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Apr 02, 2018

Location trumps price

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Demand for warehouses and distribution space is growing faster in high-cost port cities and major inland hubs than in secondary markets, despite accelerating rets, labor and land costs.

“If that’s where the demand is, that’s where I want to be. Yields will be higher,” Chris Caton, senior vice president of research at Prologis, told the 18th Annual TPM Conference in Long Beach, CA , on March 6.

Seaport locations such as Los Angeles-Long Beach and New York-New Jersey and inland hubs like Chicago and Dallas are experiencing especially rapid demand for industrial development, because of convergence of traditional import distribution activities and last-mile e-commerce fulfillment. Vacancy rates are low, rents are increasing steadily, and a shortage of warehouse workers and truck drivers are pushing labor costs higher at a faster pace than in secondary inland population centers. AAs a result, US industrial rents increased 9 percent last year, but rents increased 15 percent at locations close to ports.

A Cushman & Wakefield analysis of 13 major seaport industrial real estate markets found that the seaport locations accounted for 28 percent of net absorption in the fourth quarter of 2017. The average vacancy rate was 3.5 percent, compared with 5.1 percent for the US market as a while. Industrial real estate rental rates can be tracked on the JOC Shipping & Logistics Pricing Hub, which shows that rents in Los Angeles have risen 6.7 percent from the fourth quarter of 2016, to $9.60 per square foot, while rents in northern New Jersey are up 11.5 percent to $8.14.

One important reason why proximity to distribution hubs and population centers is more important than real estate prices is the increasing cost of transportation, said Michale Murphy, chief development officer at CenterPoint Properties. Until recently, transportation costs were 10 times the cost of real estate, but now its more like 13 to 14 percent, he said.

Increasing drayage costs and worsening driver shortages since the roll-out of the federal electronic logging device (ELD) mandate in December are forcing transportation prices higher. The April 1 enforcement of the ELD requirement is expected to accelerate this trend because drivers no longer will be able to adjust their log books to make it appear they are adhering to federal hours-of-service requirements. With an aging driver force and the difficulty drayage companies have attracting young drivers, warehouse operators’ ability to ensure access to sufficient truck capacity is more valuable than ever, Murphy said.

Rapid growth in e-commerce sales, which translates to a requirement to locate last-mile delivery facilities closer to large consuming populations. Are rapidly absorbing the supply of available industrial space in large port cities and inland rail transportation hubs. “Everyone Wants speed,” said Adam mullen, senior managing director and Americas leader at CBRE. “They are constantly rethinking their locations.” Retail sales at brick-and-mortar stores increased 2 percent last year, while e-commerce sales increased 15 percent.

The e-commerce trend is part of a larger migration to cities, a trend that is accelerating because the population seeks access to the urban experience. “Its all the things that make city life what it is,” Caton said. As traditional and e-commerce retailers focus on bringing their products closer to consumers, they are experimenting with different ways to deliver their products more efficiently “They’re still experimenting,” Caton said. “There are eight different ways it can work.”

Creativity in the siting of mixed-use distribution warehouses is especially evident today with the three-story facility Prologis is building at the Port of Seattle and the logistics hub CenterPoint is developing at the Port of Oakland.

Prologis last April broke ground on the first multistory distribution facility in the US, a 590,000-square-foot, three-story warehouse and distribution center two miles from the Port of Seattle. While Prologis has built multistory warehouses for 20 years in Japan, where developable land in urban areas is especially tight, the Seattle project is revolutionary for the US, and if successful, it could be duplicated in other large urban areas where land is at a premium.

Although port-adjacent property is more costly than land in distant locations, the emphasis of the future tenant or tenants won’t be on moving high-cost merchandise, but rather on attracting high-volume business, Caton said. Due to its location at the port, the Seattle facility could serve as an import distribution center and as a last-mile fulfillment warehouse for the urban area.

The 440,000-square-foot facility, CenterPoint is developing adjacent to container terminals at the Port of Oakland will be the first structure to be built as part of the Seaport Logistics Complex on the former 180-acre Oakland Army Base. “It’s a beautiful location,” Murphy said. “The location gives options for international, transloading and last-mile, the ability to serve different pieces of the supply chain.”

The evolution underway in the development of warehouses and distribution centers will help to sustain the momentum that industrial real estate has experienced since the end of the 2008-2009 economic recession, a period marked by 31 consecutive quarters of positive net absorption and 25 consecutive quarters of rent growth. “All of us are trying to figure out this evolution,” Mullen said. The rapid changes underway the past five years could accelerate at twice the pace In the next five years.

Mullen predicted that 2018 will see a continuation of the low vacancy rates, rising rents and robust development of recent years. Developers, landlords, and users will proceed with a sense of urgency. “No one in this room is getting more patient,” Mullen said. “They are getting less patient.”

Print Edition

Demand for warehouses and distribution space is growing faster in high-cost port cities and major inland hubs than in secondary markets, despite accelerating rets, labor and land costs.

