March 4, 2025 • 37 mins
The Port of Los Angeles is a major gateway for freight moving in and out of the US, which is key to the regional and national economies. The pull-forward benefits from anticipated new US implemented tariffs, and a potential strike at US East Coast and Gulf ports, helped drive 19% volume growth in 2024. This year, comparisons will become more difficult and may result in low-double-digit declines in 2H. In this Talking Transports podcast, Gene Seroka, executive director of the Port of Los Angeles, joins Lee Klaskow, Bloomberg Intelligence senior transportation and logistics analyst, to share his insights about what’s over the horizon for North America’s busiest container port. Seroka also discusses the company’s emission goals, technology-driven productivity gains and how his career in shipping started with a plane ticket from his dad.
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Episode Transcript
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Speaker 1 (00:07):
Hi everyone, this is Lee Clasgow when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klaskow, senior Freight, transportation and logistics analysts at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. Before diving in a little
public service announcement, your support is instrumental to keep bringing
(00:29):
great guests onto the podcast like the one we have today.
We really do need your support, so please, if you
enjoyed this podcast, please share it, like it, and leave
a comment. Also, if you have any ideas for future
episodes or just want to talk transports, please hit me
up on the Bloomberg terminal, on LinkedIn or on Twitter
at logistics Lead. Now on to our episode, We're delighted
(00:51):
to have Gene Soroka, Executive Director of the Port of
Los Angeles, with us today. As executive director of the
busiest container port in North America, Gene is responsible for
managing a two point six billion dollar budget, advancing major
capital projects, growing trade volumes, and promoting innovative sustainable practices
(01:11):
that strengthen the region's economy. Prior to joining the Port,
Jane held several key positions both nationally and internationally in
sales and marketing for American president Lines Limited or APL
healed a MBA and Bouchelors of Science and Marketing from
the University of New Orleans. Gene, thanks so much for
being with us today. Thanks Lee, appreciate you having me on.
(01:33):
So the Port of Los Angeles, I know all about it.
Can you tell the listeners a little bit about the port.
Speaker 2 (01:41):
We're one hundred and seventeen years old this year, seventy
five hundred acres of property, forty three miles of waterfront,
and the cargo that traverses our port reaches each and
every one of our nations four hundred and thirty five
congressional districts.
Speaker 1 (01:58):
A little bit.
Speaker 2 (01:58):
Closer to home, fifteen working Angelinos today has a job
related to the port, and it's one to nine in
the five counties Southern California region, meaning that about a
million of us go to work every day relying on
the great efforts here at the Port of Los Angeles.
Speaker 1 (02:15):
So, you know, twenty twenty four was a pretty good
year for the port. I know, you know, time we're
recording this it's late February, but can you just talk
about twenty twenty four before we get into this year.
Speaker 2 (02:27):
We closed out last year LEE with ten point three
million container units going through the port. That was our
second best year ever, and to me more importantly, we
moved more cargo during the traditional summertime peak season than
we did at any other point, including those COVID years
without one ship backed up. Truly a remarkable year. Also,
(02:49):
in parallel with that high level of cargo volume, pollution
from port activities is at the lowest it's been since
we began measuring almost twenty years ago.
Speaker 1 (02:59):
So in twenty twenty four, what was driving the volume
increases eight that you saw at the port.
Speaker 2 (03:06):
A number of factors, but led by a strong underlying
US economy, the American consumer continued to purchase even beyond
some experts opinions. We also had a protracted labor negotiation
of dock workers on the East and Gulf Coast, drought
conditions in the Panama Canal, and security concerns in the
(03:27):
Red Sea that led to Suez Canal crossings dropping by
some eighty percent. That pushed more and more cargo over
the West Coast. Specifically, to Los Angeles and Long Beach.
Speaker 1 (03:38):
And can you talk a little bit about the share
gains that maybe you benefited from because of those port negotiations,
you know, was it a significant amount of share? Is
that share now like leaking back to those ports.
Speaker 2 (03:52):
We saw several percentage points of cargo share come our way,
but it's a fluid situation, as you well know, based
on those geopolitical issues, and even in more recent times,
from the campaign trail last summer until inauguration, some importers
started front loading inventory or advancing it ahead of what
(04:13):
they perceived to be a new terriff regime and trade
policy coming out of Washington. So a lot of factors,
and while we gained a little bit of share for
folks who wanted to balance out their risk on imports
and exports, what we see now is this week the
International Longshore Association of dock Workers on the Eastern Gulf
Coast will have their rank and file vote on a
(04:37):
new six year agreement with the United States Maritime Exchange.
When that agreement goes through, we'll see a little more
balancing of cargo through major gateways, and I believe you'll
see some of that cargo that came our way move
back to its natural flow over east and Gulf coastports.
Speaker 1 (04:55):
So you know, you kind of have a competitor right across.
Is it the Bay, I don't know, it's the Port
of Long Beach? Is that the bay? I guess you
would say the bay.
Speaker 2 (05:04):
Yes, it's called the San Pedro Bay. And the ports
in LA and Long Beach combined account for about forty
percent of our nation's imports and roughly thirty percent of
our exports. Some call it coopetition. We work very closely
on areas of infrastructure, environmental strategy with respect air and
water quality as well as safety and security. And it's
(05:28):
my view that Long Beach needs to be operating at
top speed at the same time Los Angeles does to
give the greatest benefit to the American economy.
Speaker 1 (05:36):
Right And so you know, obviously geography a location, location,
location is a big decider on which port people use.
You mentioned, you know, there are some things that can
shift share earlier, whether it's potential for a port strike
with your competitors or you know, geopolitical issues. So when
you're competing against other Western West Coast ports, whether it's
(05:58):
the Port of Prince Rupert up in Canada or closer
to home, the Port of Long Beach. How does LA's
Port of La stack. What are your competitive advantages versus
those other ports?
Speaker 2 (06:10):
Well, we cater to three major segments of cargo here
at the Southern California's San Pedro Bay Ports. One is
the twenty million of us that live in Southern California
consuming and bringing things to market, whether it be produce
or manufactured goods. The second segment is about fifty to
(06:30):
sixty miles away from our ports, the inland empire of
Southern California, where we have approximately two billion square feet
of warehousing under roof, and think of this as storage facilities, crosstocks,
the ability to get cargo out on deconsolidation to the
interior of the country, and fulfillment centers for all of
(06:53):
those now that buy online here in the United States.
The third segment is that intact ocean box that starts
in Asia and goes to Chicago, Memphis, Dallas among fifteen
different major distribution centers in the country. So number one
on our list, as you rightly says geography, we're open
(07:13):
seven days a week, three hundred and sixty five days
a year. Second is that we have the ability to
bring in major NonStop services from key Asia locations and
driving those export containers back to those key locations. Thirdly,
is the long standing institutional knowledge from our dock workers
(07:35):
at the International Longshore and Warehouse Union, the broker and
forwarder community, the marine terminal operators and shipping concerns that
bring this cargo to market. That stacks us up against
anyone else in this port business.
Speaker 1 (07:49):
And you mentioned, you know, intact containers moving eastward. I
guess so I'm assuming both major railroads service the port,
Burlington Northern and Union Pacific.
Speaker 2 (08:04):
That's correct, And this is really their biggest market to
distribute goods throughout the country, connecting line agreements that bring
cargo to the East Coast as well, and with more
than sixty percent of all cargo that leaves California by rail,
two important partners in the success of this port complex.
Speaker 1 (08:24):
Great, And you know you mentioned earlier, you know, maybe
the pull forward demand on tariffs. Obviously tarifs are or
the talk of tariffs are more fluid than the water
at the port. Can you talk about you know, I
don't know if you have an opinion about you know,
some of the new stuff that they're talking about about,
you know, Trump floating the idea on service or fees
(08:46):
for you know, Chinese ships coming into the port. Is
that just gonna force shippers to bring their products into
you know, I guess Canada and Mexico and then ship
them into the US. Or do you think that that's
really not going to be a huge event for the port.
