"Co-opetition" Between Ports of LA and Long Beach Means Strong Year Ahead, Pulse of the Port Forecasts

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Given last year’s record cargo volume numbers and this year’s evasion of large-scale congestion, things are looking up for the Port of Long Beach and businesses associated with it.

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Officials at the port are pretty excited about the future. Port of Long Beach (POLB) CEO Jon Slangerup underscored the importance of all sectors coming together to assist in attracting more volume to the Long Beach/Los Angeles gateway, emphasizing the corridor’s potential.

“We’ve come out on top because we know how to work together,” said Slangerup, referencing the dynamic between the Port of Los Angeles and the POLB. “Together, Los Angeles and Long Beach have learned to not only compete effectively against each other, but we enjoy working together as well. I call it ‘coopetition,’ and it’s something that we have mastered.”

He was quick to note that though the two ports enjoy “stealing containers” from each other; as long as the traffic is headed to this part of the U.S., both ports are winning.

Almost all of the panelists at the event noted the upward economic trend of the past years, but did not shy away from challenges awaiting them during this year’s forecasted peak season. Which, as IHS Senior Economist Mario Moreno noted, is no longer expected to be October, as it was in the years predating the Great Recession, but rather July and August.

“The effects of the past recession are still being felt,” said Moreno. “We will likely not see normal peak seasons for years to come.”

Regardless, specific issues found their place in the spotlight at this morning’s 12th Annual Pulse of the Ports season forecast inside downtown Long Beach’s packed Hyatt Regency Ballroom, including a projected decrease in U.S. exports to Asia and South and Central America, congestion and turnaround time.

Various port businesses set to work describing the challenges they are looking at this year, just one year after congestion clogged the ports and slowed cargo traffic for a period of a few months.

The strongest point of contention throughout the morning arrived in the form of Vic La Rosa of Total Transportation Services, Inc., who was quick to say that 2016 won’t be without its challenges for the drayage industry.

La Rosa put forth perhaps the clearest set of issues among those represented by the panel (which included reps from Johnson & Johnson, export shipping company The Schoular Company, marine terminal operator Total Terminals International, Union Pacific and Majestic Realty Company).

“The trucking industry historically has never had pricing power,” said La Rosa. “The real pricing power is in the shipping industry and with BCOs. Our industry continues to remain fragmented, it’s a low-margin business, and its equipment was historically cheap until CTP came in.”

La Rosa elaborated, stating that cheaper trucks are coming out now, at the risk of being less efficient and potentially bringing more pollutants into the environment, as well as more congestion. He added that misclassification lawsuits threaten to further fragment the community

It was widely agreed that turnaround times were the strongest priority to streamline in preparation for peak season. Union Pacific’s Senior Director of Intermodal Sales Seana L. Fairchild noted that one third of rail transportation time is the 48 or more hours that cargo “dwells” in between travel. She called that unfortunate, as such dwelling time “takes up ramp capacity.”

La Rosa also emphasized the need for quicker turnaround times, as drayage companies are judged based on their capacity to quickly and efficiently transport goods.

All groups were quick to agree on improving the flow of the supply chain, pledging to continue to tweak individual work flows and independently streamline their capabilities.

While falling fuel costs have yet to affect certain domestic clients of Union Pacific in proportion to international clients (something Fairchild admitted to and alluded may be changed in the future), all groups appeared cautiously optimistic regarding this year’s peak season. Some, like Fairchild and representatives from Johnson and Johnson and the Majestic Realty Company more so than others.

“So when I was asked to speak here, I was really asked the question, ‘are the railroads going to be ready for peak?’” said Fairchild. “Let me give you a one word answer, and that is ‘yes.’ And I’m gonna follow that with ‘Bring it!’”



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