POLA’s Gene Seroka on Need for Federal Infrastructure Investment

Despite ongoing disruption to global logistics from the COVID-19 pandemic, and with the upcoming holiday shopping season on its way, the Port of Los Angeles is already working through one of its busiest years to date. VX News interviewed Gene Seroka, Executive Director of the Port of Los Angeles, to elaborate on what operations currently look like in the San Pedro Bay and what the future holds for the port. With President Biden asking POLA for its operations to go 24/7, and with Congress inching closer to moving forward on a bipartisan infrastructure framework, Seroka highlights opportunities to accelerate the Port’s plans for zero-emissions operations and reminds readers that with 40 percent of the nation’s exports coming through the Ports of LA & Long Beach, the impacts of capital investment in the Port are magnified well beyond LA city limits.

As we speak, the Ports of LA and Long Beach are experiencing significant backlog, with dozens of ships and trucks waiting anchored and idling in the San Pedro Bay. President Biden, in response, asks for 24/7 operations. As Executive Director of the busiest port of entry in the US, what are the challenges that have caused this backlog and how do its impacts reverberate throughout the US?

What you see right now is the buying power of American consumers on display at the nation's largest port. Realistically, those 54 container ships that are outside the Ports of Long Beach and Los Angeles today represent an additional two weeks’ worth of work. So, out of a full year, we're only two weeks behind. We've made some really good recovery over this week alone. We started off at about 76 container ships at anchor, but we still know that we've got production parts that have to get to factories, holiday goods that must get to the consumer, and small to midsize companies whose entire year is built around this holiday season.

Again, as we do this interview, Congress is inching closer to sealing a deal on the once-in-a-generation infrastructure spending plan. What's in Congress’ spending plan for the ports re capital improvement that could ease this backlog?

You've hit it right. There's a lot of process work that we have to do day-to-day, but there's a longer investment perspective as well. During the last 10 years, the federal government and US Congress has out-invested the West Coast ports at a rate of 11:1. That's a little more than $11 billion that have gone to ports on the East and Gulf Coasts, compared to about $1.2 billion here on the West Coast. With 40 percent of the nation's imports and 30 percent of its exports, cargo through Los Angeles reaches each and every one of our nation's 435 congressional districts. All roads lead to Los Angeles.

As the House considers this infrastructure bill, we're encouraging them to vote it up, and then we'll start talking to appropriators on how best we can invest America's money right here at the Port of Los Angeles. This will be a big deal for our roads and railway connectors, densifying our on-dock rail product, the work we have to do in the water of the main channel, and fortifying our wharfs. All of that needs to be done to manage the amount of freight flow that we project over the years to come.

There's much more work to be done here, and that's why we've stayed so close to the elected officials and policymakers in Washington, so that they're fully aware of the impact that investment will have, as well as a look back to see what underinvestment looks like. We heard in the last administration that our infrastructure was a priority, and it got nowhere. President Biden and his administration have made it a priority, and we're close to the finish line. Our job is to focus on getting this bill passed and getting it moved through.

You’ve addressed some of the infrastructure investments that are needed, but what are the 21st century IoT technologies that ought to be embraced by all ports, especially the Port of Los Angeles?

This is equally as exciting. What we've done here is create the nation's first and only port community information sharing system. We're taking disparate data points from the supply chain and housing it right here at the Port of Los Angeles. The goal is to share it with our partners, stakeholders, and customers, so they can have an early look at the products that are moving in and out of this port and can better assign their workforce and machinery to move all this cargo.

Safety, security, and our sustainability plan all translates into how we're going to care for this data. After five years now, we have one of the most sophisticated systems around. Some folks are still hesitant about sharing their data, but we've got specific data-sharing agreements in place with each of our trading partners to make sure we can't make a move without their consent. We haven't sold a character of data in the five years our port optimizer has been up and running. I'm excited about the opportunities we have to continue our campaign to bring more people along.