Speaker 2 (09:04):
Well, with this recent announcement, certainly there are discussions across
board rooms to operating centers, across our supply chain as
to how to handle this latest overture. A million a
million five dollars per vessel call is a big number
on a ship that holds fifteen to sixteen thousand containers.
Will that cost effectively be absorbed by the shipowner or
(09:28):
will it be passed on to the import export community
or even out to US as American consumers. I don't
think any determinations have been made right now, but it's
yet another variable in this extremely complex equation of supply
chain and costs that have people looking very closely right
now at our key transpecific market.
Speaker 1 (09:50):
This might be a silly question, but like you know
that the increased talk of protectionism by the new administration,
the talk of tariffs. You know this other duty that
they're talking about. Are those all headwinds for the parts?
Can they betail winds? Is there any benefit that you
might get from that.
Speaker 2 (10:10):
Well, we're going to stay engaged, nimble, and agile when
it comes to this discussion. And here is my point.
When we saw the first round of tariffs implemented back
in the springtime of twenty eighteen, we saw disruptions to
the supply chain, heavy runoffs before tariff milestone date of
cargo volume, and then really big drop offs after those
(10:32):
new tariffs went into place, so much so that in
the fourth quarter of twenty nineteen, after we had gone
through fifths and starts of bringing a lot of cargo,
in that fourth quarter showed us sixteen percent drop in
cargo with the Port of Los Angeles because we had
all the brake pads and computer keyboards and tires in
our warehouses that we could possibly hold. Similarly, today, the
(10:56):
speed component has been our value proposition to market for decades.
Getting cargo from North Asia through the Los Angeles gateway
to the consuming public of the United States has been
our hallmark. And yet since that twenty eighteen first trade
policy change, we saw China, which was fifty seven percent
(11:17):
of our business portfolio, dropped down to forty five percent
in recent months. Yet we've still grown here in LA
because we've chased the cargo. As sourcing and manufacturing has
migrated to Southeast Asia, more NonStop services and additional capacity
have been put in play by the liner shipping companies,
(11:37):
and it's availed us the opportunity to continue pursuing cargo growth.
So there's a lot to be done. We've got some experience.
We've got to keep our heads about us and make
sure that we find the best way to get products
into the United States for the American manufacturer and consumer
as well as that export market which is so important
(11:58):
to the US economy.
Speaker 1 (12:00):
So, you know, you mentioned earlier that you know, you
had a really busy year and you know the backlogs
were I believe you said that there were none, you know,
which is fantastic. Obviously during the pandemic, there were a
lot of backlogs at the ports, and you know it
wasn't just the Port of LA that it was a
systematic through most ports in the US. What did you
guys learn from that in terms of maybe you're operating
(12:24):
a little differently so that doesn't happen again or it's minimized.
Speaker 2 (12:29):
Yeah, Lee, I think number one, we got a lot smarter,
smarter how to engage. This is still to me a
relationship business, and when one part of our supply chain
is hurting or feeling some impediments, we've all got a
rally to help support. Secondly, data flow has been really
important to us. Our port optimizer, co developed with the
wab Tech Company, can now see cargo forty days before
(12:50):
it arrives Los Angeles and that allows us to better
plan our great skilled labor, the land, and our machinery
to handle that cargo. No surprises here. And then thirdly,
what we saw is that we needed to maintain a
high level of velocity for the cargo crossing our docks.
This is not meant to be a warehouse, but a
(13:12):
transit facility. And what we saw over the last eighteen
months is that the cargo that moves out by truck
sits fewer days than it did even before COVID nineteen,
so meaning that we're moving the cargo in and out
very quickly. And those long shoremen I continue to mention,
are averaging about eleven to twelve thousand containers exchange per
(13:32):
vessel call. That's the best in the business today.
Speaker 1 (13:36):
So, you know, speaking of longshoremen, obviously, automations always a
sticking point with unions and sometimes understandably so can you
can you talk about, you know, the transition that the
port has done to be more productive with technology. You
know what has I guess labor embraced or been willing
(13:56):
to work with you on and kind of what are
the red lines for labor when trying to you know,
you know, leverage that technology at.
Speaker 2 (14:07):
Least on the West coast of the United States, covering
twenty nine ports and twenty two thousand aisle w DOC workers.
Negotiations took place to codify this technology language in the
two thousand and eight Collective Bargaining Agreement, and what we've
seen from then till now, quite honestly, are mixed results.
We know here at the Port of Los Angeles that
(14:29):
we will never see it's on where technology is moving
faster than it is right now, but we cannot leave
the worker behind. In part, driving more cargo means more jobs.
For every four containers that go through our port complex,
we create one job, and that is SACRISANCT to us.
But with technology comes an opportunity to increase capacity and
(14:52):
the number of containers moved. It allows companies to get
a pop to their top line revenue and improve margin play.
We don't necessarily have to see the drastic cuts of
existing workers that have been the case in some of
these operations, and that's going to take a lot of
work from policymakers, to labor leaders and private sector companies
(15:13):
to help move this along in a little bit different
fashion that we've seen so far and give a line
of sight to the worker that careers will be able
to continue. In our part here in Los Angeles and
Long Beach, we're developing the United States first goods Movement
training campus. The initial idea is to upscale and reskill
(15:34):
workers for the new age of technology, whether it be
robotics or green technology, and if you're of my vintage,
you need to relearn those skills to be competitive for
the years ahead. We also want to attract, retain, and
recruit new folks for that next generation of workforce, whether
you're coding today for today's technology or you're out there
(15:57):
moving all this cargo through the comp So there's a
lot of work to do again on a relationship based
approach to bring necessary parties together to make sure that
one advance is not leaving others behind.
Speaker 1 (16:13):
And so you know the technology that you haven't adopted
over the last I don't know, five or ten years.
What's been the biggest game changer in terms of throughput
at the port?
Speaker 2 (16:22):
A couple things. I think number one, when I said
earlier that we got smarter about business, we're seeing the
productivity gains on the number of containers that we can
move through this complex.
Speaker 1 (16:31):
It wasn't but.
Speaker 2 (16:32):
Ten or fifteen years ago we're at eight million container units.
We thought we had met capacity and really we were
blocked down in the number of container ships we could welcome.
And then we pierced that ten million TEU level not once,
but twice. Now you're at the Port of Los Angeles
and it's my estimation that even with our second busiest year,
we probably ran at about eighty percent of solutions capacity,
(16:57):
meaning we've still got upside to grow because we know
how to do this business better and better every day
with the great institutional knowledge that we have across the harbor.
The gains on the automation side may mean for longer hours,
lower cost per unit. But again that knowledge about how
to drive the cargo through and make sure that we're
an employer of choice is also very important to our local,
(17:22):
municipal and regional economies. Keeping people on the job and
keeping people moving forward is what we're all about.
Speaker 1 (17:29):
So through moving stuff through the port, you know, on
the trucking side, on the drade side, can you talk about,
you know, how the port's improved that productivity and kinon
of what's been driving it.
Speaker 2 (17:39):
Yeah, and we're very pleased with improvements, but we know
we can't stop here. On average, a container that comes
in waiting to move by trucks, it's for three days.
That's better than it was prior to the pandemic time.
I'd like to see that number drop down a little
bit more more dual transactions. If a trucker is coming
to get an import container, let's bring in an empty
(18:00):
an export load and do that transaction simultaneously. We've also
just introduced in the last couple of months, the first
ever truck reservation system as a module of the port optimizer.
What this will do is allow us to be more
efficient on the available truck appointments every single day. We've
(18:20):
been measuring this now for the better part of five years,
and on average, we here at the Port of Los
Angeles use about fifty percent of available truck appointments, meaning
we've got about half of that capacity available to the marketplace.
