With the pandemic-induced container ship backlog at the Ports of LA and Long Beach officially cleared, VX News spoke with the Port of Los Angeles’s Executive Director, Gene Seroka, to elaborate on POLA’s efforts to ease supply chain congestion. In addition to moving cargo more effectively, Seroka highlights the alignment in local, state, and federal investments in infrastructure, workforce development, and clean goods movement as well as the Port’s international partnerships and their role in driving both public and private innovations in port sustainability and green shipping.
Gene, at the close of our last VX News interview, you gave readers a prescient prediction on where we would be on COVID-19, on clean trucks, and on federal infrastructure investments by November of this year. Has this year shaped up as you predicted it would?
Gene Seroka: All of what was quoted has come true. We found better ways, as a society, to navigate COVID-19 with advances in vaccines and an ability to make for a safer society, so we could go back out and greet each other again.
Our new Clean Truck Program initiative came to fruition through Harbor Commission approval in November, and we implemented, on April 1, a clean truck fee. We plan to raise about $45 million annually to entice both private and public investment, with the port leading the way, along with our neighbors in Long Beach and their cache of $45 million a year.
As we move forward, our ability to improve begins with how we've advanced in technology because we've gotten a lot smarter about our supply chain. A year ago at this time, there were folks who were saying that the holidays might be canceled. We had 89 ships at anchor off the ports of Los Angeles and Long Beach. It was data that allowed us to see how we could better segment cargo and get that product to market that was needed, while moving aside that product that was part of the “just-in-case” inventory.
We saw a record retail sales year last year and the best holiday sales growth ever in this nation by 8.5 percent. Whether it be fortuitous or just grinding it out and working every day, those three areas really came to fruition. We're in a better place, but always with room to grow and improve.
Re those almost 100 ships that were the topic of national and international news coverage last year, elaborate on what POLA has accomplished and what the new year portends for the nation’s supply chain?
The media has done a great job covering this pandemic-induced buying surge like we've never witnessed from American consumers. We had 89 ships stacked up in November and December of last year, but we were able to flush most of that cargo and get it to market before the all-important retail holiday season.
Then, we were met with an uncontrollable number of empty containers that came back off of all of those imports. So much so, that after Lunar New Year, we had 109 ships in January backed up. We worked that down to 20 in June and in the single digits by the first week of August, all while moving record amounts of cargo in five of the first seven months of the year.
It was information that drove us to see what was coming, so we could plan land, our great skilled labor, and machinery to move it all. It was the enticement to the import community to use this port as a transit facility, not a warehouse, and encourage them to move the cargo off the property as quickly as possible to welcome the next vessel.
We saw unheard of productivity by our longshore dock workers, warehouse people, and truck drivers, along with a whole host of others that contributed to that recovery and the continued push as the American economy is driven by the consumer.
During last year’s pandemic-created goods movement slowdown, the President of the United States ordered Ports to work 24/7. Could you comment on the POLA workforce issues resulting from that order?
In the United States, with 10.7 million jobs open and a record low unemployment level, those of us in the supply chain and imports industry are not immune to that phenomenon. It's very tough to attract, recruit, and retain key talent, whether it be entry level or seasoned participants in this industry.
With that, we have decided to develop the nation's first Goods Movement Training Campus based right here at the Port of Los Angeles with partnership at the Port of Long Beach. The idea is that everyone will be welcome. Just like a shopping mall of yesteryear, the ILWU longshore members will be our anchor tenant, but they will provide the passage for all other labor interests--big, medium, and small--to work with us as well.
The relationships, I believe, on the labor side have never been better, but we're in the midst of a relatively protracted labor negotiation between the employers group and the longshore dock workers that eventually will be resolved, but maybe not as fast as any of us would like. There are issues on the table that are more common to both sides than they are different, but still, our import and export community has been very concerned and have moved about 25 percent of the cargo away from Los Angeles to ports on the East and Gulf Coasts. That is causing backups at those locations while we now have wide open capacity. It gives me no satisfaction to see other ports struggling like we had in recent years. We've got to get this contract agreed upon, bring confidence back to the market, and have a better and more even distribution of cargo flow across all our nation's ports.