“If that’s where the demand is, that’s where I want to be. Yields will be higher,” Chris Caton, senior vice president of research at Prologis, told the 18th Annual TPM Conference in Long Beach, CA , on March 6.

Apr 02, 2018

Pressure Rising

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Aligning capacity with fluctuating demand and sticker-shock pricing is always a tough dance in the air cargo spot market, but sharply rising volumes and lift constraints today are buffeting shippers and forwarders, with no swift solution in sight.

Historically, a full 50 percent of this volatile “boom-bust” marketplace has been driven by emergency shipments plus business cycle or seasonal demand factors, Mike Piza, senior vice president of Apex Global Logistics, said last month at 18th Annual TPM conference in Long Beach, California.

“But there’s a whole new paradigm in the air market today,” he added. “A few years ago, it was too much capacity and low volume, ‘just in time’ and emergency shipments. Now, its speed to market that is straining capacity everywhere, especially in peak seasons that seem to be getting longer.”

Sanne Manders, chief operating officer of Flexport, a San Francisco-based digital freight forwarder and customs broker, said demand growth in 2017 was stronger than anticipated. “You saw a rise in e-commerce and in freighters flying full directly from China to the US.”

But while volumes were large, actual tonnage was not, Manders contends. “When you get a parcel from Amazon, there’s a lot of air in that parcel, so air is filling up the plane very quickly with volumetric cargo.”

Adding to the demand for air cargo capacity last year, Manders said, were a series of new product launches of electronic goods manufactured in China, most notably the suite of Apple iPhones. On the supply side, capacity shortages arose when some large freighter operators “had a relatively large numbers of planes on the ground for heavy maintenance servicing,” he said, citing Korean Air Lines as an example.

“There is also a lot of capacity parker in the desert, such as passenger 747s. They can be converted to freighters, but that takes capital and maybe six to nine months for the overhaul. Not like you can just go into the desert and get a few planes.”

Flexport will launch its first weekly freighter flight between Hong Kong and Los Angeles this month, operating two flights per week as the tech-based forwarder locks in capacity on the busy and space constrained trans-Pacific route.

The two flights per week on Atlas Air Boeing 747-400 freighters will have a total capacity of 1,600 tons of cargo every month. To cater to peak season demand, the schedule will be increased to three times per week from September, increasing total cargo capacity to 2,400 tons per month.

Initially, the private cargo flights will target manufacturers, exporters, and trading companies in Shenzhen, Guangzhou, Hong Kong, and other major cities in southern China, as well as importers based in North America, Flexport said.

Claudia Andersen, import-export manager, enterprise logistics for 1-800Flowers.com, said she gets good service on ocean and uses air only when forced to. But the spot market today, she claims, is a “mess.”

“Before, it took 24 hours to get a quote, and now it takes 48 hours,” Andersen said, “plus its increasingly compounded by missed connections. A five-to seven-day service can take seven to nine days. I was paying for a three-to four-day premium service in the last two months of 2017 and sometimes getting deliveries in 11 to 12 days.

Andersen said she is abandoning air freight for a while because of the service inconsistencies and price volatilities. “We’re also educating our (company) buyers about the logistics problems we’re facing to guide them in ordering. I send them articles. I keep them informed.”

Her job, she said, is to give her buyers “the realities of what is happening in air cargo today. We are paying higher rates. We are experiencing longer transit times.”

Andersen declined to identify her primary air cargo provider, noting delays and service gaps are “an industry problem across the board, not just one airline. We will return to the (air cargo) market, we will pay for the premium service, we just expect to receive what we pay for.”

Glyn Hughes, global head of cargo for International Air Transport Association (IATA), said demand for air cargo capacity was up 9.3 percent in 2017, while growth in supply or lift increased 3 percent. “We’re still forecasting (supply-demand) growth for this year.”

The IATA official said air cargo growth from the mid-1990s was steady and “predictable,” but ever since the global financial crisis of 2008 to 2009, “there have been many “false starts” and the industry has been plagued by disruptions of the supply-demand equilibrium.

“To have a sustainable growth industry, you need to have a sustainable growth pattern,” Hughes said. He sees the rebound of 2017 continuing. “E-commerce is still less than 10 percent of total retail sales, but the potential (for expansion) is huge.”

Hughes called for even greater transparency and communications between the “tripartite” – the customer, carrier, and forwarder. “The sooner you can anticipate the demand happening, the sooner we can provide the freighter capacity to move it. But we haven’t digitized the support services, and this industry is historically non-communicative. We talk to the ground handler but not to the forwarder.

“We urge more people to get around a common table and talk so all our needs can be understood and balanced,” Hughes argued. “In air cargo, we are looking for optimization and equilibrium.”

Manel Galindo, CEO of Freightos WebCargo, said there was no indication on the horizon that demand would drop this year with cargo movements in January and February higher than they were in early 2016.

“So it seems likely that come the next peak season there will be similar capacity constraints, which will have a similar impact on pricing. Right now, as well as e-commerce growth, generally healthy world trade is also pushing up demand,” he said.