If we could better point truckers in a direction of
when they can get in and out the quickest, have
the surety that an appointment means a container, and give
(18:42):
them confidence to keep coming back and getting a greater
number of truck turns every day, the truck community can
make more money as well, and it also grows our
capacity by better utilizing these open appointments. Now, it's an
imperfect science. We're the first to do this, may stub
our tow here and there, but if we can go
from fifty percent truck appointment utilization to sixty percent, that's
(19:07):
a gain that we want to build.
Speaker 1 (19:09):
And can you you know you mentioned earlier that pollutions
at the at the lowest level that it has been
in some time. What's driving those improvements now?
Speaker 2 (19:21):
I think it was the vision of leaders more than
two decades ago to create what we call the Clean
Air Action Plan, and it was a way not only
to grow jobs and cargo, but to reduce pollution, and
in cooperation and partnership with original equipment manufacturers for both
trucks and on port cargo handling equipment, we found cleaner
(19:43):
technology to do business, whether it's renewable diesel or low
Knox engines. Today, now we've taken a step way outside
our comfort zone. And in twenty seventeen, the mayors of
Long Beach in Los Angeles resolved that by twenty thirty
ports in the San Pedro Bay would be the first
ever zero emission cargo handling ports. That means that about
(20:07):
five thousand units of cargo handling equipment would be moved
into the zero emission category. Then by twenty thirty five,
that resolution called for all twenty thousand heavy duty Class
eight trucks to be zero emission. Again, no one else
has stepped into an arena like this, but the ports
of Long Beach and Los Angeles. There have been some strides. Today.
(20:30):
Out of those twenty thousand trucks, we have almost five
hundred that are classified as ZE, and about ten percent
of the overall equipment on the terminals is now of
the ZE variety. Too long way to go. We've got
to build infrastructure for fueling and energy transmission, storage and
off take. We've moved into an arena where we're testing
(20:52):
hydrogen as well for longer haul trucks and cargo handling
equipment on the docks. A deal with the DWP Los
Angelus Department of Water and Power called Zeppio Project five
hundred million dollars to generate transport and store more electricity
than ever to help feed our marine terminals is in
(21:12):
progress right now with a due completion date of twenty thirty.
And lastly, we're also creating green shipping corridors. This is
now between eight ports in Asia and the ports of
Long Beach and Los Angeles to try to affect change
with the ocean going vessels who in their own category
emit the most pollution of any other the supply chain
(21:35):
conveyance machines. If we were to reduce the pollution in
the trade from Shanghai to the southern California ports by
ten percent, that would be the equivalent of all the
pollution at the Port of Los Angeles in one year.
So the stakes are pretty high, but we've already seen
proof of concept the Alete mirsk called Los Angeles last summertime,
(21:58):
transiting all the way from Jahmen in Fujian Province in
China sixteen days with a sixteen thousand TEU vessel to
Los Angeles, the first ever zero emissions port call here
in La So now we've got a long way to
go to manufacture this renewable energy, make it available and
cost effective for the liner shipping companies. But we're now
(22:19):
showing that the new built ships have the capability and
technology to move in a ze environment. A lot of
upside here, but plenty of work for us to do.
Speaker 1 (22:28):
So when you mentioned the twenty thousand Class eight trucks
to get to zero, these are the dreage operators that
going out of the ports. Correct.
Speaker 2 (22:36):
That is correct?
Speaker 1 (22:37):
And then like so, a lot of these are owner operators.
They don't have a lot of capital. How are they
going to be able to afford a truck that could
be two or three times more than the cost of
a traditional diesel truck.
Speaker 2 (22:49):
It certainly is a postgraduate case study on how we
transition this entire industry. But what I can say is
this that incremental gains are very important to build confidence
in both private sector interests as well as what we
can get done on the grounds here. First, we've collected
a clean truck fee now for about forty four and
a half years. That money is intended to help bridge
(23:11):
the gap between a new build, zero emissions truck and
that which is of the garden variety today that moves
all this cargo so effectively. We've partnered with the State
of California on a voucher stacking program that helps cut
that gap down even more so and giving advantage to
those smaller operators for early takeup on these vouchers and
(23:34):
grant capabilities. Still, the gap is big. The average battery
electric truck is about five hundred thousand dollars. The average
hydrogen fuel cell electric truck is about eight hundred thousand
dollars in pre production stage. While that current rig that
is operated by the owner operator, the small business person
(23:55):
costs about fifty thousand dollars on the tertiary market. There's
a long way to go. Oh, So we've got to
continue to make these gradual advances, knowing that we've got
milestone dates in the future, and in partnership with the
OEMs helped drive interests so we can bring down the
commercially available costs at the same time, it doesn't just
(24:16):
stop with the unit itself. We've got to build the infrastructure,
in part charging, in part fueling for hydrogen fuel cell rings.
That's a private public sector partnership that is ongoing. Again,
I said, this is a daunting task and the numbers
are huge, but every truck that we put on the
road takes a little bit more pollution out of the air,
(24:38):
and we're down to the last nine percent of that
tailpipe pollution to make it work.
Speaker 1 (24:43):
So what is the port doing to make sure there's
an ample supply of these alternative fuels for the ships
or for the trucks, whether it's I guess, plug in
or hydrogen like you mentioned, or for the ship's ammonia
or great all the different green and blue fuels that
they have out there.
Speaker 2 (25:03):
Right, And that's all the work that's taking place today.
This concept of the green Shipping Corridor originally started between
Shanghai and the ports here in southern California talking about
what we could do not only to bring the private
sector ship owners in but look closely toward their needs
of what we traditionally call bunkering. How can we build
the infrastructure necessary to manufacture the renewable energy like any methanol,
(25:26):
ammonia or others and derivatives that will be contemplated in
the years and decades to come. And how can we
give confidence that private sector that when their ship comes in,
we'll be able to fuel up. That's still work that's
taking place today. In fact, in combination with our friends
in Shanghai and the California Secretary of Transportation Tokesoma Shakan,
(25:48):
we'll be having a discussion on that in the second
week of March right here in Long Beach to talk
about how we can continue to advance the green shipping corridors.
When it comes to the trucks and the rigs on
the ground, this truly is a private public sector engagement
that takes place across a wide geography. In fact, there
(26:09):
are only ninety two high speed chargers in the country
today for these big rig trucks, we've got to make
them more available. And you think about the traffic here
in southern California, about a third of all our cargo
goes out to that fifty sixty mile perimeter area known
as the Inland Empire. If we can just in your minds,
(26:31):
I think about put charging stations and hydrogen fueling capabilities
where truck stops and fueling stations are located today along
that normal path a trucker takes, where she has confidence
in getting fueling, getting her tires and brakes fixed, that's
going to go a long way. And we do have
data associated with the run rates of the trucks, the stops, etc.
(26:54):
And nothing proprietary, but enough to give us that confidence
where we can negotiate and begin discussion with private sector interests.
That too will help build up the capabilities and the
interest in migrating to these ze rates.
Speaker 1 (27:08):
And so with a different administration in the White House
and there you know apparent love for fossil fuels. Is
the transition going to be more difficult and more expensive
for the port?
Speaker 2 (27:19):
Well, that remains to be seen. But the way we
look at investments traditionally from an infrastructure standpoint, our community
and public access funding, or our environmental strategy, we don't
build on just one budget cycle, one economic cycle, or
even one election cycle. This is a multi decade approach
(27:39):
that's going to require a lot of input from so
many and the continued investment from the Port of Los
Angeles along with our friends in long beach, and as
long as that cargo volume can stay high, those revenues
get invested right back into these areas that are so
important to the port.
Speaker 1 (27:55):
We'll continue on all right. So this year, the port,
you know, continue to see some good growth. I believe
it was like nine or ten percent for full containers
coming into the port. What is the outlook for twenty
twenty five? Obviously there's a lot of uncertainty out there
with the consumer. Are you guys expecting an up year,
a flat year, a down year.
