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2012 Focus On International Trade Long Beach Business Journal

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Looking east from the Port of Los Angeles’ main channel, with the Evergreen Terminal and Vincent Thomas Bridge to the left, and Piers 300 and 400 to the right, home to APL and Maersk, respectively. In the background is the Port of Long Beach. Photograph at right shows containers on Pier T at the Hanjin Terminal in Long Beach. (Photographs by the Business Journal’s Thomas McConville, April 16, 2012.)

San Pedro Bay Ports Strengthening To Maintain Key ‘Economic Engine’ Local Ports To Increase Capacity, Green Efforts And Jobs As Competition Ramps Up ■ By SEAN BELK Staff Writer ith fierce competition coming from seaports around the nation and bordering countries, the San Pedro Bay ports are heeding the call to secure their top position as North America’s leading stream of international trade. The ports of Long Beach and Los Angeles, together considered the busiest port complex in the country, are moving forward with billions of dollars worth of infrastructure developments and capital improvements over the next several years. The developments come as ports compete for Midwest-bound discretionary cargo that primarily flows from Asia-Pacific through Southern California. Realizing the ever-increasing demand for heavier and larger cargo loads, the twin ports are eagerly working to increase capacity, efficiencies and capabilities, while leading the charge to reduce local environmental impacts. Upgrades to container terminals, railways and truck routes are expected to spur thousands of construction jobs annually, while maintaining the local area’s vast maritime labor force and industrial base.

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Last month, the 1,200-foot-long Mediterranean Shipping Company’s (MSC) “Fabiola” vessel – considered the largest ship to call in North America – cruised into the Port of Long Beach before stopping at the Port of Oakland along its assigned trans-Pacific trade route from Yantian, China. The massive ship is capable of handling 12,500 twenty-foot equivalent units, or TEUs, and is comparable in length to a 120-story skyscraper, almost the size of the Empire State Building. The arrival of the colossal MSC ship proves that the Port of Long Beach, one of the few deep water ports in the country, is “Big Ship Ready,” said J. Christopher Lytle, the port’s executive director. “We’ve put together the facilities and expertise to handle these megaships that are the future of international trade,” he said. “It’s our mission to both preserve and strengthen the economic engine that is the port.” This month, Hong Kong-based Orient Overseas Container Line (OOCL) and its affiliate, Long Beach Container Terminal, officially signed a 40-year, $4.6 billion lease with the Port of Long Beach. The contract is the largest such terminal lease in history, sealing the way for a long-term tenancy at the planned new Middle Harbor terminal, which is currently under construction as a major redevelopment project. The neighboring Port of Los Angeles also made big news recently by breaking its export record last year, moving a total of 2.1 million outbound TEUs. Economists pre-

dict that imports and exports at both ports are expected to increase this year over 2011, bringing in more revenue to port coffers through terminal leases and fees charged on containers. Kathryn McDermott, Port of Los Angeles deputy executive director of business development, said the port’s most critical achievement this year is the adoption of its “strategic plan,” approved last week by the Los Angeles Harbor Commission. The new plan focuses on maintaining “competitive operations, strong relationships and financial strength” over the next five years, she said. “The Port of L.A. is going to remain focused on what we have to do to be the port that our customers want to use and the port that the public wants to visit,” McDermott said.

Financial Strength

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espite potential threats to cargo growth, including the opening of the Panama Canal in 2014, terminal expansion at the Port of Lazaro Cardenas in Mexico and further growth at Prince Rupert in Canada, San Pedro Bay port officials say they are “well positioned” to maintain or even increase market share this year. Both Los Angeles and Long Beach ports continue to maintain the highest credit ratings in the international trade industry that allows the ports to move forward with such large projects and initiatives. Despite their firm financial (Please Continue To Page 2)

Inside 2012 Focus On International Trade 1 San Pedro Ports Strengthening To Maintain Key ‘Economic Engine’

13 Port Of Long Beach And Los Angeles Harbor Commissioners

4 U.S. West Coast Ports Bound To Gain Market Share This Year

14 Long Beach Container Terminal: The Port Of The Future

6 Twin Ports At Forefront Of Green Technology And Standards

16 World Trade Week Calendar; World Trade Week History; List Of Advertisers

10 Port Security: Pushing The Perimeter 12 L.A. Chamber Kicks Off Annual World Trade Week On May 4 12 Japan Seeks to Further Trade, Business Ties With L.A. County

Cover Photograph Photograph taken April 16, 2012 by Long Beach Business Journal Photojournalist Thomas McConville

2012 Focus On International Trade Published April 24, 2012, by the Long Beach Business Journal, a publication of South Coast Publishing, incorporated in California in 1985. 2599 E. 28th Street, Suite 212 Signal Hill, CA 90755 Phone: 562/988-1222 www.lbbusinessjournal.com Sponsored by: The Port of Los Angeles, Moffatt & Nichol and The Port of Long Beach

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2012 Focus On International Trade Long Beach Business Journal

Kathryn McDermott serves as the deputy executive director of the business development division of the Port of Los Angeles. She is responsible for the daily management of the port’s real estate, marketing, planning and economic development activities. (Photograph by the Business Journal’s Thomas McConville) (Continued From Page 1)

standing, both ports are impacted by a variety of budget factors, including market volatility. Because of its large investments, Lytle advised the Long Beach Harbor Commission earlier this year to cut expenses to increase net income. “The port has a long record of solid financial management and it’s a priority to the commission and the staff that we continue on this course,” he said. McDermott said the Los Angeles port has managed hiring new employees in the

last four years and has tried to scale back consulting services to keep costs down, while adding business development staff to assist in growing revenue. The port has also leveraged the use of “external funding,” including grant sources. She said the port’s grant portfolio has grown from about less than $30 million to about $380 million in the last five years. “We understand that even though traditional sources of income, which is our cargo business, went down during the economic slowdown, we had to look at other

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J. Christopher Lytle, who joined the Port of Long Beach in 2006, was appointed executive director last year, succeeding Richard Steinke. Lytle previously served as the port’s deputy executive director and chief operating officer. (Photograph by the Business Journal’s Thomas McConville)

funding sources . . . as a way to help make sure we can do what needs to get done,” McDermott said.

Green Initiatives

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he San Pedro Bay ports are also continuing to lead the way in industry changes toward more sustainable and cleaner operations to reduce emissions and contaminants in the water and air. The ports worked collaboratively on the Clean Trucks Program, banning pre-2007engine trucks from entering the port as of

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January 1. The program cut diesel particulate emissions from trucks serving the ports by more than 80 percent, according to port officials. The ports are now engaged in a variety of new environmental initiatives. Both ports have recently become a testing ground for “zero-emissions” trucks built by Motor Vision Corporation through the Technology Advancement Program. Other green initiatives this year include: installing “cold ironing” capabilities to enable heavy diesel-burning vessels to shutdown their engines at dock; vessel speed reduction incentive programs; water quality studies and initiatives; and testing lowemission locomotives. The Port of Long Beach alone is investing $100 million to install “shore-side electrical power” at terminals this year, Lytle said. “I’m delighted to lead a Port that is known worldwide for its achievements in environmental sustainability, whether it be cleaner trucks, a healthier harbor habitat for wildlife or the largescale recycling of construction materials at the Port,” he said. McDermott added that each major development and expansion project at the Port of Los Angeles contributes to the Harbor Community Benefit Fund to go toward green initiatives in the community, such as air filters at nearby schools. She said each contribution is based on how much cargo growth each project would produce.