Forwarders are advising shippers to book freight early on the major east-west routes. C.H. Robinson said capacity will become harder to find as airlines try to engage with large shippers in a variety of industries and negotiate directly for their air freight needs.

“There is only so much air cargo space available,” the third-party logistics provider said in a report on air trends in 2018. “If large shippers absorb a larger slice of the available capacity, small and medium-sized shippers will probably find it a lot more difficult to secure air space for their freight.

“Generally speaking, the longer the lead time you can allow between pickup and delivery to customers, the more able you will be to find available space and contain your costs.”

To add stability to the volatile air cargo market, Manders of Flexport called for consistent volume shippers of goods such as high-value electronics and perishables “to lock in your pricing and capacity as soon as possible. The regular shippers who buy long-term contracts will still be subject to the (market’s) stronger volatility and a little bit higher rates, but they will be somewhat cushioned.

“The shipper who only needs air capacity for, say, a certain month or a short period of time, cannot lock in and will be subject to extreme volatility.”

Panelists at TPM agreed airport infrastructure problems, facility congestion, and traffic are adding to air cargo shipment delays, while freight plays second fiddle to passengers in airport expansion planning and new terminal construction. One solution often heard is to develop secondary airports with a focus on freight.

Hughes summed it up by saying, “It’s all about consistency and visibility. You have a 10-ton blocked space agreement with a carrier and you show up with 14 tons, our supply forecasts are off,” and the equilibrium is upended in that one spot alone.

 

 

Print Edition

Aligning capacity with fluctuating demand and sticker-shock pricing is always a tough dance in the air cargo spot market, but sharply rising volumes and lift constraints today are buffeting shippers and forwarders, with no swift solution in sight.

Historically, a full 50 percent of this volatile “boom-bust” marketplace has been driven by emergency shipments plus business cycle or seasonal demand factors, Mike Piza, senior vice president of Apex Global Logistics, said last month at 18th Annual TPM conference in Long Beach, California.

Apr 02, 2018

An East Coast gate-keeper

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The ports of Virginia and Georgia hope a groundbreaking agreement to collaborate on a host of operational and other issues will positions them as two of the most prominent gateway ports on the US East Coast, with rail a key focus.

The Federal Maritime Commission (FMC) in April 2017 unanimously voted to accept the East Coast Gateway Port Terminal Agreement between Virginia and Georgia, the first of its kind in the US, that some analysts believe will set a precedent for port partnerships.

Under the agreement, the ports will be able to jointly acquire operating systems and equipment; meet to share information on cargo handling, gate operations, turn times, staffing, and infrastructure; draft agreements with carriers, shippers, and other terminal operators; and sync marketing materials to attract joint services, alliances, and carrier network agreements. The two ports can’t jointly set rates or charges.

“This is not just a port agreement, this is a gateway port agreement,” Griffith V. Lynch, executive director of the Georgia Ports Authority, said in a panel discussion at the 18th Annual TPM Conference in Long Beach on March 7. “The gateway port agreement helps us ensure that for the future we will be able to handle this cargo,” he said. “I think we will see in the future fewer ports benefiting from these larger ships. I believe that you have got three gateway ports on the East Coast. And that is New York-New Jersey; that is not going to change. That’s Virginia. And that’s Georgia. So, to the extent that we can collaborate, the better it will be for everybody involved.”

The agreement, Lynch said, will help give the ports an edge on the East Coast, as ports along the coast face the logistical stress from the expanded Panama Canal and the steady escalation in size of mega-vessels.

Combined, Norfolk and Savannah handled 5.3 million loaded TEU in 2017, more than the 4.8 million laden TEU handled by the Port of New York and New Jersey, the East Coast’s largest port, according to PIERS, a sister product of The Journal of Commerce within HIS Markit. Norfolk and Savannah had a combined markets share of 32.8 percent of the total East Coast container trade last year, compared with a share of 29.2 percent at New York and New Jersey.

By pooling information on operating practices, comparing notes on new technology, and, perhaps in the future, coordinating ship arrivals at the two ports, they can improve operational efficiency and command more attention from beneficial cargo owners (BCOs) than operating alone, the executive directors of the ports said.

Virginia – which served by CSX Transportation’s $850 million National Gateway project, the last piece of which was opened in September – handles 36 percent of the port’s cargo by rail, and is looking to get to “40 percent and beyond,” said John F. Reinhart, CEO and executive director of the Port of Virginia, who also addressed the TPM panel.

In Savannah, which is spending $128 million to upgrade its rail capacity to enable it to load 10,000 foot trains and doubles its lift capacity, rail accounts for 18 to 20 percent of the cargo volume, and the port is hoping to expand that to 25 percent, Lynch said.