Speaker 2 (28:17):
Will be competitive, But it is my view lead that
the second half of this calendar year we'll see a
bit of a drop in cargo. I'm estimating right now
about ten percent, simply because we've had so much product
shipped in already as a hedge against purported tariffs that
are now starting to become a little more clear. And
again it is going to be a cycle. We witness
(28:39):
this to an extent in twenty eighteen and nineteen. We'll
get our sea legs under US as manufacturing shifts. But
also today we're seeing procurement executives negotiate with manufacturers on
what all this means for the landed cost of their goods.
So there are a lot of different discussions happening in
the industry, but safe to say a lot of front
(29:00):
loading means will probably have a little bit of a
drop off, but nothing debilitating to the Port of Los Angeles, right.
Speaker 1 (29:07):
And so a lot of people don't know how ports operate.
So are you more or less a landlord and you
kind of lease out the space to other operators that
operate the different parts of the port.
Speaker 2 (29:19):
That's right today, on that seventy five hundred acres, we've
got twenty five marine terminals with two hundred and seventy
cranes leased out to private sector interests with the effort
to move international and domestic trade. We have some three
hundred leases that also include retail, dining, entertainment, and a
hotel right here on our waterfront. We've also got a
(29:42):
Harbord apartment staff that's made up of some industry folks
like Mike de Bernardo, Eric Harris, and Chris Chase who
have decades of experience in liner shipping, marine terminals, and
land transportation that are additive to these conversations with our
private sector partners to help LA become that the gateway
of choice for many of our import and export community, and.
Speaker 1 (30:04):
These terminal leases, I'm assuming they're very long term in nature.
Speaker 2 (30:09):
Yeah, they are. Typically they're twenty five to thirty year agreements,
and it allows us to amortize the works that we
do on infrastructure and for the audience. Typically, our responsibility
as the Port of Los Angeles is at grade and
below infrastructure, getting the electricity and the plumbing down, making
sure the terminal tarmacs are in place, and that the
(30:30):
wharfs are fortified to handle these big ships. The main
channel continues its deepening plant at fifty three feet across,
meaning the biggest ships in the world can come up
and down that main channel and berth alongside are marine terminals.
Those who we leased to are then responsible for the
ground up, putting in buildings, buying or leasing equipment, and
(30:51):
putting in the necessary capabilities from a human resource standpoint
to move all this cargo internationally. It's a great combination
that has been successful for over a century and the
work continues to help drive the American economy.
Speaker 1 (31:06):
And I guess what's the port's role in attracting new
business to these terminals. Do you work with them in
tandem to you know, move shipping lines and things like that,
or like how does that work?
Speaker 2 (31:18):
Very closely, and as you know, Lee, most of the
shipping lines today that we work with on the international
stage are headquartered in Europe and Asia. Last year alone,
I traveled to Asia seven times and Europe twice to
make sure that we're not only keeping up those strong
business relationships, but sharing the virtues of this port of
Los Angeles. Even with the shifting trade policies and migration
(31:41):
of cargo moving south, we still want to be front
and center with the shipping lines, the marine terminal operators,
and equally as important, the importers and exporters who make
the call on where their cargo goes.
Speaker 1 (31:54):
Sounds like you probably have a lot of freaking flyer miles.
Speaker 2 (31:57):
I do, But you know, Lee, the last thing you
want to do at the end of the year is
get on another airplane. So I'll take care of that
business during the year, stay on the ground and try
to work on that golf game when the warmer weather
months come around. What's your handicapped, Jean, Oh, it's really bad.
I'm playing to about a sixteen, but on any day
it could look a little bit worse than that. For sure,
so keep you humble, but you're out there trying.
Speaker 1 (32:20):
You have to tell me as bad as yours are is,
mine's probably five or six strokes more than that, so
we'll just keep it there. So what's your favorite thing
about your cerone roll at the Ports?
Speaker 2 (32:31):
Well, after eleven years on the job, I still run
to work every day, and it's because of these friendships
and relationship I've built over the past three and a
half decades. We have nine hundred and fifteen other colleagues
here at the Harvard Apartment of Los Angeles that I
look to for guidance and support every day. But it's
just been amazing to watch these folks grow into new
(32:51):
jobs and new responsibilities. Our budget is tripled in the
time that I've been here, meaning that we've become three
times more productive with the great Harvard Apartment staff that
we have, and whether it's working with people in Asia,
Europe or right here at home across a wide variety
of segments and industries, it's just so much fun to
(33:11):
sit down with people and talk about how we could
do more for this economy, this port, and the companies
that we serve. Just a blast every day.
Speaker 1 (33:20):
And you know when we did the introduction. You know
you worked at APL. How did you get into the
transportation industry?
Speaker 2 (33:27):
You know when you started, I got very lucky after
earning my MBA from the University of New Orleans. The
price of oil was below nine dollars a barrel. Unemployment
was rising, and it was just after the stock market
crash in the late eighties. I had a really difficult
time finding a job. At the request of my father,
(33:48):
I then went to a headhunter in New Orleans that
had done some business with APL got me an interview,
and I was able to get that interview because my dad,
working for American Airlines, got me a free ticket to
fly to Cincinnati, Ohio, and was told that if I
did well there, I'd use another free ticket to fly
to the big bosses home in Chicago to see if
(34:09):
I could earn a job. And that was an entry
level sales support position that allowed me to work with
some of the most professional folks in the steamship industry
that I'd ever seen, and learned as quickly as possible
on the ground. But it was by chance, yet with
a direction of a person who had been in the
transportation sector, my own dad, that guided me properly well,
(34:30):
thanks to dads.
Speaker 1 (34:32):
What I guess, you know, being a leader of not
only you know, a large organization at the port, but
you know you're also responsible for a large chunk of
the US economy. What kind of keeps you up at night?
If anything?
Speaker 2 (34:44):
Well, I sleep pretty good. And that's why I say
our run to work every morning, And really it's because
there's so much in front of us. We talk about
policy to business investment, what's happening on the international trade landscape,
and the fact that ninety percent of trade moves on water,
and the jobs that we help create and facilitate here
(35:06):
in the Port complex are all things that you carry
with a great deal of respect and motivation. A lot
of decisions we make here at the port affects somebody,
and I'm very cognizant of that. So the responsibilities that
have bestowed on me now for more than a decade,
I take super seriously. But the run to work every
(35:27):
day is about how we can make this place better
and how we can make our colleagues reach their heights
and aspirations. So it has been the most rewarding job
I've had in my career. And there's still so much
more to do.
Speaker 1 (35:41):
And I like to ask all my guests of the
Talking Transport podcast this question about a book that you
might read, whether it's about leadership or transportation that's kind
of close to your heart because a lot of listeners,
are you know, aspire to get into the industry or
learn more about the industry or just become better leaders?
Speaker 2 (36:00):
Well, I spend a lot of time driving in southern California,
as you could imagine, so listening to podcasts of leaders
and their own biographical depiction of how they got where
they got and what it took, but more importantly, what
mistakes have been made along the way that they've been
able to learn from, really continues to be motivating for me.
(36:21):
And whether that be the book about Nick Saban, the
long standing Alabama coach who was also at Michigan State
and LSU back in my home state, to Jamie Diamond
and others in between, listening to leaders and what their
experiences have been in a small way have helped shape
what I am today as a leader.
Speaker 1 (36:40):
Well, I hope while Earn Traffick or also listening to
Bloomberg Talking Transports podcasts as well, absolutely fantastic. So are
you gonna be at TPM in next month.
Speaker 2 (36:51):
Yes, looking forward to it. We should have a very
good turnout and it's always a great way, whether it's
in the sessions themselves and the sidebar meetings we have
with business partners.
Speaker 1 (37:00):
It sure is the.
Speaker 2 (37:01):
Event to be at here in southern California. When it
comes to the trans specific maritime trade.
Speaker 1 (37:07):
Well, I hope we bump into each other at the show,
count on it. That'd be greatly all right, Well, Gine,
I really want to thank you for your time and
insights today.
Speaker 2 (37:17):
This has been a thrill. Keep up the good work.