Recent action by Congress and President Biden has averted a national rail strike. In light of the above workforce challenges, could you comment on what impact a strike would have had on the Port and your ability to being a “warehouse” to being a “transit center” to the nation?
In addition to the groups that I just mentioned, rail workers have been going all out since the pandemic. I’m pleased the workers are receiving much of the compensation that they were seeking. I applaud President Biden, U.S. Labor Secretary Marty Walsh and Congress for stepping in and averting what would have been a national crisis. It would have had a severe impact on our operations. About 28 percent of our nation's freight moves on rail today. Of the cargo that leaves California from these ports, it amounts to about two-thirds of all the boxes that come through here. There’s no contingency plan that can accommodate a full stop of our national rail network.
Rail is critical not only to our ports and transportation sector, but to the economy as a whole. With the revised data Q3 and 2.9 percent GDP growth, we have nothing stopping us from continuing to propel this economy forward. Federal action to avert a rail strike was the right thing to do.
The possibility of a federal infrastructure bill and what that would mean to the Ports was, as noted above, a welcomed expectation in our last interview. With federal and state funds about to flow, how will that money be deployed at the POLA?
Now, this is one of the great successes of the Biden administration at the midway point. What we've seen is a Bipartisan Infrastructure Investment and Jobs Act. It’s $1.2 trillion and designates $17 billion to ports and waterways across the nation. It is a great start. I've advocated now to go even a step further and have monies for ports and waterways budgeted annually.
First thing’s first, infrastructure projects are not built overnight. We've got a billion-dollar pipeline here at the Port of Los Angeles of projects that we will be filling applications for grants and other opportunities as outlined by both the IIJA and the Inflation Reduction Act, which also puts a lot of money towards electrification and cleaner energy in ports and industrial settings.
Not to be unnoticed was California Governor Gavin Newsom’s historic budget, where he outlined $2.3 billion for the state's 11 municipal ports, with almost half of that ready for immediate projects that we can get started on.
For the first time in a generation, we've got federal, state, and local alignment on the government side. What that means is we will give confidence and encouragement to the private sector to follow our governmental investment in infrastructure.
Already, we've received a grant of $20 million for flyovers and grade separations on a very important piece of land at the port that we're repurposing to manage these big surges in cargo. Just recently, a $3 million grant from the Department of Transportation is designated to our now leading Port Optimizer, the port information community system that was co-designed by our partners at Wabtec to put in new modules on export warehouses and a port-wide truck reservation system.
We're already starting to see some early wins in this area with the focus of the administration, the industry, and for that matter, the media, who has spotlighted the importance of the supply chain.
One of the opportunities addressed at the last VerdeXchange conference was the potential for a regional clean hydrogen hub at the Port of LA. Update our readers on that opportunity and the Port's interest?
We're absolutely excited about the Hydrogen Hub concept led by the Department of Energy and Senator Granholm in Washington. The state of California has brought together so many parties, like DeeDee Meyers of Go-Biz, our state's leader when it comes to all commercial endeavors, who is running a program to bring municipalities and private sector partners together to make a very strong first bid, which will be due here in the not-too-distant future.
We fully expect to make the second round, where it's going to get really interesting. How do we produce, transport, and consume this hydrogen in so many different sectors? The ports have been identified as one of the central areas of consideration in our bid and application process.
We've already been testing, as you know, class 8 heavy duty trucks, some designed by Toyota right here at the Port in our Shore to Store program. Toyota and others have already started changing over equipment on cargo handling efforts and testing on the ground right now.
While hydrogen is not going to be the answer to everything, neither is battery electric. We're going to have to have a combination of the two. We’re going to have to create a resilient grid and manufacture more clean and green energy. The acceleration of the hydrogen technology is so timely aligned with the federal government's aspirations. We want to have all this cargo handling equipment zero emission by the year 2030 and all heavy-duty trucks calling the Port zero emission by the year 2035.
The Port has invested heavily over the decade in community infrastructure in San Pedro, culminating in a number of significant development projects that should open in the next year. Elaborate on these investments and the leadership that the board and executive staff have brought to these Harbor developments.