The two parties, he said, have spent the last year getting “to know each other.” Virginia, which had installed a Navis terminal operating system, was able to give insight to Georgia as it prepares to do the same. Likewise, the two executive directors spent a day with their support teams comparing the design each has for expanding their rail operations, which are a key part of both their future plans, Lynch said. “We are not doing the same thing. But we learned from each other,” he said. “That is a great example of what this whole thing is about.”

“One of the things we looked at is we were both operating ports,” Reinhart said. “We said, ‘What are the areas where cooperation and collaboration would add value?’ Some of these came real quickly. Customer service. If we can come up with better customer service and customer service that meets the requirements of the BCOs, we will be more competitive.”

Print Edition

The ports of Virginia and Georgia hope a groundbreaking agreement to collaborate on a host of operational and other issues will positions them as two of the most prominent gateway ports on the US East Coast, with rail a key focus.

The Federal Maritime Commission (FMC) in April 2017 unanimously voted to accept the East Coast Gateway Port Terminal Agreement between Virginia and Georgia, the first of its kind in the US, that some analysts believe will set a precedent for port partnerships.

Apr 02, 2018

Ocean Carriers try to recoup higher US surface costs

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US beneficial cargo owners (BCOs) scrambling to manage their supply chains amid intermodal rail delays and rising truck prices are paying an extra $300 per container under existing contracts, with some ocean carriers seeking to recoup their higher costs in the tight surface transport market. The truck capacity pressure, exacerbated by the federal electronic logging device (ELD) mandate, is trickling down to all modes of inland cargo transportation: railroad, drayage, and transloading and long-haul truckload. Ocean carriers are responding with a mixture of actions consisting of emergency surcharges, raising tariffs, and suspending or restricting store-door deliveries in the US. Higher surface transportation costs also are factoring into BCO and carrier negotiations of service contracts, which generally run from May to late April. Some carriers are working to reduce their exposure to store-door contracts where they have responsibility for inland moves to and from the port. Cosco Shipping, for example, told The Journal of Commerce that hopefully “a lot of this can be addressed in one-on-one negotiations with our (customer) accounts” rather than a widespread action. Trucking costs are expected to rise after April 1 when law enforcement will place drivers out of service for failure to operate a working ELD or for violating hours-of-service regulations. Daily truck productivity also is expected to drop with ELDs, and when coupled with rail ramp delays, ocean carriers are worried to the speed in turning around chassis will slow, increasing rental charges.

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Apr 05, 2018

Freight Pollution Vote Delayed

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Southern California air quality officials delayed action Friday on a proposal to draft regulations for warehouses, rail yards and large construction projects that are responsible for much of the regions most harmful smog-forming emissions.

The South Coast Air quality Management District governing board had been scheduled to vote on whether to use its authority to regulate freight facilities and development projects as indirect sources of pollution due to the large number of trucks, trains, and construction equipment they attract.

But the panel postponed the matter to its next meeting in May, citing the absence of three members, including Chairman William A. Burke, who was out sick.

Despite the absences, the board heard the results of a poll it commissioned, which found a majority of voters in the region support the agency pursuing a local ballot measure for a quarter-cent sales tax increase to fund pollution-reduction programs.

The tax-hike proposal is controversial and remains in its early stages. If ultimately approved by voters across Los Angeles, Orange, Riverside and San Bernardino counties on the 2020 ballot, it could raise an estimated $700 million a year, according to the district.

Of those surveyed, 65% favor the state Legislature giving the South Coast district authority to seek voter approval of a ballot measure to raise incentive funds for cleaner cars and trucks, according to online and telephone interviews with 1,490 registered voters. A narrower majority of 54% would support a quarter-cent sales tax hike for such programs.

The air board did not take action based on the poll. It remains unclear whether such a measure would require a simple majority or a two-thirds vote to pass.

The idea has drawn criticism from environmentalists and business-aligned Republicans on the board, who say it would unfairly burden residents across the region to fund clean-air incentives to industry. But Democrats on the panel say voters should have the chance to decide how to pay for cleaning the air.

A potential sales tax increase has emerged as one possible way for the agency to meet its obligations to cut the nation’s worst smog to federal health standards. To meet looming deadlines, the district says it must increase funding for cleaner vehicles to $1 billion a year, but so far is falling short.

Also Friday, the panel approved a $120,000 no-bid contract with the consulting firm of former California Assembly Speaker John A. Perez to help search for those pollution-reduction funds.

Under the agreement, Perez’s company, Double Nickel Advisors, would provide “strategic advice” to the air district regarding its communication and messaging to the state Legislature and governor’s administration.

The contract was not competitively bud, according to a staff report, because Perez’s position as former assembly speaker gives his firm “special and unique capabilities that will ensure the agency’s communications…garner support for our funding needs.”

Perez is not registered as a lobbyist and has agreed not to lobby on the district’s behalf, according to staff for the district, which gas three lobbyists in Sacramento. The district previously hired Perez’s firm in 2016 and records show the district has since awarded the firm more than $250,000 in strategic consulting contracts.

Print Edition

Southern California air quality officials delayed action Friday on a proposal to draft regulations for warehouses, rail yards and large construction projects that are responsible for much of the regions most harmful smog-forming emissions.

