The Port of Los Angeles has provided some details on a proposed memorandum of understanding (MOU) with the Port of Long Beach aimed at improving efficiency at the nation’s two largest ports.
Speaking to the Port of Los Angeles Board of Harbor Commissioners on Sept. 19, Mike DiBernardo, deputy executive director, said the agreement would allow the ports to discuss “opportunities for service enhancements” at landslide points where cargo is transferred between marine terminals and motor carriers and railroads.
He noted the two adjacent ports on San Pedro Bay, with 13 container terminals encompassing 3,400 acres, handle approximately 37% of U.S. containerized ocean cargo. They have worked closely in the past to develop a clean air action plan. That plan was originally adopted in 2006 and updated in 2010 and 2017.
The proposed MOU was being presented to the Port of Long Beach Harbor Commission at its Sept. 23 meeting.
Mario Cordero, the executive director of the Port of Long Beach, said the purpose of the MOU is “to discuss collaboration on operational-related questions as we have done so on the environmental front.”
“The two ports have accomplished great objectives in addressing the environmental objective and reducing emissions and now the objective of moving toward zero emissions. So my view is given that collaboration has been a great success on that front, I think we need to have a similar path in terms of collaborative spirit on some ground operational issues,” he said.
One potentially fertile area for cooperation, he said, is furthering ocean container chassis interoperability in and around San Pedro Bay.
Gene Seroka, the executive director of the Port of Los Angeles, said the two ports have to find a better way to compete, noting that they have lost market share for 17 years, “a generation where we have been giving cargo to other ports.”
The two ports are forming working groups that will discuss how to improve cargo transfer predictability, supply chain connectivity, cybersecurity and metrics.
DiBernardo gave some details on what would be discussed in each of these areas, but noted the staffs of the two ports were seeking feedback from their respective commissions before entering into an MOU.
- In the area of improving cargo transfer predictability, DiBernardo said the two ports would look at improving gate velocity, both waiting time for truckers outside and inside container terminals, and terminal appointment systems for truckers. The ports also would look for ways to improve the reliability of rail service, railcar availability and reducing dwell time for cargo moving from terminals to trains. Improving rail service is key to retaining so-called “discretionary cargo,” that is cargo moving to inland destinations that can move through a number of ports. Finally, the ports also will look at chassis provisioning and if there are ways to improve the current “pool of pools” that the three major chassis leasing companies in the region participate in: Direct ChassisLink (DCLI), Flexi-Van Leasing and TRAC Intermodal.
- To improve what the ports term supply chain connectivity, DiBernardo said the ports would look at digital systems similar to the Port Optimizer that was developed by General Electric Transportation (now part of Wabtec) for the port. That system gives users such as trucking companies and chassis providers visibility into what cargo is arriving in the port in future days and weeks so they can do better planning. The ports will look at ways to make cargo delivery more reliable and the possibility of setting up a single appointment system that could be used at all terminals. The use of predictive analytic tools also will be discussed, said DiBernardo “to allow different nodes of supply chain to plan and execute their operations.”
- In the area of cybersecurity, the ports will seeks to promote information sharing to minimize the impact to the supply chain in the event of a cyberattack. DiBernardo compared it to a “neighborhood watch — if someone is attacked, get the information out.” The ports would increase planning, prevention, mitigation and response protocols for cyber incidents in order to minimize their impact.
- He also said the ports will figure out ways to track four major metrics: how well vessels perform in meeting their proforma schedules; how long cargo dwells on terminals; what are the turn times for trucks at marine terminals; and how long the transfer time is from ship to rail.
DiBernardo told the commission that discussions about a fifth area — workforce development — were put on the back burner because the staffs of the two ports thought it would be better to focus on supply chain issues initially.
But that got immediate pushback by the Los Angeles harbor commissioners.
“We should have that in there. That’s a big element of efficiency, workforce development,” said Commissioner Anthony Pirozzi Jr.
Commission President Jaime Lee also thought it critical given the fact that two ports share the same workforce, including members of the International Longshore and Warehouse Union.
Commissioner Diane Middleton pressed for more information about the Port Optimizer system and whether it would be used in both ports.
“How can it only be in one port? On the other hand, we are paying for it, so that raises the question of … shared costs.”
Seroka said the purpose of the product is to eliminate port congestion through information sharing and that the Port of Los Angeles believes that its investment in the product could be repaid if it grew its business by 2% through efficiency gains.
Further, he said industry could gain 8 to 10% “efficiency gains” by having participants in supply chains better share information and become more efficient.
“The question of why Long Beach has not adopted this system yet has been one of the burning questions in the industry for some time. We have sponsored financially a pilot at the Port of Long Beach at three terminals whose results came back very successful.”
He said the Port of Los Angeles would continue to work with the Port of Long Beach “to push this over the goal line.”
Noel Hacegaba, the deputy executive director of the Port of Long Beach, said that while the port was appreciative of the opportunity to “test pilot” Port Optimizer for several months last summer, the port was still evaluating it and similar products.
“There are a number of different platforms that are emerging — everything from blockchain to TradeLens to CargoSmart to APIs (application programming interfaces). What we are doing is taking a close look at the wide range of options,” he said, adding that Port Optimizer is one of those options.
“We expect to make a recommendation to our board on this matter in the very near future,” he said.