Driving Development

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ajor capital improvements to terminals and transportation infrastructure over the next several years are also likely to be a boon for the struggling construction industry as the local twin ports work to roll out the red carpet for new and existing international trade customers. Lytle said the Port of Long Beach’s construction schedule is moving into “full swing” this year, with more than $4.5 billion in capital improvement projects over the next decade. One of the largest developments is the construction of a massive new bridge to replace the outdated Gerald Desmond Bridge that was built in 1968. The port and Caltrans are soon entering into a contract with an engineering-construction team to start building the new

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Long Beach Business Journal

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cable-stayed bridge next year. The total $950 billion federal- and state-funded project is to be completed in about five years. The new bridge will allow taller container ships to pass underneath, while upgrading a major thoroughfare used daily by freight trucks – which handle about 15 percent of the nation’s goods – and automobiles. The Long Beach port is also working on major improvements to the Pier G facility for terminal operator ITS. The project includes adding highly efficient and modern facilities, gold-level LEED-certified buildings, along with a new on-dock rail yard. The port is also breaking ground on new maintenance facilities. Projects are expected to provide work for construction firms that order equipment and hire thousands of employees, who spend money in the community, Lytle said. But, he added, the long-term goal is to “make sure the Port of Long Beach stays competitive in the shipping industry and continues to bring trade to the port.” Lytle said import and export trade through the port directly provides for about 300,000 jobs in Southern California. Finding a new headquarters for the port’s 400-member staff is also a priority this year, he said, because the current administration building is outmoded, undersized and seismically deficient. “We have assigned key staff to shepherd this process, and we are committed to seeing that we find the right home, possibly an

interim headquarters at first, in the short term,” Lytle said. The Port of Los Angeles, meanwhile, is moving forward with a $1.2 billion capital improvement program over a shorter fiveyear timeframe. The largest projects this year include: a $121 million expansion of the China Shipping terminal, with plans to double in size to 142 acres; a project for American Presidents Line (APL) to expand its terminal by 40 acres; and the near $100 million Berth 200 rail yard project. The port’s main channel deepening project is to be completed this year, bringing the channel to minus 53 feet for larger container ships. The port is also securing funds for a new fiber optics security system and is breaking ground on the South-Wilmington grade separation project. McDermott said the Port of Los Angeles cargo operations support about 800,000 jobs in the region. Ways to spur further job growth, she said, is through developing clean maritime technology partnerships, developing an academic maritime research center and spurring recreation and tourism through several projects to redevelop the L.A. Waterfront. “Even though we’re mostly a cargo port, we have a program to redevelop our waterfront over time,” McDermott said. “This helps to maintain strong relationships with the community and really makes San Pedro and Wilmington and the surrounding areas a place where people want to live and bring their businesses.” ■

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2012 Focus On International Trade Long Beach Business Journal

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U.S. West Coast Ports Bound To Gain Market Share This Year Economists Say L.A.-Long Beach To See Rise In Imports, Exports In 2012 ■ By SEAN BELK Staff Writer ocal economists say all signs are pointing toward a modest uptick in goods movement through the San Pedro Bay ports this year. The cautiously optimistic outlook comes after overall cargo volumes through the dominant ports of Los Angeles and Long Beach were weaker than expected in 2011. While U.S. export traffic grew, major foreign trading partners experienced natural and economic disasters and U.S. retailers kept shelves relatively lean in anticipation of a soft holiday sales season last year.

L A Mitsui O.S.K. Lines ship prepares to dock at a TraPac terminal in the Port of Los Angeles. The TraPac facility at Berth 136, according to the firm’s Web site, consists of 170 acres of container yard and three vessel berths that have 10 TraPac-owned shore-side cranes. (Photograph by the Business Journal’s Thomas McConville)

With more encouraging, stable economic conditions in recent months, economists predict both inbound and outbound cargo volumes will bounce back this year. After the seasonal first-quarter slowdown in trade, mostly due to the Chinese New Year, container cargo in March began climbing, with a steady rise in imports, according to recent statistics. Overall cargo volume through the Port of Los Angeles jumped 8.27 percent last month compared with the same month last year, while the Port of Long Beach saw a more dramatic 12 percent rise in goods movement. Together, the ports handled more than 1.1 million twenty-foot equivalent container units (TEUs). The National Retail Federation (NRF) predicted the trend to continue, with imports at container ports across the nation increasing 3.2 percent in April, according to the NRF’s recently released report. For the remainder of the year, local ports should see a “traditional” peak season, with imports ramping up in July and August and then dropping off by mid-September, according to Ben Hackett, founder of Hackett Associates, which produces the industry newsletter Global Port Tracker. An economic forecast released in February by the Los Angeles Economic Development Corporation (LAEDC) predicted the twin ports will see a combined 2.8 percent increase in overall container traffic in 2012 compared with last year, representing an uptick of about 14.8 million TEUs for the year.

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2012 Focus On International Trade Long Beach Business Journal

Although risk factors continue to linger, “Asian economies are once again expected to lead the way with higher rates of growth compared with the economies of Europe and North America, which bodes well for trade volumes at the local ports,� the report said.

China Comeback

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everal months of positive employment and industry growth show a more “solid� U.S. economic landscape, Hackett said. As a result, retailers will likely start building up inventories this year due to excess capacity, bringing a rise in market share to the West Coast ports, with more consumer products coming in from China, primarily. “We believe economic patterns [have been] going in the right direction long enough to suggest that we’re going to see growth and expansion in the U.S. economy,� Hackett said. “We may see one or two bumps along the way, but it’s growing as opposed to shrinking . . . The capacity is available, the boxes are available, so I would imagine that we’ll see the return of the normal peak season.� He added that rising gas prices, although a concern for some consumers, shouldn’t have any dramatic impact on overall consumer confidence. After the industry saw slight market shifts last year – such as more demand from India that channeled imports through the Suez Canal to East Coast ports – a rebound in trade with China should bring the majority of import trade back to the West Coast this year. “This year, we’re expecting more growth on the West Coast as opposed to the East Coast,� Hackett said. John Husing, a regional economist based in the Inland Empire, agreed that China should continue to be San Pedro Bay ports’ top trade partner. But, he cautioned about competition from other routes through the East Coast as products from China have become more expensive than in the past. “That’s a bit of an issue for us,� he said. “What that will do is dampen the growth.� Additionally, port officials said competition from expanding ports in Mexico and Canada looking to capture discretionary cargo bound for the Midwest region may also continue to threaten cargo growth through the local twin ports this year.

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turing, healthcare and business management. Logistics jobs, in particular, are tied to international trade through San Pedro Bay, he said. The Inland Empire, known for its sprawling warehouses and massive distribution centers, added some 7,800 jobs from January to February compared to the same time last year, increasing more than any other county in the Southland, Husing said. He said the rise was surprising considering the region’s perceived economic struggles with an overbuilt housing inventory. “Some of our very important sectors out here are trucking, warehousing and wholesale trade, and those sectors are very closely related to port trade,� Husing said. “They’re the major driver.�

Free Trade Pacts

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ecently approved free trade agreements (FTAs) should also be a bonus for both export and import trade markets this year, according to local economists. Last October, Congress approved plans for three new FTAs with Korea, Colombia and Panama, all expected to open up markets for U.S. firms and increase exports by lowering or eliminating trade tariffs and other barriers either immediately or over the next decade. President Barack Obama quickly signed the legislation, lauding the agreements as tools to produce more jobs and further his initiative to double exports by 2014. The U.S.-Korea trade agreement, which went into effect on March 15, is considered

the largest bilateral trade agreement since the North American Free Trade Agreement, which was passed nearly two decades ago. Under the new agreement, almost 80 percent of U.S. exports to Korea immediately became void of any tariffs, while nearly 95 percent of bilateral trade in consumer and industrial products are to become tariff-free within five years and most remaining tariffs are to be eliminated in the next 10 years. The U.S. International Trade Commission (ITC) estimates the reduction of Korean tariffs and “tariff-rate quotas� on goods will add $10 billion to $12 billion to annual U.S. gross domestic product. Ferdinando Guerra, an international trade economist for the LAEDC, is providing a full report on the local effects of the U.S.Korea agreement during an international trade outlook event on May 16 at the Hyatt Regency in Long Beach. The LAEDC and the World Trade Center Association are organizing the event. Although he said it’s still too early to calculate the overall net impact on job growth, the new agreement should undoubtedly bring benefits to improve “twoway trade� with Korea, which is North America’s third largest trading partner. New professional business services should also start picking up in the Los Angeles County and Southern California region, which will likely be the greatest beneficiary of the new agreement, Guerra said, adding that about 30 percent of all

U.S. trade with South Korea moves through the L.A. region. “Whether or not we see a higher increase in imports versus exports, or vice versa, is something that’s very hard to quantify,� he said. “But, we’ll definitely see an increase in two-way trade and goods movement, which will be a big plus for international trade-related employment any way you look at it.� The trade agreement is particularly important since it puts the United States on a level playing field with competing foreign partners, particularly the European Union, which enacted a free trade agreement with Korea just last July, Guerra said. “The fact that we were already at a disadvantage because another region in the world had a free trade agreement with Korea, the agreement now has even more meaning for us,� he said. The U.S.-Colombia Free Trade Agreement, meanwhile, is expected to enter into force on May 15. The tariff reductions and eliminations are expected to expand the growth of U.S. exports, such as agriculture and construction equipment, by more than $1.1 billion, while supporting thousands of U.S. jobs, according to the ITC. President Obama said during a recent press conference that the new trade agreement is a “win-win� for businesses in Colombia and the United States. He added that the agreement also comes with labor rights commitments and environmental protections. ■

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n terms of exports, Husing said the San Pedro Bay ports should continue to experience a “boom,� partially related to the low value of the U.S. dollar, which has declined by about 35 percent over the last 10 years. “If I’m a foreigner buying American goods, today they’re . . . cheaper than they were a decade ago,� he said. Last year, the L.A.-Long Beach port complex set a new national export record, handling a combined 3.3 million outbound TEUs, Husing said. Whether the U.S. dollar will continue to decline this year depends mostly on the Federal Reserve’s decision to keep interest rates low, he added. A boost in trade, however, should continue to lift the job market throughout Southern California this year, Husing said. The main industry sectors driving the economy this year are logistics, manufac-

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2012 Focus On International Trade Long Beach Business Journal

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Twin Ports At Forefront Of Green Technology And Standards With Growing Capacity, San Pedro Bay Ports Push For Cleaner Air And Water ■ By SEAN BELK Staff Writer t might not be the perfect marriage, but expansion and environmental initiatives go hand in hand at the San Pedro Bay ports, where keeping an eye on cargo containers is just as important as gauging pollution levels. As the ports of Long Beach and Los Angeles gear up to handle the biggest container ships in the world, they also hope to attract the greenest fleets, said Robert Kanter, managing director of environmental affairs and planning at the Port of Long Beach. “Large doesn’t always equate to cleanest,” he said.

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U.S. Environmental Protection Agency Administrator Lisa Jackson is seen during her tour of the Port of Long Beach on April 19 to observe the port’s green industry-leading efforts and technology, including a Class 8 zero-emissions “Tyrano” truck by Vision Motor Corp. that’s currently being tested at the port complex. Also pictured is Martin Schuermann, president and CEO of Vision Motor Corp., left, and Vic La Rosa, president and CEO of Total Transportation Services, Inc., a trucking company that is currently utilizing the trucks. (Photograph by the Business Journal’s Thomas McConville)

The busiest port complex in the nation remains a key job generator for the local region, but it also has long been a leading source of diesel particulate emissions, smog, contaminated water runoff and other toxins. Studies indicate that environmental pollution caused by port-related operations impacts the health and livelihoods of residents, local workers and surrounding habitats. In recent years, however, the ports have

collaborated to take proactive steps toward groundbreaking initiatives that have become the benchmark for industry changes and best practices. The ports’ internationally recognized Clean Trucks Program, for example, recently phased out thousands of aging pre-2007-model drayage trucks as of January 1. In the next decade, billions of dollars worth of capital improvements are expected

to enable the ports to increase capacity, while also implementing cleaner and more sustainable vessels, terminals, cargo-handling equipment, trucks, trains and harbor craft. Such efforts involve a broad-based partnership between international trade stakeholders, pushing for cleaner technologies, more efficient infrastructure and industry-wide regulation, Kanter said. As container terminal landlords, the ports continue to work with regulatory agencies, port operators, customers, engine manufacturers, government officials and the local community, he said. Both ports initiated a Clean Air Action Plan almost six years ago that has since reduced overall diesel particulates and other emissions by more than 70 percent, with new targets to reduce health risks as well. But Kanter said furthering such green initiatives takes a willingness and investment from the industry to make such changes happen. It’s also a balancing act for the local ports, challenged with bearing the burden of competitive costs that come with new standards, he said. The goal, Kanter said, is to work toward international treaties and measures to “level the playing field” and mandate environmental stewardship and sustainable operations worldwide. “If we have certain air quality improvements that are only down here at the San Pedro Bay ports or the West Coast of California, that immediately puts us at a competitive disadvantage and cargo will go elsewhere,” he said. “We want to make sure everybody is playing by the same rules . . . I think there’s a need [for cleaner port operations] throughout the world . . . So, we’re not unique.”

Big Ships, Clean Ships

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arger container vessels calling on the local ports are considered a testament to the region’s maritime operations. But big ships with engines using dirty “bunker” fuel that emit greenhouse gas and diesel particulates, still pose a challenge for reducing air pollution off the coast. The next project for the San Pedro Bay ports is to provide incentives to carriers that switch to low-sulfur diesel fuels, reduce

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2012 Focus On International Trade Long Beach Business Journal

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Electrifying Terminals

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On January 23, 2009, the Foss Maritime-built Carolyn Dorothy, right, made its debut at the Port of Long Beach as the world’s first hybrid harbor tug. On March 28, 2012, the Carolyn Dorothy was joined by the world’s second hybrid tug, the Campbell Foss, pictured at left. The tugs are about 70 percent less polluting than diesel-powered tugboats. (Photograph by the Business Journal’s Thomas McConville)

Pacific Harbor Line (PHL), which provides rail transportation, maintenance and dispatching services to the Los Angeles and Long Beach ports, became the first all low-emission railroad in the United States several years ago. PHL’s engines emit 85 percent less diesel particulate matter than previous generation engines. (Photograph by the Business Journal’s Thomas McConville)

speeds before entering the harbor and implement other green practices. “We’re in the process of doing our due diligence on how the industry would respond . . . But the idea

would be to attract the newest, cleanest vessels to this port complex,” Kanter said. The International Association of Ports and Harbors is currently working with ports

to roll out incentive program strategies to participate in the Environmental Ship Index Program starting this year. The program is a Web-based ship-rating system that ports can use to promote clean ships by rewarding operators whose vessels exceed current state and federal environmental standards and regulations. Chris Cannon, director of environmental management for the Port of Los Angeles, said the Los Angeles Harbor Commission is expected to vote on approving the port’s partnership with the program in coming months, with a commitment to invest at least $400,000 in credit incentives the first year. “The Environmental Ship Index program is something that we’re really excited about and we hope that it will result in even cleaner ship operations here in the port in coming years,” he said.