Electrification is the word of the decade; but you are being solicited by many other technology advocates proposing hydrogen and zero-emissions solutions to cleanly power the port. Elaborate, please.

This is also one of our top priorities. Through Mayor Eric Garcetti and our city's leadership, we have an aspiration to be a zero emissions (ZE) marine terminal port by the year 2030. That means all the equipment on the ground needs to be ZE. By the year 2035, we want to be a zero emissions heavy duty truck port, so those 18,000 big rigs that haul our cargo in and out of the port complex also need to be zero emission. The work that we're doing in this area has a neutrality around technology. There's battery electric, hydrogen fuel cell, and maybe other biofuels and renewables that will be coming on the market that we'd love to test here in Los Angeles.

The other question that remains out there is how do you get enough electricity in this ZE environment? We've had big thinkers around the table in how we want to do it. We're fortunate that we work very closely with our city partner power company, the Los Angeles Department of Water and Power, who also has great aspirations for what we want to do here.

We've got to find two things. One: how do we accelerate the technology and make it commercially available? Two: how are we going to fund all this work? We need partners in the private and public sectors, the administrations in Washington and Sacramento, and those forward-thinking companies on the ground to find ways to invest that will make resiliency our number one strategy.

While you're the leader of the Port of LA, your competitor in the San Pedro Bay is the Port of Long Beach. Address the opportunities for collaboration, given you've just spoken about the potential for the ports to work together to get to goal.

It's “coop-etition.” We are competitors who have different customers and different stakeholders, but most people who work with us see us as a one port complex. We've operated under a federal Maritime Commission agreement for almost 50 years now on subjects like the supply chain, infrastructure, safety, security, environment, and even joint advocacy. The platform is there for both of us. There are core tenets that we both believe in and that work will continue.

Re cargo out of the Port of LA—what are the ships leaving the harbor today carrying?

Most of our imports go to metropolitan areas where we have population density. Many of our exports emanate from rural America. We've got to find a way to make economic sense out of getting that equipment from cities, to the rural areas, and then back to our ports, whether it be on the East coast or West coast. The difficulty in that is that it's really expensive to reposition that equipment.

I think the timing may be very good at this point, because we will see this import surge plateau sometime in 2022 or 2023. To replace this surge, we're going to need to get our American farmers and manufacturers back in the export game. We've been working very closely with the United States Department of Commerce, Transportation, and other agencies to see if we can craft a national export policy.

A lot of our ships are filled on the export side today with empty containers because the import demand is so strong. The shipping companies are trying to get those empty containers back to the factories in Asia quicker than ever. We're at a pretty good place right now to get big thinkers around the table to see how we can craft encouraging policy that will lead to activity on the ground for the export community.

Pivoting… how are you and your board managing the Port workforce issues of the 21st century and related challenges?

One in nine jobs in Southern California, about a million people every week, have work related directly to this port. This is big time business for the fifth-largest economy in the world. While we have a very highly-skilled and robust longshore worker group, we need to make sure that we can bring that group along as technology continues to emerge. Leaving those workers behind is not an option for us. Reskilling, upskilling, and having more cargo come in are all on the table for us.

 In fact, within months, we'll be turning dirt on one of the nation's first workforce and training development centers geared towards ports. This is going to become a reality at the Port of Los Angeles with the help of the IOWU, the Pacific Maritime Association, and private sector partners. We'll see exactly how this goes over the coming months, but we'll also need the federal and state governments to be involved too. I've been encouraged by the conversations we've had on that light.

We're also going to see a change in how we treat the worker, how we train them, and how we compensate them. These folks are key, and we need more drivers. Nationwide, we've got a 20 percent attrition rate of truck drivers annually, and the average age is about 57 years old. We need to attract, recruit, and retain skilled drivers like we never have before.

We will see, I believe, that folks who are hiring are going to reevaluate compensation packages and benefits because there's competition for workers today like we've never seen. Folks are going to have to be creative with whatever it takes to be an employer of choice in tomorrow's workforce.