Speaker 1 (37:19):
Thank you all right, Thanks Gene, and I want to
thank you for tuning in. If you liked the episode,
please subscribe and leave a review. We've lined up a
number of great guests for the podcast, so please check
back to your conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, check
out our work on the Bloomberg Terminal at BIGO or
(37:42):
on social media. Take care and let's keep those supply
chains moving. Thanks everyone,
Hi everyone, this is Lee Clasgow when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klaskow, senior Freight, transportation and logistics analysts at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. Before diving in a little
public service announcement, your support is instrumental to keep bringing
(00:29):
great guests onto the podcast like the one we have today.
We really do need your support, so please, if you
enjoyed this podcast, please share it, like it, and leave
a comment. Also, if you have any ideas for future
episodes or just want to talk transports, please hit me
up on the Bloomberg terminal, on LinkedIn or on Twitter
at logistics Lead. Now on to our episode, We're delighted
(00:51):
to have Gene Soroka, Executive Director of the Port of
Los Angeles, with us today. As executive director of the
busiest container port in North America, Gene is responsible for
managing a two point six billion dollar budget, advancing major
capital projects, growing trade volumes, and promoting innovative sustainable practices
(01:11):
that strengthen the region's economy. Prior to joining the Port,
Jane held several key positions both nationally and internationally in
sales and marketing for American president Lines Limited or APL
healed a MBA and Bouchelors of Science and Marketing from
the University of New Orleans. Gene, thanks so much for
being with us today. Thanks Lee, appreciate you having me on.
(01:33):
So the Port of Los Angeles, I know all about it.
Can you tell the listeners a little bit about the port.
Speaker 2 (01:41):
We're one hundred and seventeen years old this year, seventy
five hundred acres of property, forty three miles of waterfront,
and the cargo that traverses our port reaches each and
every one of our nations four hundred and thirty five
congressional districts.
Speaker 1 (01:58):
A little bit.
Speaker 2 (01:58):
Closer to home, fifteen working Angelinos today has a job
related to the port, and it's one to nine in
the five counties Southern California region, meaning that about a
million of us go to work every day relying on
the great efforts here at the Port of Los Angeles.
Speaker 1 (02:15):
So, you know, twenty twenty four was a pretty good
year for the port. I know, you know, time we're
recording this it's late February, but can you just talk
about twenty twenty four before we get into this year.
Speaker 2 (02:27):
We closed out last year LEE with ten point three
million container units going through the port. That was our
second best year ever, and to me more importantly, we
moved more cargo during the traditional summertime peak season than
we did at any other point, including those COVID years
without one ship backed up. Truly a remarkable year. Also,
(02:49):
in parallel with that high level of cargo volume, pollution
from port activities is at the lowest it's been since
we began measuring almost twenty years ago.
Speaker 1 (02:59):
So in twenty twenty four, what was driving the volume
increases eight that you saw at the port.
Speaker 2 (03:06):
A number of factors, but led by a strong underlying
US economy, the American consumer continued to purchase even beyond
some experts opinions. We also had a protracted labor negotiation
of dock workers on the East and Gulf Coast, drought
conditions in the Panama Canal, and security concerns in the
(03:27):
Red Sea that led to Suez Canal crossings dropping by
some eighty percent. That pushed more and more cargo over
the West Coast. Specifically, to Los Angeles and Long Beach.
Speaker 1 (03:38):
And can you talk a little bit about the share
gains that maybe you benefited from because of those port negotiations,
you know, was it a significant amount of share? Is
that share now like leaking back to those ports.
Speaker 2 (03:52):
We saw several percentage points of cargo share come our way,
but it's a fluid situation, as you well know, based
on those geopolitical issues, and even in more recent times,
from the campaign trail last summer until inauguration, some importers
started front loading inventory or advancing it ahead of what
(04:13):
they perceived to be a new terriff regime and trade
policy coming out of Washington. So a lot of factors,
and while we gained a little bit of share for
folks who wanted to balance out their risk on imports
and exports, what we see now is this week the
International Longshore Association of dock Workers on the Eastern Gulf
Coast will have their rank and file vote on a
(04:37):
new six year agreement with the United States Maritime Exchange.
When that agreement goes through, we'll see a little more
balancing of cargo through major gateways, and I believe you'll
see some of that cargo that came our way move
back to its natural flow over east and Gulf coastports.
Speaker 1 (04:55):
So you know, you kind of have a competitor right across.
Is it the Bay, I don't know, it's the Port
of Long Beach? Is that the bay? I guess you
would say the bay.
Speaker 2 (05:04):
Yes, it's called the San Pedro Bay. And the ports
in LA and Long Beach combined account for about forty
percent of our nation's imports and roughly thirty percent of
our exports. Some call it coopetition. We work very closely
on areas of infrastructure, environmental strategy with respect air and
water quality as well as safety and security. And it's
(05:28):
my view that Long Beach needs to be operating at
top speed at the same time Los Angeles does to
give the greatest benefit to the American economy.
Speaker 1 (05:36):
Right And so you know, obviously geography a location, location,
location is a big decider on which port people use.
You mentioned, you know, there are some things that can
shift share earlier, whether it's potential for a port strike
with your competitors or you know, geopolitical issues. So when
you're competing against other Western West Coast ports, whether it's
(05:58):
the Port of Prince Rupert up in Canada or closer
to home, the Port of Long Beach. How does LA's
Port of La stack. What are your competitive advantages versus
those other ports?
Speaker 2 (06:10):
Well, we cater to three major segments of cargo here
at the Southern California's San Pedro Bay Ports. One is
the twenty million of us that live in Southern California
consuming and bringing things to market, whether it be produce
or manufactured goods. The second segment is about fifty to
(06:30):
sixty miles away from our ports, the inland empire of
Southern California, where we have approximately two billion square feet
of warehousing under roof, and think of this as storage facilities, crosstocks,
the ability to get cargo out on deconsolidation to the
interior of the country, and fulfillment centers for all of
(06:53):
those now that buy online here in the United States.
The third segment is that intact ocean box that starts
in Asia and goes to Chicago, Memphis, Dallas among fifteen
different major distribution centers in the country. So number one
on our list, as you rightly says geography, we're open
(07:13):
seven days a week, three hundred and sixty five days
a year. Second is that we have the ability to
bring in major NonStop services from key Asia locations and
driving those export containers back to those key locations. Thirdly,
is the long standing institutional knowledge from our dock workers
(07:35):
at the International Longshore and Warehouse Union, the broker and
forwarder community, the marine terminal operators and shipping concerns that
bring this cargo to market. That stacks us up against
anyone else in this port business.
Speaker 1 (07:49):
And you mentioned, you know, intact containers moving eastward. I
guess so I'm assuming both major railroads service the port,
Burlington Northern and Union Pacific.
Speaker 2 (08:04):
That's correct, And this is really their biggest market to
distribute goods throughout the country, connecting line agreements that bring
cargo to the East Coast as well, and with more
than sixty percent of all cargo that leaves California by rail,
two important partners in the success of this port complex.
Speaker 1 (08:24):
Great, And you know you mentioned earlier, you know, maybe
the pull forward demand on tariffs. Obviously tarifs are or
the talk of tariffs are more fluid than the water
at the port. Can you talk about you know, I
don't know if you have an opinion about you know,
some of the new stuff that they're talking about about,
you know, Trump floating the idea on service or fees
(08:46):
for you know, Chinese ships coming into the port. Is
that just gonna force shippers to bring their products into
you know, I guess Canada and Mexico and then ship
them into the US. Or do you think that that's
really not going to be a huge event for the port.
Speaker 2 (09:04):
Well, with this recent announcement, certainly there are discussions across
board rooms to operating centers, across our supply chain as
to how to handle this latest overture. A million a
million five dollars per vessel call is a big number
on a ship that holds fifteen to sixteen thousand containers.