The South Coast Air quality Management District governing board had been scheduled to vote on whether to use its authority to regulate freight facilities and development projects as indirect sources of pollution due to the large number of trucks, trains, and construction equipment they attract.

Apr 04, 2018

Port of Long Beach begins pilot program to reduce pollution

Online Edition

The project also includes purchasing 12 batter-electric yard tractors, and converting four LNG trucks into plug-in hybrid-electric yard tractors, officials said.

Partners, including Southern California Edison, officially launched the project Wednesday at the port’s Pier J. The project, funded by a $9.7 million grant from the California Energy Commission, will bring 25 vehicles that are zero- or near zero-emissions to marine terminals for one year to test their performance, officials said in a prepared statement.

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“This project is another example of the goods movement industry, equipment builders, utilities and public agencies stepping up to reach for the goal of zero emissions,” Mario Cordero, Port of Long Beach executive director, said in a written statement. “Today, you can see how everyone is coming together to meet that challenge.”

The project is expected to reduce greenhouse gases by more than 1,323 tons and smog-causing nitrogen oxides by 27 tons each year, officials said. The new equipment is also expected to save more than 270,000 gallons of diesel fuel.

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The project also includes purchasing 12 batter-electric yard tractors, and converting four LNG trucks into plug-in hybrid-electric yard tractors, officials said.

Partners, including Southern California Edison, officially launched the project Wednesday at the port’s Pier J. The project, funded by a $9.7 million grant from the California Energy Commission, will bring 25 vehicles that are zero- or near zero-emissions to marine terminals for one year to test their performance, officials said in a prepared statement.

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Mar 19, 2018

City Council to weigh environmental impacts of Port of Long Beach’s rail expansion project

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City Council Chambers will soon be center stage for a David-and-Goliath battle – between a loose coalition of small businesses and Long Beach’s economic powerhouse.

A study on how a proposed rail yard expansion by the Port of Long Beach will affect the environment will go before the City Council on Tuesday – with port officials arguing the more than half-billion-dollar project is crucial to improving air quality and opponents saying it will hurt nearby companies.

The Board of Harbor Commissioners approved the Environmental Impact Report in January, but two businesses just outside the project’s proposed path filed separate appeals to the council, challenging the report’s breadth and accuracy.

The council appeal is the last major hurdle before the port can begin buying up properties that sit in the way of the rail yard expansion.

“We think the council will find the EIR (Environmental Impact Report) was done properly,” said port spokesman Lee Peterson. “It will hold up to the appeal.”

But, opponents said, the consequences of the project could be greater than the report suggested.

“With all those diesel trains going through,” said Stan Janocha, chief operating officer of appellant Superior Electrical Advertising, “how could it not cause major pollution?”

The expansion, on 171 acres of land in the harbor area, is slated to begin in 2020, will create 1,100 construction jobs, and will increase the number of tracks at the Pier B rail facility from 12 to 48 tracks.

But in doing so, it would require the port to acquire 39 parcels of land, forcing the closure or relocation of long-time businesses located in the project zone. And Ninth Street east of the Los Angeles River would close permanently.

Port officials say the expansion is a crucial part of its continuing effort to reduce emissions and traffic congestion around the port.

Once finished, the rail yard – the only one that connects to the docks – will provide extra storage for empty rail cars, be able to accommodate trains up to 10,000 feet long and “allow for more efficient rail operations,” according to a city staff report.

The expanded rail yard would also reduce the number of trucks needed to transport the steel shipping containers from the docks: one train can carry about 250 containers, as opposed to the one-to-one ratio for trucks, Peterson said.

The port is trying to increase the percentage of containers carried via on-dock rail to 30 to 35 percent by 2030, Peterson said. Currently, according to city documents, 24 percent of cargo is shipped by rail and the rest by truck.

“Pier B is a really importance piece,” Peterson said. “It’s absolutely necessary for achieving that goal.”

But first, the port must prove this project – estimated to cost $540 to $820 million – will not significantly damage the environment. Any major project must undergo an environmental study and, under state law, be approved during a public hearing by whatever board oversees it.

The report analyzed how the project, during and after construction, would affect seismic conditions, water quality, ground transportation and noise.

The Environmental Impact Report, which underwent a 90-day public review before its approval by the Harbor Commission, found two areas that would be significantly impacted: air quality and global climate change.

The air emissions created by the project would, at times, create more pollution than allowed by regional regulations.

“It’d be rare,” Peterson said.

But not everyone agrees.

Phillips Steel Company and Superior Electrical Advertising, both on Anaheim Street, have filed appeals against the Environmental Impact Report. The owners of both companies are expected to speak at Tuesday’s meeting. Representatives of WestPac, a coalition of businesses in the harbor area, will also speak.

Phillips and Superior are not in the path of the project, but both argue in their respective appeals that expanding the rail yard would hurt their businesses.