Early days, back in 2014, Mayor Garcetti and I lined up our belief that a successful port will mean the community will be successful and that a thriving community can only add strength to this port. It's been absolutely true.
Back in 2015, we designed one of the nation's first public access infrastructure plans, which designated 10 percent of our operating income here at the Port of Los Angeles to visitor-serving infrastructure projects, which would then lead to private sector businesses coming in to do their work on the waterfront.
That plan has designated over $400 million during a 10-year period since 2015. A recent harbor commission meeting also debated how we could make this program permanent. We'll be bringing that back for vote at the next meeting.
The prior 10 years show that we invested $600 million in our waterfront but didn't necessarily meet with the community's requirements. Part of it was not only designating money year in and year out, but also bringing the community to the table, whether it was the neighborhood councils, the faith leaders, or community leaders themselves talking about what projects were most meaningful, what were needed, and how we could do them better.
What that means now is that the West Harbor retail, dining, and entertainment will begin groundbreaking very soon. The San Pedro fish market also has an opportunity to find new property here at the port with new space that will modernize their facilities of a fourth-generation family business. We're really looking skyward when it comes to public access, dedication, and commitment from this Port of Los Angeles in true partnership with our community.
Pivoting to the future, as one of the region’s most respected economic stewards, could you brief our region’s civic leadership and new mayors and city councils on the immediate opportunities and challenges facing the Port of LA in 2023?
I look forward to meeting all of our newly elected officials, and we do have some folks that will continue, like our Council President Paul Krekorian, who has always taken an avid interest in the Port, along with some of the other veteran council members.
I had the privilege of having a discussion just yesterday with our council member-elect, Tim McOsker, from the district here in the harbor. The discussion that we had was all around what we can do to work together and what we can do to amplify how important this port is, not only to our city and region, but to the nation as a whole. Realistically speaking, it's directly in line with all of our thoughts, and I look forward to sitting down with mayor-elect, Karen Bass, as well to discuss how this port’s strategic value can be additive to her platform and City's strategic plan.
We've got 200,000 companies that call Los Angeles home to import and export their goods. No one company has more than a 5 percent share. Basically, we feed, house, clothe, and care for America. Across those broad categories, about a quarter of the cargo is retail finished goods that we will buy either online, curbside pickup, or off store shelves. Another 25 percent is manufacturing parts and components that go to American factories, whether it be in the automotive sector, industrials, farm equipment, or a whole host of others.
On the export side, our largest commodities are in the agricultural sector, whether it be working with our ranchers, growers, and farmers throughout the state and nation to those who have other products, such as the International Dairy Foods Association, who has doubled their cargo through the Port of Los Angeles this year. We’ve grown nationwide exports by 50 percent, all by taking advantage of opportunities within the supply chain and working closely together with public and private sector partners. If you're wearing it, eating it, or using it, it probably came through the Port of LA.
Given your recognized expertise re trade and the internationalization of the supply chain, please opine on the significance of the recently signed MOU between the Port of LA & Japan’s External Trade Organization (JETRO) to promote cooperation on sustainability, environmental initiatives, and supply chain optimization.
We have a deep history with our trading partners in Japan. They are our second largest at the Port of Los Angeles. Our work on the international space dates back 63 years to our sister city port arrangement between LA and the city of Nagoya.
From my over 11 years in Asia, I maintain great ties in Japan, both in the public and private sectors. To drive innovation and new energy concepts, Japan is exactly the right partner for to modernize our ports, not only through a physical brick and mortar infrastructure, but digitalization.
JETRO has been the fulcrum with respect to all of these discussions. They are a long and trusted member of our international society that has brought together governments and friends to talk about many different issues. This agreement takes our trading agreements to a completely new level.
And likewise, the Port’s relationship with our nation’s biggest trading partner: China?
China is our number one trading partner. Having lived and worked there for a number of years and maintained strong business ties over the past three decades, it is important for the two largest economies in the world to be able to trade together.
Now, in recent years, we've seen changes in trade policy, heightened nationalism, and the unfortunate outcomes of COVID-19 both in China and the United States. There has not been a day that goes by without something that impacts the supply chain. To the credit of the central government in Beijing and the ports in China, the government has prioritized long-haul trade, and that means trade between China and Los Angeles.