Will that cost effectively be absorbed by the shipowner or
(09:28):
will it be passed on to the import export community
or even out to US as American consumers. I don't
think any determinations have been made right now, but it's
yet another variable in this extremely complex equation of supply
chain and costs that have people looking very closely right
now at our key transpecific market.
Speaker 1 (09:50):
This might be a silly question, but like you know
that the increased talk of protectionism by the new administration,
the talk of tariffs. You know this other duty that
they're talking about. Are those all headwinds for the parts?
Can they betail winds? Is there any benefit that you
might get from that.
Speaker 2 (10:10):
Well, we're going to stay engaged, nimble, and agile when
it comes to this discussion. And here is my point.
When we saw the first round of tariffs implemented back
in the springtime of twenty eighteen, we saw disruptions to
the supply chain, heavy runoffs before tariff milestone date of
cargo volume, and then really big drop offs after those
(10:32):
new tariffs went into place, so much so that in
the fourth quarter of twenty nineteen, after we had gone
through fifths and starts of bringing a lot of cargo,
in that fourth quarter showed us sixteen percent drop in
cargo with the Port of Los Angeles because we had
all the brake pads and computer keyboards and tires in
our warehouses that we could possibly hold. Similarly, today, the
(10:56):
speed component has been our value proposition to market for decades.
Getting cargo from North Asia through the Los Angeles gateway
to the consuming public of the United States has been
our hallmark. And yet since that twenty eighteen first trade
policy change, we saw China, which was fifty seven percent
(11:17):
of our business portfolio, dropped down to forty five percent
in recent months. Yet we've still grown here in LA
because we've chased the cargo. As sourcing and manufacturing has
migrated to Southeast Asia, more NonStop services and additional capacity
have been put in play by the liner shipping companies,
(11:37):
and it's availed us the opportunity to continue pursuing cargo growth.
So there's a lot to be done. We've got some experience.
We've got to keep our heads about us and make
sure that we find the best way to get products
into the United States for the American manufacturer and consumer
as well as that export market which is so important
(11:58):
to the US economy.
Speaker 1 (12:00):
So, you know, you mentioned earlier that you know, you
had a really busy year and you know the backlogs
were I believe you said that there were none, you know,
which is fantastic. Obviously during the pandemic, there were a
lot of backlogs at the ports, and you know it
wasn't just the Port of LA that it was a
systematic through most ports in the US. What did you
guys learn from that in terms of maybe you're operating
(12:24):
a little differently so that doesn't happen again or it's minimized.
Speaker 2 (12:29):
Yeah, Lee, I think number one, we got a lot smarter,
smarter how to engage. This is still to me a
relationship business, and when one part of our supply chain
is hurting or feeling some impediments, we've all got a
rally to help support. Secondly, data flow has been really
important to us. Our port optimizer, co developed with the
wab Tech Company, can now see cargo forty days before
(12:50):
it arrives Los Angeles and that allows us to better
plan our great skilled labor, the land, and our machinery
to handle that cargo. No surprises here. And then thirdly,
what we saw is that we needed to maintain a
high level of velocity for the cargo crossing our docks.
This is not meant to be a warehouse, but a
(13:12):
transit facility. And what we saw over the last eighteen
months is that the cargo that moves out by truck
sits fewer days than it did even before COVID nineteen,
so meaning that we're moving the cargo in and out
very quickly. And those long shoremen I continue to mention,
are averaging about eleven to twelve thousand containers exchange per
(13:32):
vessel call. That's the best in the business today.
Speaker 1 (13:36):
So, you know, speaking of longshoremen, obviously, automations always a
sticking point with unions and sometimes understandably so can you
can you talk about, you know, the transition that the
port has done to be more productive with technology. You
know what has I guess labor embraced or been willing
(13:56):
to work with you on and kind of what are
the red lines for labor when trying to you know,
you know, leverage that technology at.
Speaker 2 (14:07):
Least on the West coast of the United States, covering
twenty nine ports and twenty two thousand aisle w DOC workers.
Negotiations took place to codify this technology language in the
two thousand and eight Collective Bargaining Agreement, and what we've
seen from then till now, quite honestly, are mixed results.
We know here at the Port of Los Angeles that
(14:29):
we will never see it's on where technology is moving
faster than it is right now, but we cannot leave
the worker behind. In part, driving more cargo means more jobs.
For every four containers that go through our port complex,
we create one job, and that is SACRISANCT to us.
But with technology comes an opportunity to increase capacity and
(14:52):
the number of containers moved. It allows companies to get
a pop to their top line revenue and improve margin play.
We don't necessarily have to see the drastic cuts of
existing workers that have been the case in some of
these operations, and that's going to take a lot of
work from policymakers, to labor leaders and private sector companies
(15:13):
to help move this along in a little bit different
fashion that we've seen so far and give a line
of sight to the worker that careers will be able
to continue. In our part here in Los Angeles and
Long Beach, we're developing the United States first goods Movement
training campus. The initial idea is to upscale and reskill
(15:34):
workers for the new age of technology, whether it be
robotics or green technology, and if you're of my vintage,
you need to relearn those skills to be competitive for
the years ahead. We also want to attract, retain, and
recruit new folks for that next generation of workforce, whether
you're coding today for today's technology or you're out there
(15:57):
moving all this cargo through the comp So there's a
lot of work to do again on a relationship based
approach to bring necessary parties together to make sure that
one advance is not leaving others behind.
Speaker 1 (16:13):
And so you know the technology that you haven't adopted
over the last I don't know, five or ten years.
What's been the biggest game changer in terms of throughput
at the port?
Speaker 2 (16:22):
A couple things. I think number one, when I said
earlier that we got smarter about business, we're seeing the
productivity gains on the number of containers that we can
move through this complex.
Speaker 1 (16:31):
It wasn't but.
Speaker 2 (16:32):
Ten or fifteen years ago we're at eight million container units.
We thought we had met capacity and really we were
blocked down in the number of container ships we could welcome.
And then we pierced that ten million TEU level not once,
but twice. Now you're at the Port of Los Angeles
and it's my estimation that even with our second busiest year,
we probably ran at about eighty percent of solutions capacity,
(16:57):
meaning we've still got upside to grow because we know
how to do this business better and better every day
with the great institutional knowledge that we have across the harbor.
The gains on the automation side may mean for longer hours,
lower cost per unit. But again that knowledge about how
to drive the cargo through and make sure that we're
an employer of choice is also very important to our local,
(17:22):
municipal and regional economies. Keeping people on the job and
keeping people moving forward is what we're all about.
Speaker 1 (17:29):
So through moving stuff through the port, you know, on
the trucking side, on the drade side, can you talk about,
you know, how the port's improved that productivity and kinon
of what's been driving it.
Speaker 2 (17:39):
Yeah, and we're very pleased with improvements, but we know
we can't stop here. On average, a container that comes
in waiting to move by trucks, it's for three days.
That's better than it was prior to the pandemic time.
I'd like to see that number drop down a little
bit more more dual transactions. If a trucker is coming
to get an import container, let's bring in an empty
(18:00):
an export load and do that transaction simultaneously. We've also
just introduced in the last couple of months, the first
ever truck reservation system as a module of the port optimizer.
What this will do is allow us to be more
efficient on the available truck appointments every single day. We've
(18:20):
been measuring this now for the better part of five years,
and on average, we here at the Port of Los
Angeles use about fifty percent of available truck appointments, meaning
we've got about half of that capacity available to the marketplace.
If we could better point truckers in a direction of
when they can get in and out the quickest, have
the surety that an appointment means a container, and give
(18:42):
them confidence to keep coming back and getting a greater
number of truck turns every day, the truck community can
make more money as well, and it also grows our
capacity by better utilizing these open appointments. Now, it's an
imperfect science. We're the first to do this, may stub
our tow here and there, but if we can go
from fifty percent truck appointment utilization to sixty percent, that's
(19:07):
a gain that we want to build.
Speaker 1 (19:09):
And can you you know you mentioned earlier that pollutions
at the at the lowest level that it has been
in some time. What's driving those improvements now?