he ports are also installing shoreside electrical power at marine terminals for ships to plug directly into docks while at berth. The process, called “cold ironing,” allows vessels to turn off pollution-emitting, on-board generators while docked at the ports, sometimes for days at a time. The efforts are in anticipation of California Air Resources Board regulations that mandate at least 50 percent of all calls to the ports plug into shore-side power by January 1, 2014. Officials at both ports said terminals should exceed the requirements before the deadline. “In most cases, ships will have several berths available to be able to plug in,” Cannon said. The Port of Long Beach is also looking to test new vessel technologies for older ships that aren’t able to use cold ironing capabilities, such as using seawater to filter dirty engines and capping emissions from smoke stacks, Kanter said. He added that the port also has the country’s first hybrid-electric tug boats being used by Foss Maritime. Under new terminal lease agreements, the ports are setting new standards for vessels and cargo-handling equipment as well, Kanter said. For instance, once the new Middle Harbor terminal at the Port of Long Beach is completed, vessels calling at the terminal will be required to slow down to (Please Continue To Page 8)

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2012 Focus On International Trade Long Beach Business Journal

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The Port of Long Beach handled the largest container ship ever to call on North America when the 1,200-foot-long Mediterranean Shipping Company’s (MSC) Fabiola cruised into the harbor on March 16, 2012. Cap Asia-to-Europe routes. The massive vessel, equivalent in length to a 120-story skyscraper, was built in 2010. The ship is 157 feet wide and can reach speeds of up to 24 knots. Unable to pass beneath the Gerald De of Long Beach because of the port’s deep-water channel, which is 76 feet deep, the deepest in North America. During its trade route, the vessel also stopped at the Port of Oakland, passing underneath the Golden G (Continued From Page 7)

12 nautical miles per hour within 20 nautical miles of the coast, he said. Additionally, both ports are committed to “sustainable design, construction and operation” at terminals, with new LEED-certi-

fied buildings and other energy-efficient measures for new developments. “You’re going to hear the term sustainability more and more in our port operations,” Kanter said. “What it means is that we’re keeping our natural resources for future generations.”

Zero-Emissions Movement

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fter enacting the final phase of the Clean Trucks Program this year, port officials said the San Pedro Bay ports are now moving ahead with goals to implement and test “zero emissions” tech-

nologies for trucks and cargo-handling equipment. Such demonstrations involve testing vehicles and operations that run on pure electric, diesel-electric hybrid or fuel cell technologies. The first zero emissions heavy-duty

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2012. Capable of carrying 12,500 twenty-foot equivalent container units (TEUs), the ship arrived as part of its maiden voyage in the trans-Pacific trade route from the Port of Yantian in China, after previously serving Gerald Desmond Bridge to reach its own SSA terminal, the MSC Fabiola docked at the Total Terminals International facility owned by Hanjin on Pier T. It will return monthly. The Fabiola was able to dock at the Port e Golden Gate Bridge. The MSC Fabiola is the first of what is expected to be a string of larger container ships to be deployed by ocean carriers in Pacific Rim routes. (Photograph provided by the Port of Long Beach)

drayage trucks, manufactured by Vision Motor Corporation, are currently being tested at both ports through the collaborative Technology Advancement Program. While the ports have already reduced diesel particulate emissions from trucks by up to 90 percent through the Clean Trucks Program, Cannon said, “For reduction of other criteria pollutants and green house gases, we’re going to have to go further . . . Our goal is to begin to transition our drayage fleet to zero emission trucks over the course of the next decade.”

Greening The Railroads

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ail operations, although considered more efficient and cleaner than trucks, are another source of air pollution from the ports. Both ports continue to work with Pacific Harbor Line to deploy loweremitting technologies and fuels within the line’s “switcher” locomotives that set up containers before being put on rail lines bound for the Midwest. The ports are also encouraging major line haul railroads, including Burlington Northern Santa Fe Railway (BNSF) and Union Pacific, to transition to the cleanest locomotive engine technologies over the next decade. State air quality measures for line haul locomotives, however, are mostly voluntary since California regulatory agencies don’t have jurisdiction over interstate commerce. “On a per-container basis, rail is still one of the cleanest ways to move goods, but the locomotives themselves put out a lot of pollution, and we want to get cleaner locomotives in the line haul,” Kanter said. Developing new on-dock rail facilities is another way for the ports to move cargo more efficiently, using trains instead of trucks to move cargo directly from ships to line hauls. Cannon said almost all terminals at the Port of Los Angeles currently have on-dock rail capabilities, with the exception of the TraPac terminal, which is in process of building facilities.

The port is also currently in the environmental review process of a $500 million near-dock facility to be called the Southern California International Gateway, or SCIG, proposed by BNSF on a 153-acre site, just four miles outside of the port complex. He said the port’s environmental review should be completed sometime this year after which it will be presented to the harbor commission for approval. If approved, Cannon said the facility would be in operation in the next three to four years. He said the port has long had an objective to promote the use of trains over trucks. “We hope to encourage continued growth and continued use of on-dock rail because it has greater efficiency to reduce emissions over trucks,” Cannon said. “It’s also better because it doesn’t clog the highways and reduces impacts on the local community.”

while determining possible remediation measures. At the Port of Los Angeles, the highest contaminated areas are located at a slip near the Dominguez Channel and Fish Harbor on Terminal Island, Cannon said. While the

port’s best practices have kept surface waters relatively clean, he said the problem is contaminants that have collected in sediments over time, even before the port’s existence. “Our concern is the sediments that continue to affect fish and other wildlife,” he said. ■

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he ports also continue to implement best practices at terminals and other measures to improve water quality and prevent contaminants from entering the harbor. Last year, the California State Water Resources Control Board approved a water quality restoration strategy, known as a Total Maximum Daily Load (TMDL), setting new compliance for metals, DDT, PCB, PAHs and other pollutants in the Dominguez Channel and the waters of the ports of Los Angeles and Long Beach. The strategy addresses more than 70 water quality impairments caused by high concentrations of pollutants found in water, sediments and fish. The TMDL focuses on toxic “hot spots,” where contaminants have built up in sediments over decades due to drains, rivers and channels flowing into the bay. Pollutants have typically come from sources upstream, such as industrial, manufacturing and the general public use of chemicals and toxins that have since been prohibited. The ports are expected to conduct scientific studies to identify the contaminants and their impact on sea life habitats,

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Port Security: Pushing The Perimeter ■ By MICHAEL GOUGIS Contributing Writer eeping a major port operation secure requires law enforcement officials to walk a delicate line. They’ve got to secure a massive amount of land where huge ships cruise in and out, loaded with cargo, the air space above, and water deep enough to allow the largest vessels ever made to call on the berths there. Since the bad guys never rest, the people in charge of security at the Port of Long Beach and the Port of Los Angeles find themselves ever pursuing better, more efficient ways of ensuring that the waterfront is safe, that the docks remain open and that the flow of goods and supplies continues uninterrupted. “Security is a dynamic discipline. We look at security as a journey, rather than a destination. It is influenced by events on the world stage as well as our regional and local threats,” says Sean Strawbridge, managing director of trade development and port operations for the Port of Long Beach. As the threats change, security officials alter their tactics to deal with the evolving dangers. And as port security continues to evolve, post 9/11, the ideas of coordination and cooperation with outside agencies continue to prove fruitful, officials say. “Over the past year, one of our biggest developments is that we’ve integrated our operations with the Long Beach Police Department. They’re much more integrated and woven together that they’ve ever been,” Strawbridge says. “You can’t execute port security in a silo. That’s impossible. You have to coordinate with others, and it becomes a multi-agency, multi-discipline coordination. There’s no barrier between the Port of Los Angeles and us – we’re one continuous harbor. We’re only going to be as good as them, and they’re only going to be as good as us.” To enhance that idea, the Port of Long Beach began operating its Maritime Coordination Center back in October. The idea was to give Long Beach police a permanent presence in the port’s Joint Command and Control Center, the state-of-the-art security headquarters that opened in 2009. By coordinating its efforts with Long Beach police and other agencies, landbased and nautical, Strawbridge says, the port effectively widens its early detection perimeters, thus helping ensure that threats to the port never make it to the port. “We’ve done an excellent job in providing security for the harbor district – at the waterline, on the waterline and above the waterline,” Strawbridge says. “We have deployed technologies – under the water, we have sonar. On the water, we have a very sophisticated radar system. Above the waterline, we have a very large camera array that all con-