They argue that the air pollution would affect the health of their employees. They also say dust and noise from the trains would hamper production and meetings with customers, and the closure of Ninth Street would make it exceedingly difficult for customers, employees and emergency personnel to get to their businesses.

“We want to stay here,” said Janocha, the COO of Superior, which makes signs for companies such as Starbucks and Disney. “But we’ll have to move out of Long Beach or shut down.”

Superior has been in business for more than 50 years and employs 125 people. Besides a 50,000 square-foot warehouse, where it constructs its signs, the company has a 50,000 square-foot yard used for storing signs that are ready to be shipped out, trucks, and large recycling containers.

The back of the yard is about half a football field from where the expanded tracks would begin.

Superior often shows clients the signs before they are finished. But with the rail yard so close, it would be difficult to bring in customers, or pitch prospective clients because of the noise, Janocha said last week.

The dust would make the new signs look dirty before they were even shipped to customers, Janocha added during a tour of his facility, as strong winds whipped around the yard.

“Tracks also cause blight,” Janocha said.

Janocha said he has looked around Long Beach for other properties that could accommodate Superior’s work, but there weren’t any large enough.

They’d have to move to elsewhere, perhaps the Inland Empire – an unreasonable burden to the 43 employees who live in Long Beach.

“Many of them take public transportation,” Janocha said. “How would they get to work?”

Peterson said Port officials have been in talks with Janocha and other business owners to mitigate any effects, which he said shouldn’t be many.

“We wouldn’t want closures to happen,” he said. “We don’t see the rail yard being anything less than a good neighbor.”

Janocha said he understands persuading the council to uphold Superior’s and Phillips’ appeals is an uphill battle. Janocha reached out to every councilmember, but only heard from Lena Gonzalez, who represents the area where the project is being built.

Gonzalez did not return requests for comment.

Janocha has discussed options with his lawyer, should the appeals get denied. But he declined to discuss those options.

“It’s David versus Goliath,” Janocha said.

Online Edition

City Council Chambers will soon be center stage for a David-and-Goliath battle – between a loose coalition of small businesses and Long Beach’s economic powerhouse.

A study on how a proposed rail yard expansion by the Port of Long Beach will affect the environment will go before the City Council on Tuesday – with port officials arguing the more than half-billion-dollar project is crucial to improving air quality and opponents saying it will hurt nearby companies.

Mar 21, 2018

Long Beach City Council shoots down appeal, certifies environmental study for Port of Long Beach rail yard expansion

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A proposed railway project that would increase the Port of Long Beach’s ability to transport cargo via train can move forward, after the City Council on Tuesday denied two appeals challenging the results of an environmental study.

In a unanimous vote, the council approved the port’s environmental impact report, which examined how the more than-half-billion-dollar rail yard expansion would affect air quality, traffic and noise.

“We believe that’s the correct decision given the findings of the EIR,” said Lee Peterson, a spokesman for the Port of Long Beach. “We will continue to engage and meet with local stakeholders there so they have input.”

The port can now begin planning in earnest for the project: coming up with a budget for the project, further designing the specifics of the expansion, finding companies to work on the various aspects of construction and acquiring properties that sit in the project’s path.

The rail yard expansion covers 171 acres; construction is slated to begin in 2020 and take seven years to complete.

It would cost between $540 and $820 million.

The project would expand the number of tracks at the Pier B rail facility, the only one that connects to the docks, from 12 to 48.

Expanding the facility, port officials say, is crucial if they are to meet their goal of transporting between 30 and 35 percent of shipping containers via on-dock rail by 2030. Currently, 24 percent of containers are shipped by rail and the rest by truck.

But the expansion would also force the closure or relocation of multiple businesses in the project zone, and permanently shut down Ninth Street west of the Los Angeles River.

It will be several months before the port “will move forward with acquisition” of the properties, Peterson said. But the environmental report’s approval “gives businesses clarity on what is going to happen at some point.”

The environmental study, required by state law, went before the Board of Harbor Commissioners in January and was approved. But two companies near the proposed project site – Phillips Steel Company and Superior Electrical Advertising – filed appeals, saying the study did not adequately address the affects it would have on their business.

By shooting down the appeals, the council upheld the Harbor Board of Commissioners’ certification of the report.

It’s unclear what recourse the appellants now have to further challenge the environmental impact report, but Stan Janocha, the chief operating officer of Superior, said he and the rest of management will meet with legal counsel on Thursday.

“I’m disappointed, frustrated and sad,” Janocha said. “I’m disappointed the council decided to go this way, where there will be more pollution in a lower-income and business neighborhood.”

Janocha added that besides speaking to counsel, he’s also exploring other options, such as moving his business out of Long Beach.

“We’ve been around here a long time,” he said, noting that one-third of his workforce lives in the city. “Leaving Long Beach is one option. We have some things to think about.”

Online Edition

A proposed railway project that would increase the Port of Long Beach’s ability to transport cargo via train can move forward, after the City Council on Tuesday denied two appeals challenging the results of an environmental study.

