

Apr 02, 2018

ELD rule pressures inland warehousing

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Land valuations and rental rates for US industrial real estate will escalate in seaport cities and at major inland distribution hubs, but rents in tertiary markets 200 to 300 miles from ports could drop because of a shortage of truck capacity and drivers.

US imports “are a huge driver of demand for industrial real estate,” said Kevin Turner, executive director in Southern California at Cushman & Wakefield, which analyzed fourth-quarter 2017 demand for warehouse and distribution space near 13 leading container ports.

Although record-low vacancy numbers for many industrial real estate locations, and especially seaport-specific markets, may appear to be healthy, “theres something else going on,” Turner said. He’s telling his beneficial cargo owner (BCO) clients the strong growth in seaport markets, and key rail-served inland hubs such as Chicago and Dallas, is attracting truck capacity because drivers have higher earning power in those markets.

Drivers are less interested in the mid-range tertiary markets such as Phoenix or Las Vegas because port and road congestion, and now the federal mandate for electronic logging devices, are limiting the distances truckers can drive each day. The safety-driven electronic logging device (ELD) requirement is making it next to impossible for drivers to fudge on their hours of service as some allegedly used to do when using paper logs. Also, the farther the distance driven, the greater the likelihood that layover will be needed. As a result, truck drivers, many of whom are owner-operators, are more interested in servicing distribution warehouses in locations such as Southern California’s Inland Empire or central New Jersey and the Lehigh Valley transloading facilities that service the port of New York-New Jersey than in longer hauls to secondary and tertiary markets. “It is even more critical now to have transloading facilities near ports,” Turner said.

Fred Johring, president of Golden State Express and chairman of the Harbor Trucking Association in Southern California, said that as he tries to maintain capacity while the driver shortage is worsening, drivers ask him two questions. “How much do you pay?” and “Can you keep me busy?” The same situation is playing out at other major seaports.

As truck rates increase at least 5 to 7 percent this year, Turner said BCOs are focusing more than ever on optimizing their supply chains by taking space at transloading facilities close to seaports. As a result, BCOs are paying higher rental rates for transloading and distribution space in seaport cities.

He cautions, however, that rental rates also vary significantly due to other factors, including local real estate costs. Therefore, a port such as Savannah, which was among the fastest-growing US seaports last year, has an average industrial rental rateof $4.62 per square foot, whereas the average rental rates in Oakland are $10.43; in Los Angeles-Long Beach, $9.60; and Seattle-Tacoma, $8.95, even though imports at those ports did not grow as much as they did in Houston, Savannah, and Charleston.

The point, however, is that since the ELD requirement took effect in late December, BCOs in most of the major seaport regions will experience increased rental rates, in some cases exponential increases because demand for close-in warehouse space will increase, and those regions will experience a growing demand for truckers, which will result in increased driver wages and benefits. Increased warehouse rental costs and transportation costs will force BCOs to optimize their supply chains by locating close to both the ports handling their imports and the consumer markets they serve in the urban cores.

“They can’t put the whole cost on the consumer,” Turner said.

Generally, the push to get closer to ports and large rail hubs could have the opposite effect on those markets that are more than 100 miles from the ports, Turner said. Industrial rental rates in the secondary and tertiary markets could experience downward pressure, and those markets may see a decrease in truck capacity as drivers gravitate toward higher-paying work with more turns per day in the seaport regions. Other industry executives, however, note that each market has its own dynamics, and the secondary and tertiary markets will make adjustments to fill their needs.

Virtually every industrial real estate market in the US has been enjoying lower vacancy rates, strong demand for warehouse space, and rising rental rates as the recovery from the 2008-2009 recession appears ready to extend for another year. Retail sales, which increased 4.5 percent last year, are forecast to increase 2.9 percent in 2018, Turner noted. New home construction is at a 10 year high, GDP is forecast to increase about 2.5 percent this year, unemployment is at an eight0year low, and the cost of money is still relatively inexpensive.

 

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Land valuations and rental rates for US industrial real estate will escalate in seaport cities and at major inland distribution hubs, but rents in tertiary markets 200 to 300 miles from ports could drop because of a shortage of truck capacity and drivers.

US imports “are a huge driver of demand for industrial real estate,” said Kevin Turner, executive director in Southern California at Cushman & Wakefield, which analyzed fourth-quarter 2017 demand for warehouse and distribution space near 13 leading container ports.