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The Port of Long Beach’s Sean Strawbridge, left, port operations, and Dan Kane, interim director of security, are pictured in the Joint Command Control Center on Pier F (also pictured below). The $21 million, 25,000-square-foot facility houses the port’s security division and harbor patrol, as well as units from the Long Beach Police Department and other agencies. (Photographs by the Business Journal’s Thomas McConville)

nects back into our command center at the port. We’re able to monitor – using real-time technology – all aspects of the port.” But with increasingly tighter controls over the land border has come increasing traffic from the south on the water. And that has led security officials to expand their view far beyond the harbor area, according to Strawbridge and Port of Los Angeles Chief of Police Ronald Boyd. “As we secure the land borders, we’re seeing more marine activity, which is really similar to what we’ve seen in the Southeast part of the country,” Boyd says. “So we’re starting to experience it here. It’s happened here before. The traffickers have a lot of money, too, and they’re versatile and they’re able to shift on the fly. We have to respond. But we’re also trying to make sure we don’t get locked into a solution, then they shift tactics again and we’re behind them again. “It’s sort of like playing sports. We’re on the defensive, and you have to make sure that the opponent doesn’t shift and shake you out of your shoes. It’s the trick de jour, but we’ve got to be ready for the next shift.” So-called Panga boats – small, open craft, typically powered by outboard motors – have been intercepted offshore in increasing numbers, as smugglers attempt to get around the tighter security at the land border. Boyd points out that while maritime drug smuggling is nothing new, it brings a danger in the form of the weapons needed in the trade. “My concern is weapons. I don’t want to see weapons showing up on the shore.

If you’re moving drugs, you’ve got to protect the drugs from the crooks and the cops, so that means that there will be weapons,” he says. And the boats themselves are becoming more and more sophisticated, with some as large as 50 feet long – powered by a quartet of V-8 engines – captured on the shores of Southern California. The solution is to intercept those craft as far away from the port – indeed, as far away from land – as possible, Strawbridge says. “We’ve pushed the virtual perimeter out much father than the harbor district. And it’s been a very successful effort in a very short period of time. We monitor as far south as San Clemente and as far north as Ventura,” he says. “If something gets as far as the Port of Long Beach without us detecting it and intercepting it, it’s too late at that point.” It’s not just monitoring threats on the water, but keeping an eye on everything surrounding the vast expanse of the ports that is critical to keeping them secure, Boyd says. “A lot of thought has been put into talking to our neighboring municipalities. We can establish what is going on there, what’s normal and what’s abnormal, and be able to have a little bit of predictive analysis going so that we can tell when something is happening. It can be as far away as Downtown Los Angeles, or it can be something happening as close as in a neighboring municipality,” Boyd says. Preventing threats is only one way of making sure port operations run smoothly

and the region remains safe. But officials are thinking beyond that, as well. The ports are not entities unto themselves, but portals to a massive, multi-million-resident municipality. The port is a way to get goods and services to them. If there is an emergency, man-made or natural, at the port or much further inland, getting the harbor operational is critical to recovery efforts, Strawbridge says. The lesson was driven home after the last earthquake in Haiti, when ships loaded with relief supplies descended upon the country’s main port, only to find no way to offload the materials necessary for recovery. “How quickly can we be [a] back up and supporting the operations? Of course, we want to facilitate trade and commerce. But if there was a catastrophic event, the port is a natural asset to bringing additional resources and supplies into the region,” Strawbridge says. “A lot of the crude used in Southern California refining comes into the port. If that supply were disrupted for any length of time, you’d see fuel shortages. That could affect first responders – that could have a wide range of consequences. We need to make sure that those tankers are able to come in. We need to make sure security vessels can escort them. And we need to make sure we have the infrastructure in place to discharge those resources.” A quick tour of the Port of Los Angeles’ new security building drives home the point. The most obvious benefit: the new facility is simply nicer to be in – the locker room has wooden furniture, the gym equipment is

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Ronald Boyd, right, chief of the Los Angeles Port Police, is pictured with Sgt. Ferrara, left, and Lieutenant Capodanno at the group’s newly opened headquarters building. The 50,000square-foot, three-story facility, which is Gold LEED certified, cost $60 million. The building was designed as an Essential Services Facility and may serve as a center for disaster relief in the event of an emergency, with grid-independent power sources and hardened infrastructure. (Photographs by the Business Journal’s Thomas McConville)

modern, there’s even a 25-yard shooting range inside the building for officers to practice. It’s good for morale, Boyd says. But more than that, the building is designed to survive a catastrophe and make sure that officials can respond to any emergency, fully in touch with the world outside. It has a massive bank of uninterrupted power supplies (backup batteries)

that literally fill a room to make sure that all its communications systems remain functioning even if power is cut off. Before those batteries are depleted, the center would fire up the generators the size of a shipping container on the roof; pour diesel into them every few days and power will last indefinitely. Both ports – Long Beach and Los Ange-

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les – continue to pour resources and thought and planning into securing their facilities. More improvements – including allowing residents to help with video surveillance via smart phones – are on the way. It is part of that balancing act, the critical answer to a delicate question: How do you make some of the busiest ports in the world safe and efficient at the same time?

“We have to do things in a way that doesn’t disrupt the supply chain and doesn’t interrupt commerce,” Boyd says. “It’s about complementing the flow of commerce and doing things in such a way that maximizes efficiency and safety. If we can do [that], and we are transparent to the operation of the port, we’re doing our job.” ■

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Los Angeles Chamber Kicks Off Annual World Trade Week On May 4 Brookings Institutions’ Amy Liu To Discuss Metropolitan Export Initiative ■ By SEAN BELK, Staff Writer The Los Angeles Area Chamber of Commerce hosts its 84th Annual World Trade Week kick-off breakfast on May 4 as the organization launches a variety of events that highlight the international trade industry and its positive impact on the region and the nation. The breakfast, to be held at the Omni Los Angeles Hotel, 251 S. Olive St., at California Plaza, kicks off a month-long celebration of world trade with more than

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30 events hosted by partnering organizations. World Trade Week was started by the L.A. Chamber in 1926 to educate the public on the importance of global trade and how it benefits the local and national economy. This year’s conference, titled “Embracing Global Alliances,” features Amy Liu, co-director and senior fellow of the metropolitan policy program at the Brookings Institution. The program, which provides trend analysis and policy concepts for urban cities and surrounding areas, is developing the Metropolitan Export Initiative. As a way to further President Barack Obama’s National Export Initiative, the Brookings Institution is working on a collaborative and comprehensive strategy to bring civic, business and political leaders together to create and implement a customized export plan for metro areas. Los Angeles was the first city chosen to create an export strategy. Called the Los Angeles Regional Export Plan, it is being developed in cooperation with the Rockefeller Foundation and is expected to outline how Los Angeles could dou-

ble its exports by 2015. Minneapolis-Saint Paul, Portland, Oregon, and Syracuse are also working on export plans. The Los Angeles region is the nation’s largest metropolitan export market, handling $79.8 billion worth of exports in 2010 and supporting over 312,000 direct jobs and another 227,000 indirect jobs, according to port officials. The Los Angeles Regional Export Council was launched in October 2011 as a way to streamline export services in the L.A. region and help companies grow. Since then, the council has received its first private sector investment from JPMorgan Chase for the Global Cities Initiative, which combines Brooking’s expertise in metrofocused research with private-sector investment. The kickoff event is expected to draw more than 500 executives and diplomatic corps members, where the presentation of the coveted Stanley T. Olafson Award will be given to a member of the regional international community. For more information, visit www.worldtradeweek.com or call Jasmin Sakal-Gonzalez at 213/580-7569. ■