In a unanimous vote, the council approved the port’s environmental impact report, which examined how the more than-half-billion-dollar rail yard expansion would affect air quality, traffic and noise.

Oct 05, 2015

Honor Thy Trucker

Printed edition.

We’ve just completed National Truck Driver Appreciation Week. Truck drivers were treated to company cookouts, honored for safe driving and service, and in some cases received bonuses and gifts from employers. Appreciation shouldn’t stop there, however.

Trucking companies, freight brokers and shippers, in particular, need to appreciate truck drivers, not just during this week of appreciation, but every week. Many already do, and make no secret of it. But those who are less “driver friendly” risk higher transportation costs and, potentially, civil penalties and fines.

How so? The Federal Motor Carrier Safety Administration is preparing regulations on truck driver coercion that will affect motor carriers and their shipper customers. Shippers who coerce drivers to violate federal safety rules would face thousands of dollars in fine. For example, if a carrier promises overnight delivery on load that can’t possibly be delivered with driver’s 11-hour legal driving window, and the shipper knows that but looks the other way, that shipper could be held as liable for coercing the driver to violate rules as the carrier.

The coercion rule-making “will make CSA look like a walk in the park in its impact on shippers,” Mike Regan chief of relationship development at TranzAct Technologies, said at 2014’s JOC Inland Distribution Conference. And the final rule may be released by the time you read this.

Here are some interesting facts about truck drivers, courtesy of Trucking Moves America Forwards, an image campaign sponsored by the American Trucking Associations:

  • There are 3.4 million truck drivers in the U.S.
  • Professional truck drivers drove more than 421 billion miles in 2014
  • Most individual long-haul drivers average 100,000 to 110,000 miles of driving a year. Regional and city drivers will drive an average of 48,000 mile

Drivers should feel a bit more appreciated this year than a year or two ago. Most large truckload and less-than-truckload carriers have raised driver pay, often more than once and by double-digit percentages. Many trucking companies are doing more to offer drivers more consistent pay and get them home more often for time with their families.

Talk to truckers, however, and they will say many companies mastered the talk but not the walk. One driver recently wrote to me to tell me reports of carrier offering guaranteed pay levels are what one might politely call bovine excrement – not his term. Another trucker recently told me too many companies still treat drivers as outsiders rather than employees.

Efforts to boost driver pay pushed the overall average annual wage for heavy-truck drivers up 2.4 percent to $41,930 a year, about a $1,000 difference, according to the U.S. Bureau of Labor Statistics. That’s a bigger raise than the average U.S. worker received in 2014 - $730 or 1.7 percent to $47,230 a year, the BLS data show.

Still, $41,930 is a long way from where most trucking executives say driver pay needs to be to make a serious dent in the chronic driver shortage and really improve driver retention.

At this time last year, I suggested that trucking companies, and their customers, need to become much more “driver-centric,” and that those transportation businesses that truly recognize drivers are their most valuable resource and invest in them will win in the long haul.

Shippers need to recognize that drivers are in effect the red blood cells of their supply chains, and that nothing they produce or sell would be shipped without them. That means eliminating unnecessary detention time, providing drivers access to restrooms, and even a safe place to park if they are short on hours. It’s time for supply chains designed with drivers in mind.

We’ve just completed National Truck Driver Appreciation Week. Truck drivers were treated to company cookouts, honored for safe driving and service, and in some cases received bonuses and gifts from employers. Appreciation shouldn’t stop there, however.

Trucking companies, freight brokers and shippers, in particular, need to appreciate truck drivers, not just during this week of appreciation, but every week. Many already do, and make no secret of it. But those who are less “driver friendly” risk higher transportation costs and, potentially, civil penalties and fines.

How so? The Federal Motor Carrier Safety Administration is preparing regulations on truck driver coercion that will affect motor carriers and their shipper customers. Shippers who coerce drivers to violate federal safety rules would face thousands of dollars in fine. For example, if a carrier promises overnight delivery on load that can’t possibly be delivered with driver’s 11-hour legal driving window, and the shipper knows that but looks the other way, that shipper could be held as liable for coercing the driver to violate rules as the carrier.

The coercion rule-making “will make CSA look like a walk in the park in its impact on shippers,” Mike Regan chief of relationship development at TranzAct Technologies, said at 2014’s JOC Inland Distribution Conference. And the final rule may be released by the time you read this.

Here are some interesting facts about truck drivers, courtesy of Trucking Moves America Forwards, an image campaign sponsored by the American Trucking Associations:

There are 3.4 million truck drivers in the U.S.

Professional truck drivers drove more than 421 billion miles in 2014

Most individual long-haul drivers average 100,000 to 110,000 miles of driving a year. Regional and city drivers will drive an average of 48,000 mile

Drivers should feel a bit more appreciated this year than a year or two ago. Most large truckload and less-than-truckload carriers have raised driver pay, often more than once and by double-digit percentages. Many trucking companies are doing more to offer drivers more consistent pay and get them home more often for time with their families.