Speaker 2 (19:21):
I think it was the vision of leaders more than
two decades ago to create what we call the Clean
Air Action Plan, and it was a way not only
to grow jobs and cargo, but to reduce pollution, and
in cooperation and partnership with original equipment manufacturers for both
trucks and on port cargo handling equipment, we found cleaner
(19:43):
technology to do business, whether it's renewable diesel or low
Knox engines. Today, now we've taken a step way outside
our comfort zone. And in twenty seventeen, the mayors of
Long Beach in Los Angeles resolved that by twenty thirty
ports in the San Pedro Bay would be the first
ever zero emission cargo handling ports. That means that about
(20:07):
five thousand units of cargo handling equipment would be moved
into the zero emission category. Then by twenty thirty five,
that resolution called for all twenty thousand heavy duty Class
eight trucks to be zero emission. Again, no one else
has stepped into an arena like this, but the ports
of Long Beach and Los Angeles. There have been some strides. Today.
(20:30):
Out of those twenty thousand trucks, we have almost five
hundred that are classified as ZE, and about ten percent
of the overall equipment on the terminals is now of
the ZE variety. Too long way to go. We've got
to build infrastructure for fueling and energy transmission, storage and
off take. We've moved into an arena where we're testing
(20:52):
hydrogen as well for longer haul trucks and cargo handling
equipment on the docks. A deal with the DWP Los
Angelus Department of Water and Power called Zeppio Project five
hundred million dollars to generate transport and store more electricity
than ever to help feed our marine terminals is in
(21:12):
progress right now with a due completion date of twenty thirty.
And lastly, we're also creating green shipping corridors. This is
now between eight ports in Asia and the ports of
Long Beach and Los Angeles to try to affect change
with the ocean going vessels who in their own category
emit the most pollution of any other the supply chain
(21:35):
conveyance machines. If we were to reduce the pollution in
the trade from Shanghai to the southern California ports by
ten percent, that would be the equivalent of all the
pollution at the Port of Los Angeles in one year.
So the stakes are pretty high, but we've already seen
proof of concept the Alete mirsk called Los Angeles last summertime,
(21:58):
transiting all the way from Jahmen in Fujian Province in
China sixteen days with a sixteen thousand TEU vessel to
Los Angeles, the first ever zero emissions port call here
in La So now we've got a long way to
go to manufacture this renewable energy, make it available and
cost effective for the liner shipping companies. But we're now
(22:19):
showing that the new built ships have the capability and
technology to move in a ze environment. A lot of
upside here, but plenty of work for us to do.
Speaker 1 (22:28):
So when you mentioned the twenty thousand Class eight trucks
to get to zero, these are the dreage operators that
going out of the ports. Correct.
Speaker 2 (22:36):
That is correct?
Speaker 1 (22:37):
And then like so, a lot of these are owner operators.
They don't have a lot of capital. How are they
going to be able to afford a truck that could
be two or three times more than the cost of
a traditional diesel truck.
Speaker 2 (22:49):
It certainly is a postgraduate case study on how we
transition this entire industry. But what I can say is
this that incremental gains are very important to build confidence
in both private sector interests as well as what we
can get done on the grounds here. First, we've collected
a clean truck fee now for about forty four and
a half years. That money is intended to help bridge
(23:11):
the gap between a new build, zero emissions truck and
that which is of the garden variety today that moves
all this cargo so effectively. We've partnered with the State
of California on a voucher stacking program that helps cut
that gap down even more so and giving advantage to
those smaller operators for early takeup on these vouchers and
(23:34):
grant capabilities. Still, the gap is big. The average battery
electric truck is about five hundred thousand dollars. The average
hydrogen fuel cell electric truck is about eight hundred thousand
dollars in pre production stage. While that current rig that
is operated by the owner operator, the small business person
(23:55):
costs about fifty thousand dollars on the tertiary market. There's
a long way to go. Oh, So we've got to
continue to make these gradual advances, knowing that we've got
milestone dates in the future, and in partnership with the
OEMs helped drive interests so we can bring down the
commercially available costs at the same time, it doesn't just
(24:16):
stop with the unit itself. We've got to build the infrastructure,
in part charging, in part fueling for hydrogen fuel cell rings.
That's a private public sector partnership that is ongoing. Again,
I said, this is a daunting task and the numbers
are huge, but every truck that we put on the
road takes a little bit more pollution out of the air,
(24:38):
and we're down to the last nine percent of that
tailpipe pollution to make it work.
Speaker 1 (24:43):
So what is the port doing to make sure there's
an ample supply of these alternative fuels for the ships
or for the trucks, whether it's I guess, plug in
or hydrogen like you mentioned, or for the ship's ammonia
or great all the different green and blue fuels that
they have out there.
Speaker 2 (25:03):
Right, And that's all the work that's taking place today.
This concept of the green Shipping Corridor originally started between
Shanghai and the ports here in southern California talking about
what we could do not only to bring the private
sector ship owners in but look closely toward their needs
of what we traditionally call bunkering. How can we build
the infrastructure necessary to manufacture the renewable energy like any methanol,
(25:26):
ammonia or others and derivatives that will be contemplated in
the years and decades to come. And how can we
give confidence that private sector that when their ship comes in,
we'll be able to fuel up. That's still work that's
taking place today. In fact, in combination with our friends
in Shanghai and the California Secretary of Transportation Tokesoma Shakan,
(25:48):
we'll be having a discussion on that in the second
week of March right here in Long Beach to talk
about how we can continue to advance the green shipping corridors.
When it comes to the trucks and the rigs on
the ground, this truly is a private public sector engagement
that takes place across a wide geography. In fact, there
(26:09):
are only ninety two high speed chargers in the country
today for these big rig trucks, we've got to make
them more available. And you think about the traffic here
in southern California, about a third of all our cargo
goes out to that fifty sixty mile perimeter area known
as the Inland Empire. If we can just in your minds,
(26:31):
I think about put charging stations and hydrogen fueling capabilities
where truck stops and fueling stations are located today along
that normal path a trucker takes, where she has confidence
in getting fueling, getting her tires and brakes fixed, that's
going to go a long way. And we do have
data associated with the run rates of the trucks, the stops, etc.
(26:54):
And nothing proprietary, but enough to give us that confidence
where we can negotiate and begin discussion with private sector interests.
That too will help build up the capabilities and the
interest in migrating to these ze rates.
Speaker 1 (27:08):
And so with a different administration in the White House
and there you know apparent love for fossil fuels. Is
the transition going to be more difficult and more expensive
for the port?
Speaker 2 (27:19):
Well, that remains to be seen. But the way we
look at investments traditionally from an infrastructure standpoint, our community
and public access funding, or our environmental strategy, we don't
build on just one budget cycle, one economic cycle, or
even one election cycle. This is a multi decade approach
(27:39):
that's going to require a lot of input from so
many and the continued investment from the Port of Los
Angeles along with our friends in long beach, and as
long as that cargo volume can stay high, those revenues
get invested right back into these areas that are so
important to the port.
Speaker 1 (27:55):
We'll continue on all right. So this year, the port,
you know, continue to see some good growth. I believe
it was like nine or ten percent for full containers
coming into the port. What is the outlook for twenty
twenty five? Obviously there's a lot of uncertainty out there
with the consumer. Are you guys expecting an up year,
a flat year, a down year.
Speaker 2 (28:17):
Will be competitive, But it is my view lead that
the second half of this calendar year we'll see a
bit of a drop in cargo. I'm estimating right now
about ten percent, simply because we've had so much product
shipped in already as a hedge against purported tariffs that
are now starting to become a little more clear. And
again it is going to be a cycle. We witness
(28:39):
this to an extent in twenty eighteen and nineteen. We'll
get our sea legs under US as manufacturing shifts. But
also today we're seeing procurement executives negotiate with manufacturers on
what all this means for the landed cost of their goods.