Japan Seeks To Further Trade, Business Ties With L.A. County Local Business Leaders Reach Out To Automakers, High Tech Firms After Disaster ■ By SEAN BELK Staff Writer

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group of Los Angeles County business leaders conducted a trade mission to Japan last month, meeting with government officials and executives of leading automobile and tech firms, just a year after the Pacific Rim country was ravished by the Fukushima tsunami and earthquake. The Los Angeles Economic Development Corporation (LAEDC), along with the World Trade Center Association and partnering Japanese business associations, organized a local delegation to promote the expansion of trade, investment and businesses ties between Japan and North America, particularly the L.A. region. After the tsunami and earthquake ignited a nuclear disaster, Japan shut down all of its more than 50 nuclear power plants, causing the country to now rely more on alternative fuel technologies and imported energy resources. While it is expected to take about a decade to fully recover, the country continues to rapidly rebuild its supply chain and economy, spending $200 billion so far on repairing damages. In light of the disaster, however, leading Japanese automobile manufacturers, such as Toyota and Mitsubishi, and electronics and entertainment companies, such as Sony, say they are poised to rebound this year, according to local business leaders who attended the weeklong trade mission. Bill Allen, LAEDC president and CEO, said Los Angeles County continues to be the ideal region to expand business and investment that would ultimately help restore Japan’s own economy. As Japanese

Top photograph – Some of the members of the trade mission to Japan included, left to right: Greg Moore, Vance Baugham, Lessing Gold; Vicki Christian; Bill Allen; David Abel; Sandra Gold; Lianne Chua; Charlie Forrest; Ted Whetstone and Haig Armaghanian. Right – Mr. Nobuhiko Sasaki, director-general of the Trade and Policy Bureau, America’s Division of Ministry of Economic, Trade and Industry, with Blake Christian, a tax partner with HCVT, LLP. Far right, Allen, who is the CEO of the Los Angeles Economic Development Corporation, is shown with Mr. Masaru Kato, executive vice president and CFO of Sony Corporation Worldwide. (Photographs provided by Blake Christian)

industries rebuild their supply chains, the L.A. economy should strengthen as well. He said many Japanese business executives showed strong interest in furthering ties with the local region. “The mission came at an opportune time to express our deepest sympathies with our friends and trading partners and to offer assistance to their companies who have clearly been distracted by rebuilding their operations in Japan,” Allen said. “Anything we can do to make it easier for them to grow their businesses here in our region is of extreme value to them at this time.” Japan, the No. 2 trading partner with the San Pedro Bay ports, has a long history of trade with the Southern California region. As the first Asian country to spur a

decades-long trade relationship, Japan has helped build the ports of Long Beach and Los Angeles into the busiest seaport complex in the country, Allen explained. Allen also said Japan is unique in that it is by far the No. 1 foreign investor in Los Angeles County. Accounting for 31 percent of all foreign direct investment, Japan has generated about 1,400 business establishments in the county, including principal and secondary locations that directly employ about 50,000 people. During the trade mission, the LAEDC conducted a business conference where 49 Japanese companies attended, with 11 requesting to receive investment prospects, market research and information about the L.A. marketplace. About 20 of the compa-

nies provided written requests for specific business assistance. Some companies were introduced to representatives of USC to start working on pilot “smart community” programs at the university campus, he said. Major auto manufacturers expressed an interest in advancing markets in electric vehicle, or EV, and hybrid technologies, while investing in the Los Angeles region, which is still considered the “car culture capital of America,” Allen said. Toyota was one of the first automakers to introduce hybrid electric models with its Prius, while Mitsubishi is marketing its iMiev plug-in electric vehicles. California, which has taken the lead on environmental public policy, continues to provide a strong consumer base for Japanese automobiles, many of which are imported through the Port of Long Beach, he said. “With 20 million people in Southern California who love their automobiles, it’s a very logical place for the auto industry to locate new brands and new extensions to their brands,” Allen said. “These Japanese companies were fascinated to know we already have an electric vehicle working group that is making our market more ready for a successful roll out, with growth opportunities for the electric vehicle marketplace.” He added that Japanese entertainment companies, such as Sony, are also looking at investment ventures with Hollywood studios that have a global distribution network. This year, economists predict Japan should see a 2 percent increase in its gross domestic product, increasing imports and exports of automobiles, computers, machinery, electrical equipment and optical and medical instruments, he said. “We think we’ll see increased trade volumes in 2012,” Allen said. Blake Christian, a CPA and tax credit consultant in Long Beach who attended the trade mission, said Japanese business executives and government officials also touched on recent trade pact initiatives, including the Trans-Pacific Partnership, currently being pushed by the United States government. Additionally, automakers and other companies stressed the need to invest in green technology transportation, sustainable communities and supporting incentives and infrastructure in Los Angeles County for electric and alternative fuel vehicles. ■

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Los Angeles, Long Beach Harbor Commissioners Tackle Big Issues For Country’s Top Ports he following 10 individuals are responsible for guiding their respective ports through good and bad times, and for making decisions that impact Southern Californians today and into the future. In recommending their appointments, the mayors of Los Angeles and Long Beach attempt to balance the board so there is representation from business, labor and the community at large.

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Los Angeles Board Of Harbor Commissioners The Los Angeles Board of Harbor Commissioners oversees the management and operation of the Port of Los Angeles. The five-member board is appointed by the mayor of Los Angeles and confirmed by the Los Angeles City Council. The commissioners serve five-year terms and elections are held every July for the offices of president and vice president. The board meets every other Thursday at 8:30 a.m. President Cindy Miscikowski, who served as a member of the Los Angeles City Council from 1997 to 2005 was appointed to the board in 2009. Prior to her city council position, she served for 20 years as chief of staff for an L.A. councilman. She earned a degree in political science from UCLA in 1979. Vice President David Arian was appointed to the board in late 2010. A resident of San Pedro, he began his career as a longshoreman in 1965, has served an officer of the ILWU Local 13 many times, including three stints as local president. In 1991 he was elected international president of the ILWU. Commissioner Douglas P. Krause was appointed to the board in the fall of 2005. He serves as executive vice president, chief risk officer and general counsel in the L.A. headquarters of East West Bank. He received his juris doctor from Columbia Law School, where he was editor of the Law Review. Commissioner Robin Kramer, who has more than three decades of service to the L.A. community, joined the commission in late 2010. She is a former chief of staff to both Mayor Antonio Villaraigosa and Mayor Richard Riordan. She earned her masters in urban sciences from Occidental College.

Commissioner Dr. Sung Won Sohn is the most recent appointment to the commission, joining the board last July. He is an endowed professor of economics for the Martin V. Smith School of Business & Economics at California State University Channel Islands, and vice chair of the retailer Forever 21.