Our ships continue to be filled and depart as close to being on schedule as humanly possible. That caravan of cargo has never stopped. We've had additional lockdowns with respect to COVID-19 that have impacted not only ports and transportation manufacturing networks, but families, friends, and society. That's where our thoughts are right now: making sure that those families and society continue to build up and overcome the depths of COVID-19.
While there are impacts and examples of those like sub assembly, manufacturing, and transportation, every single day, that cargo has kept on coming. To me, that's been the resilience of the Chinese people, business folks, and the government. There's much more work to do. We stay in tune all the time. I just welcomed some customers from China the other day here in Los Angeles, and our resolve has never been greater. We're going to keep trading and keep business flowing to the best of our ability.
Re the above trading relationship, The Port of LA and the Port of Shanghai agreed earlier this year to create the world's first Trans-Pacific Green Shipping Corridor between the US and China. What’s the significance of that agreement?
This green shipping corridor was the thought of Los Angeles Mayor Eric Garcetti, who at the time, was also chair of the C40 cities organization. Now with more than 400 municipalities in membership, it was this group of cities that strengthened the Paris Accord with commitments when the United States wandered away between 2016 and 2020.
Mayor Garcetti wanted to count on our expertise to see what we could do to reach our goals of zero emissions that we had created here at the Ports of Los Angeles and Long Beach to the international landscape. In working with the Shanghai Municipal Port Group and the Shanghai International Port Group, along with a host of private sector shipping and transportation companies, we were able to announce the green shipping corridor.
What that simply means is that after goods are produced at a factory, they're put into a container, driven to the port to a terminal, and loaded on a ship that are all green. We hope that one day that will mean zero-emission, zero-carbon output from all these transport sector partners.
That ship coming across the ocean has been the most elusive when it comes to that technology. Partners like CMA CGM, ONE, Cosco, and so many others have said they’re going to experiment with us, whether it's going to near-zero emissions, like LNG, that CMA CGM has already installed in their ships for their waterborne deployments.
We've had discussions about hydrogen on landside efforts, whether it be in marine terminals, trucking, or cargo handling equipment. This is absolutely a world's first, and we hope to have a plan coming out towards next year along with timelines associated for the various participants and their new entries to the renewables and cleaner energy space.
It caught so much attention that the Minister of Port Authorities in Singapore jumped in and created the Singapore to Los Angeles and Long Beach Green Corridor. The President of the Harbor Commission here in Los Angeles, Jamie Lee, and I visited for our first Asia trip since COVID, and the MPA in Singapore was just over the moon with the prospect of joining. Within weeks we had an agreement inked.
We'll look to others pretty quickly in the Pacific Rim and Europe to join us in these efforts. We're starting to see a groundswell of enthusiasm led off by that great relationship between the Shanghai Port and Los Angeles.
Before closing, VerdeXchange News would like to give a shout out to Congressmember Alan Lowenthal, who almost 20 years ago advanced his campaign to green the ports of San Pedro. With his retirement this month, and the election of Robert Garcia, the Mayor of Long Beach, to take his seat in Congress; and with a new Mayor of Los Angeles, Karen Bass, and Long Beach’s Rex Richardson taking their oath of office this week, speak to their legacies and the promise of new leadership.
The contributions that Alan Lowenthal has made at the city, state, and federal level are just inspiring. With his great career coming to an end, it is an appropriate time to offer our appreciation and thanks to a dear friend who made a difference in the shipping and port industry. He will now pass the baton to one of our great young leaders in Robert Garcia who, as he takes the helm at the federal level, will be able to carry on and bring to the table new and big thoughts to help that legacy that Alan Lowenthal started.
We also have, as you rightly mentioned, Rex Richardson as the new mayor-elect in Long Beach, a council member and AQMD member at the regulatory level here in Southern California, and Karen Bass, the mayor-elect in Los Angeles, a sixth-term congresswoman from right here in LA, a community organizer and known to so many.
The ability to bring all these new eyes and ears to the table will only promote and amplify what we've already done to this day. It's a truly exciting time for the Ports of LA and Long Beach, and I can't wait to get started with these newly-installed leaders.