So there are a lot of different discussions happening in
the industry, but safe to say a lot of front
(29:00):
loading means will probably have a little bit of a
drop off, but nothing debilitating to the Port of Los Angeles, right.
Speaker 1 (29:07):
And so a lot of people don't know how ports operate.
So are you more or less a landlord and you
kind of lease out the space to other operators that
operate the different parts of the port.
Speaker 2 (29:19):
That's right today, on that seventy five hundred acres, we've
got twenty five marine terminals with two hundred and seventy
cranes leased out to private sector interests with the effort
to move international and domestic trade. We have some three
hundred leases that also include retail, dining, entertainment, and a
hotel right here on our waterfront. We've also got a
(29:42):
Harbord apartment staff that's made up of some industry folks
like Mike de Bernardo, Eric Harris, and Chris Chase who
have decades of experience in liner shipping, marine terminals, and
land transportation that are additive to these conversations with our
private sector partners to help LA become that the gateway
of choice for many of our import and export community, and.
Speaker 1 (30:04):
These terminal leases, I'm assuming they're very long term in nature.
Speaker 2 (30:09):
Yeah, they are. Typically they're twenty five to thirty year agreements,
and it allows us to amortize the works that we
do on infrastructure and for the audience. Typically, our responsibility
as the Port of Los Angeles is at grade and
below infrastructure, getting the electricity and the plumbing down, making
sure the terminal tarmacs are in place, and that the
(30:30):
wharfs are fortified to handle these big ships. The main
channel continues its deepening plant at fifty three feet across,
meaning the biggest ships in the world can come up
and down that main channel and berth alongside are marine terminals.
Those who we leased to are then responsible for the
ground up, putting in buildings, buying or leasing equipment, and
(30:51):
putting in the necessary capabilities from a human resource standpoint
to move all this cargo internationally. It's a great combination
that has been successful for over a century and the
work continues to help drive the American economy.
Speaker 1 (31:06):
And I guess what's the port's role in attracting new
business to these terminals. Do you work with them in
tandem to you know, move shipping lines and things like that,
or like how does that work?
Speaker 2 (31:18):
Very closely, and as you know, Lee, most of the
shipping lines today that we work with on the international
stage are headquartered in Europe and Asia. Last year alone,
I traveled to Asia seven times and Europe twice to
make sure that we're not only keeping up those strong
business relationships, but sharing the virtues of this port of
Los Angeles. Even with the shifting trade policies and migration
(31:41):
of cargo moving south, we still want to be front
and center with the shipping lines, the marine terminal operators,
and equally as important, the importers and exporters who make
the call on where their cargo goes.
Speaker 1 (31:54):
Sounds like you probably have a lot of freaking flyer miles.
Speaker 2 (31:57):
I do, But you know, Lee, the last thing you
want to do at the end of the year is
get on another airplane. So I'll take care of that
business during the year, stay on the ground and try
to work on that golf game when the warmer weather
months come around. What's your handicapped, Jean, Oh, it's really bad.
I'm playing to about a sixteen, but on any day
it could look a little bit worse than that. For sure,
so keep you humble, but you're out there trying.
Speaker 1 (32:20):
You have to tell me as bad as yours are is,
mine's probably five or six strokes more than that, so
we'll just keep it there. So what's your favorite thing
about your cerone roll at the Ports?
Speaker 2 (32:31):
Well, after eleven years on the job, I still run
to work every day, and it's because of these friendships
and relationship I've built over the past three and a
half decades. We have nine hundred and fifteen other colleagues
here at the Harvard Apartment of Los Angeles that I
look to for guidance and support every day. But it's
just been amazing to watch these folks grow into new
(32:51):
jobs and new responsibilities. Our budget is tripled in the
time that I've been here, meaning that we've become three
times more productive with the great Harvard Apartment staff that
we have, and whether it's working with people in Asia,
Europe or right here at home across a wide variety
of segments and industries, it's just so much fun to
(33:11):
sit down with people and talk about how we could
do more for this economy, this port, and the companies
that we serve. Just a blast every day.
Speaker 1 (33:20):
And you know when we did the introduction. You know
you worked at APL. How did you get into the
transportation industry?
Speaker 2 (33:27):
You know when you started, I got very lucky after
earning my MBA from the University of New Orleans. The
price of oil was below nine dollars a barrel. Unemployment
was rising, and it was just after the stock market
crash in the late eighties. I had a really difficult
time finding a job. At the request of my father,
(33:48):
I then went to a headhunter in New Orleans that
had done some business with APL got me an interview,
and I was able to get that interview because my dad,
working for American Airlines, got me a free ticket to
fly to Cincinnati, Ohio, and was told that if I
did well there, I'd use another free ticket to fly
to the big bosses home in Chicago to see if
(34:09):
I could earn a job. And that was an entry
level sales support position that allowed me to work with
some of the most professional folks in the steamship industry
that I'd ever seen, and learned as quickly as possible
on the ground. But it was by chance, yet with
a direction of a person who had been in the
transportation sector, my own dad, that guided me properly well,
(34:30):
thanks to dads.
Speaker 1 (34:32):
What I guess, you know, being a leader of not
only you know, a large organization at the port, but
you know you're also responsible for a large chunk of
the US economy. What kind of keeps you up at night?
If anything?
Speaker 2 (34:44):
Well, I sleep pretty good. And that's why I say
our run to work every morning, And really it's because
there's so much in front of us. We talk about
policy to business investment, what's happening on the international trade landscape,
and the fact that ninety percent of trade moves on water,
and the jobs that we help create and facilitate here
(35:06):
in the Port complex are all things that you carry
with a great deal of respect and motivation. A lot
of decisions we make here at the port affects somebody,
and I'm very cognizant of that. So the responsibilities that
have bestowed on me now for more than a decade,
I take super seriously. But the run to work every
(35:27):
day is about how we can make this place better
and how we can make our colleagues reach their heights
and aspirations. So it has been the most rewarding job
I've had in my career. And there's still so much
more to do.
Speaker 1 (35:41):
And I like to ask all my guests of the
Talking Transport podcast this question about a book that you
might read, whether it's about leadership or transportation that's kind
of close to your heart because a lot of listeners,
are you know, aspire to get into the industry or
learn more about the industry or just become better leaders?
Speaker 2 (36:00):
Well, I spend a lot of time driving in southern California,
as you could imagine, so listening to podcasts of leaders
and their own biographical depiction of how they got where
they got and what it took, but more importantly, what
mistakes have been made along the way that they've been
able to learn from, really continues to be motivating for me.
(36:21):
And whether that be the book about Nick Saban, the
long standing Alabama coach who was also at Michigan State
and LSU back in my home state, to Jamie Diamond
and others in between, listening to leaders and what their
experiences have been in a small way have helped shape
what I am today as a leader.
Speaker 1 (36:40):
Well, I hope while Earn Traffick or also listening to
Bloomberg Talking Transports podcasts as well, absolutely fantastic. So are
you gonna be at TPM in next month.
Speaker 2 (36:51):
Yes, looking forward to it. We should have a very
good turnout and it's always a great way, whether it's
in the sessions themselves and the sidebar meetings we have
with business partners.
Speaker 1 (37:00):
It sure is the.
Speaker 2 (37:01):
Event to be at here in southern California. When it
comes to the trans specific maritime trade.
Speaker 1 (37:07):
Well, I hope we bump into each other at the show,
count on it. That'd be greatly all right, Well, Gine,
I really want to thank you for your time and
insights today.
Speaker 2 (37:17):
This has been a thrill. Keep up the good work.
Speaker 1 (37:19):
Thank you all right, Thanks Gene, and I want to
thank you for tuning in. If you liked the episode,
please subscribe and leave a review. We've lined up a
number of great guests for the podcast, so please check
back to your conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, check
out our work on the Bloomberg Terminal at BIGO or
(37:42):
on social media. Take care and let's keep those supply
chains moving. Thanks everyone,
Host
Lee Klaskow
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