What should the civic and political leadership of Southern California understand better about what's happening to today’s logistics industry—of which the Port of LA is a major player?

It's going to take a couple things. We've been fortunate that a spotlight has been shined on us, whether from the President's executive order on supply chain to being in mainstream media now almost on a daily basis. The folks on Main Street want to know why they can't get their goods online for another week or two. What we've got to do next is to make policymakers, elected officials, and investors understand how important this is. We need to look at what planning for investment means.

We also need to see how we can flex better to ups and downs in the industry without overburdening workers, investors, or the public sector supporters of this business interest. We're also going to have to be on the same page when it comes attracting business. We want folks to be headquartered here, and we want decision makers around the supply chain to take advantage of the great institutional knowledge we have here in Southern California.

The San Pedro Bay community economically has changed dramatically with the addition of SpaceX, AltaSea, and other marketmakers in the innovation economy. Elaborate on the environment being created in the San Pedro Bay and the economic role the Port of LA is playing to stimulate investment and jobs.

The Port of LA today is still a company town. Many of our businesses and surrounding areas rely on this port complex. You're also seeing us embrace the future. Whether it be redesigning our LA waterfront for retail, dining, and entertainment, or building out new public spaces like we've done with our public access investment plan, it's our belief that if the port does well, the community will do well. When the community does well, the port will flourish.

At the same time, we're starting to see new businesses come here. AltaSea is a great example of an urban marine research facility in the blue economy. We've got aquaculture farms where we're growing mussels for the first time at a port of our background in the United States. We're also seeing folks like SpaceX come in collecting information from space to make us more technologically savvy. The opportunities are limitless.

What I've been most proud of is the way this community in San Pedro, Wilmington, Harbor City, and Harbor Gateway is lending to this conversation in trying to attract and retain companies, big and small, to develop and build our future.

The robustness of the port and the port community in San Pedro Bay has always raised issues about the health of the San Pedro Bay environment and its air quality. How does POLA meet stricter air quality objectives in a way that doesn't diminish the potential of the Port?

This is also another very important topic here every day at the port. Global warming and climate change are a global issue for all of us to try to solve. Before my time, the port created the first-ever clean air action plan in conjunction with our friends and partners at the Port of Long Beach, which it is still the standard for today. During the past 17 years, we have reduced diesel particulate matter by 87 percent. We've reduced sulfur oxide by 97 percent, nitrogen oxide by 64 percent, and greenhouse gases by about 20 percent, all while cargo growth was more than 25 percent.

The next chunk of pollution and greenhouse gases that we need to take out are going to take monumental strides. Our aspiration to go to zero emissions is the way to get there. The work in this area is going to take technological advancement, as well as financial investment from both the public and private sectors. There is nothing that I would like to see more than a zero-emissions port complex, but there's a long way from here to there. What we do need are more people to come along with us because that could make the acceleration of this technology more of a reality.

Lastly, what achievements / news do you hope to be able to share at VX2022 next March?

 

I think I stand with all Angelenos to say that we trust in March we'll be in a better position from a health and safety perspective with respect to COVID-19. We will be seeing a program in place with a specific tariff item along with a revenue stream to start to invest in clean trucks. That'll be happening in the month of November here at the Port of Los Angeles. We'll also see hopefully the beginning blueprint of what the new infrastructure bill will mean for all of us here at the ports of Los Angeles and Long Beach when successfully passed. There's so much to look forward to as we enter the new year.

“During the last 10 years, the federal government and US Congress have out-invested the West Coast ports at a rate of 11:1. That's a little more than $11 billion that have gone to ports on the East and Gulf Coasts, compared to about $1.2 billion here on the West Coast.”
“President Biden and his administration have made [infrastructure] a priority and we're close to the finish line. Our job is to focus on getting this bill passed and getting it moved through.”—Gene Seroka

VX2021 Speakers: