Macquarie commits $130m for container staging hub in L.A.

The proposed Harbor Performance Enhancement Center on Terminal Island at the Port of Los Angeles is designed to speed the flow of containers.    The developer planning to build a large container staging yard on Terminal Island at the Port of Los Angeles has obtained financing for the project.
   Jonathan Rosenthal, the chief executive officer of the proposed Harbor Performance Enhancement Center (HPEC), said Macquarie committed up to $130 million for the project, which would involve building a 110-acre dray-off yard for containerized cargo moving through the ports of Los Angeles and Long Beach.
   HPEC will not simply be a parking lot, but a service, he explained. Containers arriving at the ports would be loaded on chassis and then moved by drayage trucks that HPEC will hire to the staging yard. That would allow HPEC customers to have the truckers moving cargo to and from their final destination to pick-up or deliver containers at the HPEC staging yard without having to actually enter marine terminals where there are often long delays.
   Trucking companies would be able to go to HPEC, rather than potentially visiting multiple terminals among the 13 container terminals that operate at the two Southern California ports.
   HPEC believes that when fully-built out, it would be able to take 3,500 truckloads per day from nearby container terminals. That will be in two or three years, but Rosenthal said the company plans to open a pilot version of the terminal within six months that could accommodate 400 containers.
   Rosenthal views the investment by Macquarie as a major vote of confidence in the project, saying the investment bank is investing its own funds, not just money it manages on behalf of others in the project.
   The yard will be built in an area of the Port of Los Angeles on Terminal Island that was formerly used to stage exports of petroleum coke. The coke terminal was shut down in 2002.
   Rosenthal said the ability to locate a large dray-off yard right in the port was an unusual opportunity, contending that it might not be possible to find a comparable site without going many miles from the port to an area such as the Inland Empire. In contrast, he said the HPEC site is within 7,500 feet of terminals with 80 percent of the crane capacity of the Port of Los Angeles.
   HPEC will be able to take advantage of so-called “peel-off” programs where shippers or groups of shippers work with marine terminals to have a fleet of trucks rapidly remove a large group of containers from a pile of containers rather than sending a trucker to pick up one particular box from the thousands or tens of thousands that may be stored at a terminal.
   Rosenthal said HPEC could make peel-off programs more attractive to marine terminal operators because they will be able to put any container going to HPEC in the same block of containers.
   “The terminal operators now, they have a hard time creating free flow stacks, because unless you’re Wal Mart or you’re Target, you just don’t have enough volume… for a free flow stack, you need volume,” he explained.
   HPEC will help truckers become more efficient, said Rosenthal. “Your number of turns per day per truck is much higher. Your labor cost is much better, and the truck drivers can make more money because they have higher turns.”
   He believes truck drivers who work for HPEC will be able to make up to five round trips to marine terminals in a day.
   The facility is attractive to beneficial cargo owners, said Rosenthal, because they will have more control over their inventory, labor, and warehouse or distribution center. Labor, he said, can be better matched to the arrival of inventory.
   He said all the containers at HPEC terminal will be mounted on chassis and the facility will have a computer system that allows BCOs to know what containers are available, and where they are. The facility will have automated gates and truckers will be able to enter it 24 hours a day, 7 days a week. He expects turn times to be 20 minutes.
   Shipping lines will potentially be able to offer shippers a differentiated service, he said.
   “Today, everybody flies coach,” he said. When HPEC begins operating, he said carriers will be able to say to customers, “We’ll deliver this thing to HPEC. We’ll deliver the can on wheels and you can come whenever you want and come pick it up.”
   Rosenthal said the project is about midway through the California Environmental Quality Act process and will have to be permitted and approved by the Los Angeles Board of Harbor Commissioners. The board has, he said, previously approved a memorandum of understanding and exclusive negotiating agreement with HPEC.
   Rosenthal said the terminal hopes it is able to use alternatively fueled vehicles running on liquefied natural gas, or hydrogen or electricity to move containers from the terminals to the HPEC lot.