Long Beach Board Of Harbor Commissioners The Port of Long Beach is governed by the City of Long Beach. The City Charter created the Long Beach Harbor Department to promote and develop the port. The Board of Harbor Commissioners sets policy for the Port of Long Beach. Commissioners are appointed by the mayor of Long Beach and are confirmed by the city council. They may serve no more than two six-year terms. In June, the commissioners elect board officers. These offices are held for one year. The board generally meets three times a month on Mondays – two at 1 p.m. and one at 5:30 p.m. – and is dark the last Monday of the month.

President Susan E. Anderson Wise was appointed to the board in December 2008. She is a graduate of the University of Chicago Law School and, since 1974, she has been an attorney in private practice in Long Beach. She has been an active member of the community for nearly 30 years, serving on numerous boards and commissions. Vice President Thomas Fields is a Long Beach advertising executive and former city planning commissioner and redevelopment agency chair. He was appointed to the board in December 2009. In 1996, he served on the Shipyard Reuse Advisory Committee, which devised the reuse plan that ultimately awarded the former Naval Shipyard property to the Port. Commissioner Nick Sramek was appointed to the board in July 2007. He is a senior project leader in system engineering

for The Aerospace Corporation in El Segundo, where he has worked for 25 years, primarily on military satellite systems. He earned a masters in engineering from California State University, Long Beach. Commissioner Doug Drummond was appointed to the board last July. He served as a member of the Long Beach Police Department for 29 years, retiring as a commander in 1988. He was elected to serve two four-year terms on the Long Beach City Council. He has also authored two books. He earned a doctorate in criminology from August Vollmer University. Commissioner Rich Dines, a longshoreman at the ports of Long Beach and Los Angeles for the past 15 years, was appointed to the board last July. In 2007 he was elected president of the ILWU Southern California District Council. He is a former diving instructor and has been a licensed real estate agent since 2003. ■

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Anthony Otto, president of Long Beach Container Terminal (LBCT), stands atop one of the firm’s gantry cranes, providing a sweeping view of the $1.2 billion Middle Harbor project under construction. The project combines Piers E and F into one 300-acre-plus facility. Hong Kongbased Orient Overseas Container Line (OOCL), of which LBCT is a subsidiary, signed a $4.6 billion, 40year lease on April 3 with the Port of Long Beach for the Middle Harbor terminal. (Photograph by the Business Journal’s Thomas McConville)

Long Beach Container Terminal: The Port Of The Future Designing The Middle Harbor: Green Thinking From Top To Bottom ■ By MICHAEL GOUGIS Contributing Writer arge-scale transportation infrastructure can pose a difficult challenge in terms of predicting the economic future, in large part because of the sheer dollars involved. The investments required for the stuff needed for transoceanic container shipping are huge; the ships aren’t cheap, and have you priced a modern port crane lately? So it becomes imperative, when planning a new project, to think in the long term – and when it comes to long-term in this industry, you are talking in terms of decades. Think of how different this is to your daily life – can you imagine driving a Ford Pinto today? So, before designing the new Middle Harbor program, Long Beach Container Terminal, a subsidiary of Orient Overseas Container Lines, had to think far into the future before deciding precisely what it wanted to do. After years of travel around the globe, visiting major container ports and examining the processes in place and the equipment in use, what the company has come up with is literally the port of the future. It needs to be; the project is anticipated to be in place for the next four decades, and

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OOCL has just signed a 40-year, $4.6 billion lease for use of the terminal. It is designed to move more containers, more rapidly and with far less impact on the environment and the surrounding community, says Anthony Otto, president of Long Beach Container Terminal. “It’s kind of a showpiece for the Port of Long Beach,” Otto says. “Some of the new technologies will usher in a whole new level of efficiency and productivity. When it’s done, it’s going to be incredible. It will be the most technologically advanced container terminal in the world.” The $1.2 billion Middle Harbor project, in a nutshell, will combine the existing Long Beach Container Terminal property and the old California United Terminal property. The Middle Harbor project will fill in about 54 acres of water, creating one large terminal that will be able to handle the equivalent of up to 3.3 million 20-foot equivalent container units (TEUs) per year. The purpose is, in a word, efficiency. The existing terminals primarily date from the birth of the containerized shipping industry in the 1950s. That means the infrastructure – the rail lines, the cranes – that was available back then is what is largely still in place today. It’s only logical. The machines are large and expensive, and you don’t trade them in frequently. One study notes that container ships last, on average, more than 27 years before they are scrapped. Locomotives and cranes can have similar life spans. But today’s ships are much, much

larger. And the volume of containerized traffic is much greater than it was. And that is driving a whole new way of building ports, Otto says. “The port’s expansion is not infinite. As trade grows, we need to handle more volume through a smaller footprint. These designs allow for a more dense operation,” he says. “Roughly seven or eight years ago, most of the industry had moved to 7,000 or 8,000 TEU ships, and now we’re moving toward anything from 11,000 to 13,000, and there are some on the drawing boards that are much, much larger. “Everything measured on these operations is measured in moves per hour – how quickly you can turn a ship. If you have 13,000 containers to move, the amount of time it takes in order to do that work and to depart that vessel is really where most of the money is made. “So the more efficient you become, the more productive you become, especially with ships that large. When you were talking 3,000 or 5,000 containers, it wasn’t that big a deal, but when you’re up to 13,000 container moves on a single ship, you need to be as productive as possible and as efficient as possible in order to be able to turn that ship in the same amount of time.” Therefore, to handle the increase in the number of containers on a ship, the equipment used to load and unload the vessel has to be far more sophisticated. And that requires more computerization and more modern equipment – and a greater ability to

load containers onto rail cars. With more containers coming off a single ship, a greater percentage of those containers will be destined for regions far from Southern California. Being able to load them directly onto rail cars eliminates the need to move the container twice and cuts the handling cost. So the Middle Harbor project will have eight times the ship-to-rail capacity of the existing terminals, Otto says. But simply buying more cranes and more equipment to handle more freight would mean more noise, more pollution and a greater impact on the surrounding community. Fortunately, in the past half-decade, environmental technology has made massive strides forward. And the Middle Harbor project will take full advantage of those advances, Otto says. “All the cranes that load and unload the ships – the 80 cranes that are in the yard – that will be servicing the stacking of the containers and servicing the rail yard, 100 percent of those are fully electrified, compared to the current models that are fueled by diesel,” Otto says. “The cranes we are purchasing are the largest cranes in the world. They will not only be able to handle the newest ships, but the generation of the ships after that.” Electricity plays a key role in the operations of the Middle Harbor terminal. Not only will the cranes be electricity-powered, the ships that call at the terminal will be required to turn off their engines and plug into shore power.