Talk to truckers, however, and they will say many companies mastered the talk but not the walk. One driver recently wrote to me to tell me reports of carrier offering guaranteed pay levels are what one might politely call bovine excrement – not his term. Another trucker recently told me too many companies still treat drivers as outsiders rather than employees.

Efforts to boost driver pay pushed the overall average annual wage for heavy-truck drivers up 2.4 percent to $41,930 a year, about a $1,000 difference, according to the U.S. Bureau of Labor Statistics. That’s a bigger raise than the average U.S. worker received in 2014 - $730 or 1.7 percent to $47,230 a year, the BLS data show.

Still, $41,930 is a long way from where most trucking executives say driver pay needs to be to make a serious dent in the chronic driver shortage and really improve driver retention.

At this time last year, I suggested that trucking companies, and their customers, need to become much more “driver-centric,” and that those transportation businesses that truly recognize drivers are their most valuable resource and invest in them will win in the long haul.

Shippers need to recognize that drivers are in effect the red blood cells of their supply chains, and that nothing they produce or sell would be shipped without them. That means eliminating unnecessary detention time, providing drivers access to restrooms, and even a safe place to park if they are short on hours. It’s time for supply chains designed with drivers in mind.

Printed edition.

We’ve just completed National Truck Driver Appreciation Week. Truck drivers were treated to company cookouts, honored for safe driving and service, and in some cases received bonuses and gifts from employers. Appreciation shouldn’t stop there, however.

Aug 17, 2017

Air getting cleaner at Los Angeles, Long Beach ports, reports show

Online edition.

The ports of Los Angeles and Long Beach reduced pollution while moving more cargo last year, according to new reports released this week.

The annual pollution scorecard shows the ports continue to make steady progress in clearing up the air around the nation’s busiest seaport and largest stationary polluter in the region, but it’s proving harder to make significant cuts in some areas.

“As emissions decline and cargo throughput rises, chipping away at what’s left gets tougher,” said Chris Cannon, director of environmental management at the Los Angeles port.

Since 2005, when the ports first began tracking pollution, diesel particulate matter emissions linked to asthma and other respiratory ailments dropped 87 percent in Los Angeles. Another harmful emission, sulfur oxides, has fallen 98 percent, and smog-forming nitrogen oxide declined 57 percent.

The Port of Long Beach posted similar findings.

Reasons for emissions cuts

Emissions have come down for several reasons, including less diesel-burning equipment along the docks, a program to reduce vessel speed and more cargo ships turning off their engines while at shore and plugging in to electrical sources. Officials also have been stressing greater efficiencies that conserve energy and burn less polluting fuel.

At the Port of Los Angeles, there’s an effort to digitize cargo data and place container boxes in off-site yards. Combined, the two create shorter wait times for truckers who would otherwise be idling, leaving their exhaust pipes to spew fumes.

But even as this year brought dramatic reductions of pollutants across the board there, carbon dioxide, which contributes to climate change, actually has increased since 2010.

‘Challenge moving forward’

“That will be the biggest challenge moving forward,” Cannon said.

In 2015, both ports saw spikes in their pollution levels after a labor crisis backed up ships and left trucks idling.

The latest data from 2016 comes as officials at Los Angeles and Long Beach ports prepare to update a more than decade-old clean air plan.

Mayors of Los Angeles and Long Beach have said they want to see the port complex become a zero-emission zone by 2035, but the ports estimate it will cost as much as $14 billion to achieve that.

Much of those funds would be used to replace diesel-guzzling big rigs and dock equipment.

Last year at the Port of Los Angeles, 95 percent of all the trucks entering the docks were fueled by diesel. And about two-thirds of all vehicles used to handle cargo along the terminals ran on the fuel, which emits some of the most unhealthy pollutants. Only about 7 percent of the equipment is electric run, with zero emissions.

Environmentalists want electric

Environmentalists want to see nothing but electric vehicles used along the docks.

“This report continues to highlight the severity of air pollution coming from ports,” said Adrian Martinez, a lawyer at Earthjustice, a pro-environmental group. “When you look at how many of the vehicles run on combustible fuels, it really demonstrates the need to fulfill the mayors’ vision of getting true zero-emission.”

John McLaurin, head of the Pacific Merchant Shipping Association, a group representing marine terminal operators and shipping lines, sees it another way.

He called the clean air plan’s estimate “mind-boggling” and pointed to the strides made this year as evidence that reductions in pollution can be made without such a heavy investment.

“Reductions will continue in the future, but additional air quality improvements must balance cost with effectiveness to preserve the 1-in-9 jobs in the Southern California area that are dependent on a competitive port,” he said.

Online edition.

The ports of Los Angeles and Long Beach reduced pollution while moving more cargo last year, according to new reports released this week.

The annual pollution scorecard shows the ports continue to make steady progress in clearing up the air around the nation’s busiest seaport and largest stationary polluter in the region, but it’s proving harder to make significant cuts in some areas.