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2012 Focus On International Trade Long Beach Business Journal

“So the new facility not only is fully electrified, which obviously reduces the emissions, but the ships will all be on cold-ironing, alternative marine power,” Otto says. “All the buildings are constructed to the LEEDS (Leadership in Energy and Environmental Design Standards) gold standard. We have solar panels that will assist in powering some of the operation, and offsetting some of that electrical demand. Anything that does run on diesel will be the most modern, most efficient, most technologically advanced, as far as emissions are concerned. We are bound to that by the lease.” Every element of the Middle Harbor project will be designed with minimizing the environmental and community impacts in mind, Otto says. The cranes are rail-mounted, the newest technology, which also happens to eliminate the air particulate pollution associated with rubber tires – you’d be surprised how much of the pollution you breathe on a daily basis comes from car and truck tires. Storm water that reaches the terminal will be collected and properly processed, rather than simply being dumped into the ocean. Even expanding the ship-to-rail capabilities pays environmental dividends; the more containers that are loaded directly onto rails, the fewer trips trucks make on local highways. It’s green thinking, from top to bottom, and it’s really the only way to continue and expand operations in the future. The terminal will be designed to accommodate the newest, largest ships, and that will make Middle Harbor one of the few places they can dock. This actually will pay dividends in environmental terms, Otto says. “The newer ships are definitely more environmentally friendly, not only from an emissions standpoint, but as well as some of the onboard services that they have. The newer ships absolutely keep the carbon footprint in mind,” Otto says. “What really benefits the local area is the fact that the ships that call on Middle Harbor will be required within 40 nautical miles to burn only low-sulfur fuel. That’s a requirement of this new facility. When they’re in port, they have to plug into shore power, so they’re not creating emissions. It’s light-years ahead of what it was.” It’s a big project – it will take nearly a decade to build out completely, Otto says. OOCL’s willingness to commit to a $4.6 billion, 40-year lease is an indication of how important the company believes the Long Beach port is to its future operations. The company is one of the largest shipping lines in the world, with more than 270 ships and numerous offices around the globe. Even the expansion of the Panama Canal, which would allow container ships from Asia to sail directly to the East Coast, will not diminish the importance of the Long Beach portal to the U.S. market, Otto says. “The fact is that roughly 50 percent of the volume, slightly more than 50 percent of the volume, is headed for Southern California consumption,” Otto says. “It is unprecedented in terms of its financial commitment to this region, to this gateway and to this port as its preferred gateway into the U.S. “A lot of people talk about the Panama Canal and its widening in 2014 and the impact that may have on this port. We don’t see it that way. And, obviously, our parent company sees the Port of Long Beach’s competitiveness going forward for the next 40 years. Their commitment is a vote of confidence.” ■

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OOCL’s Qingdao pulls into Long Beach Container Terminal on April 17 with a ship full of containers. (Photograph by the Business Journal’s Thomas McConville)

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2012 Focus On International Trade Long Beach Business Journal

World Trade Week Events Calendar May 2012 Calendar Information Provided by the Los Angeles Chamber Of Commerce www.lachamber.com May 1 Foreign Trade Association Presents: “U.S.-Korea Free Trade Agreement” 8-11:30 a.m., Reef Restaurant 880 Harbor Scenic Dr., Long Beach info@foreigntradeassociation.com May 2 African Trade Reception 5:30-8 p.m., Flight Path Museum 6661 W. Imperial Hwy., Los Angeles hthomas@ivcla.org May 2 Embracing U.S.-Middle East/North Africa (MENA) Global Trade Alliances 9 a.m.-5 p.m. Los Angeles Area Chamber of Commerce Bank of America Rooms A, B & C 350 S. Bixel St., Los Angeles jgray@nusacc.org May 3 Going Global – Expanding Opportunities In Canada 10 a.m.-noon Southern California Gas Company, Edison Resource Center 9240 Firestone Blvd., Downey dgathers@gathersstrategies.com May 3-5 2012 Asian Business Summit 19th Annual Inland Empire World Trade Conference Ontario Airport Hilton Hotel 700 North Haven Ave., Ontario fred.latuperissa@trade.gov May 4 86th Annual World Trade Week Kickoff Breakfast 8:30-10 a.m. Omni Los Angeles Hotel 251 S. Olive St., Los Angeles JGonzalez@lachamber.com May 6 20th Annual ‘Day Of The Races’ 10:30 a.m.-4:30 p.m., Hollywood Park 1050 S. Prairie Ave., Inglewood elizmglynn@gmail.com May 8-10 Stadia Design & Technology Expo 2012 10 a.m.- 5 p.m. Los Angeles Convention Center 1201 S. Figueroa St., Los Angeles samuelgee@ukipme.com May 15 Focus On Bulgaria: Ambassadors Business Road Show 8:30-10:45 a.m. Los Angeles Area Chamber of Commerce 350 S. Bixel St., Los Angeles julieanne.hennessy@trade.gov

May 15 Global Logistics Forum & Maritime Day Breakfast: Goods Movement – Facing the Future 8 a.m.-2 p.m., Hilton San Diego Bayfront 1 Park Blvd., San Diego mconfer@wtcsd.org May 16 International Trade Outlook 8-10:30 p.m., Hyatt Regency Long Beach 200 S. Pine Ave., Long Beach marilyn.mcpoland@laedc.org May 17 6th Annual US-Japan Green Conference 3-7 p.m., Miyako Hybrid Hotel 21381 S. Western Ave.,Torrance info@jas-socal.org May 17 Afghanistan Opportunities For U.S. Businesses 8:30 a.m.-5 p.m. Los Angeles Area Chamber of Commerce 350 S. Bixel St., Los Angeles julieanne.hennessy@trade.gov May 17 MexPort 8863 Siempre Viva Rd., San Diego mexport@otaymesa.org May 19 Free Public Boat Tours 10 a.m.-3 p.m. Ports O’ Call Village, Berth 75-79, San Pedro Bannings Landing 100 E. Water St., Wilmington www.portoflosangeles.org or (800) 831-PORT May 22 The 86th Annual World Trade Week & International Trade Delegates Luncheon And Trade Fair 11 a.m.-1:30 p.m. The Westin Bonaventure 404 S. Figueroa St., Los Angeles info@foreigntradeassociation.com

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World Trade Week History The World Trade Week concept was conceived in 1926 and first observed in 1927 in Southern California. World trade significantly contributes to the nation’s economy and has developed a vast new horizon for America’s businesses. In 1926, Stanley T. Olafson, then manager of the World Trade Department of the Los Angeles Chamber of Commerce, conceived the idea of a World Trade Week observance in Southern California. This was during a period of isolationism and under the conditions prevailing during the heyday of the restrictive Smoot-Hawley Tariff Act. In 1935, President Franklin Delano Roosevelt officially proclaimed World Trade Week a national observance by the U.S. Government and selected the third week in May each year, which includes May 22, National Maritime Day. Initially, the purpose of World Trade Week was the promotion of the Ports of Los Angeles and Long Beach. Following World War II, the expanding economy and potential for international commerce growth created an opportunity for World Trade Week to expand its scope to include all facilities and organizations in the Southern California area involved in world trade. Under the guidance of its founding sponsors the Los Angeles Area Chamber of Commerce, Los Angeles World Airports, The Port of Long Beach and The Port of Los Angeles, the original week-long observance has now grown to more than 30 events held each year from May 1-30 in the counties of Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura. This tremendous nonprofit endeavor is further supported by Southern California companies who offer sponsorship for the many programs and informational materials the World Trade Week Southern California Committee creates each year. – Los Angeles Chamber of Commerce www.worldtradeweek.com

Thank You Advertisers The following companies and public sector entities made the 2012 Focus On International Trade possible: • Ability Tri-Modal • Alameda Corridor Transportation Authority • California Cartage Company • California State University, Long Beach • FuturePorts • Halcrow/A CH2M Hill Company • Long Beach City College International Trade Office • Moffatt & Nichol • OWI Specialized, Inc. • Pacific Harbor Line • Pasha Stevedoring & Terminals • Port of Long Beach • Port of Los Angeles • PortsAmerica • Seaway Company of Catalina • Total Transportation Services, Inc. – Long Beach Business Journal Photograph by the Business Journal’s Thomas McConville

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Nora Sanchez Westside resident and mother of four

For the health of my family, the Port made the air cleaner. Now if they could just get my kids to eat their veggies. At the Port of Long Beach, a cleaner environment is one of our top priorities. In just over three years, our innovative Clean Trucks Program has reduced truckrelated pollution by 90%. And we’re not stopping there. We’ll continue to work for the health and well being of residents like Nora Sanchez and her family, now and for many generations to come. Learn more at www.POLB.com/environment

©2012 The Port of Long Beach

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2012 Focus on International Trade