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Talking Freight

Perspectives from Freight Transportation Providers: Ports and Shipping

June 16, 2004 Talking Freight Transcript

Operator:

Ladies and gentlemen, thank you for standing by. Welcome to the Talking Freight Seminar. Afterwards we will conduct a question-and-answer session. At any time during the presentation, press a one and four to access the operator. Now, I would like to turn the conference over to Jennifer Seplow. Please go ahead.

Jennifer Seplow

Good afternoon or good morning to those of you to the West. Welcome to the Talking Freight Seminar Series. My name is Jennifer Seplow and I will moderate today's seminar. Today's topic is Perspectives from Freight Transportation Providers: Ports and Shipping. Please be advised that today's seminar is being recorded.

Today we'll have perspectives the World Shipping Organization and 2 Ports. We have three speakers, Bob Blair of the World Shipping Organization, Louis Rubenstein of the Port of Long Beach and Jeannie Beckett of the Port of Tacoma.

Robert Blair is director for economics and policy analysis at the World Shipping Council. Prior to joining the World Shipping Council in Jan. 2001, Bob served as senior economist at the Federal Maritime Commission. He began at the FMC in 1985 working in the then Office of Policy Planning and International Affairs and as staff liaison with the U.S. ports industry. Before joining the FMC, Bob was transportation research manager at First International Corporation, a research firm covering projects being developed and funded by the World Bank and other regional development banks. While pursuing MA studies at the University of Maryland, Bob taught economics there, and worked as a research assistant with the World Bank's transportation office.

Louis Rubenstein is a Port Traffic Engineer for Port of Long Beach, California. Mr. Rubenstein is responsible for traffic operations on public Port roadways, and contributing to development of long range improvement plans. He manages the traffic engineering group. He is involved in: adjusting traffic flow models to accommodate high portion of large and overweight trucks, applications of ITS to improve roadway traffic flow, Port security, mitigating traffic impacts of railroad grade crossings; design of roadway improvements, and long range planning to divert cargo trips from truck to rail. He caused the implementation of the new 5th lane on the Gerald Desmond Bridge as a truck climbing lane and the Port guide signing program.

Prior to the Port of Long Beach, Louis worked at the Jet Propulsion Laboratory, Pasadena California as Transportation Systems Engineer, and the New York City Department of Transportation as the Director of Special Programs. He managed the first federally funded urban goods movement study, "Manhattan Garment Center Urban Goods Movement Study".  He has a MS in Transportation Engineering from Polytechnic University of NY and a MS in Mechanical Engineering from the City College of NY. He is a licensed Traffic, Civil and Mechanical Engineer in California.

Jeannie Beckett is the Senior Director of Inland Transportation for the Port of Tacoma. Ms. Beckett joined the Port of Tacoma in 1986 as Budget Director. In 1997, she was promoted to the Senior Director, Budget and Business Planning, where she was responsible for the strategic planning, market forecasts, the budget process, research and technology. During the Port's strategic planning process of 1998, Ms. Beckett was selected to be the line of business leader for Economic Development. In July 2000, she was chosen to lead the Intermodal Transportation line of business.

Ms. Beckett is a graduate of University of California, Berkeley, where she earned her bachelor's degree in economics and has a master's degree in finance.

I'd like to go over a few logistical details prior to starting the seminar. Today's seminar will last 90 minutes, with 60 minutes allocated for the speakers, and the final 30 minutes for audience Question and Answer. The Operator will give you instructions on how to ask a question over the phone during the Q&A period. However, if during the presentations you think of a question, you can type it into the smaller text box underneath the chat area on the lower right side of your screen. Please make sure you are typing in the thin text box and not the large white area. Presenters will be unable to answer your questions during their presentations, but I will use some of the questions typed into the chat box to start off the question and answer session in the last half hour of the seminar. Those questions that are not answered will be posted to the Freight Planning LISTSERV. The LISTSERV is an email list and is a great forum for the distribution of information and a place where you can post questions to find out what other subscribers have learned in the area of Freight Planning. If you have not already joined the LISTSERV, the web address at which you can register is provided on the slide on your screen.

If at anytime you would like to zoom in on the slide that is showing on your screen, you can click on the zoom icon at the top of your screen. It looks like a magnifying glass with a plus sign in it.

Finally, I would like to remind you that this session is being recorded. A file containing the audio and the visual portion of this seminar will be posted to the Talking Freight Web site in the next day or so. To access the recorded seminar, please visit Talkingfreight.webex.com and click on the "recorded events" link on the left side of the page and then choose the session you'd like to view. Due to the size of the file, recorded files are available for viewing/listening purposes only and cannot be saved to your own computer. We encourage you to direct others in your office who may have not been able to attend this seminar to access the recorded seminar.

The PowerPoint presentations used during the seminar will be available within the next week. I will notify all attendees of the availability of the PowerPoints, the recording, and a transcript of this seminar.

It's actually now about 1:00, so we'll start with the first presentation of the day which is Bob Blair of the World Shipping Council. He will give us an overview of shipping liner trends and Bob, if you give me just a second I will turn the speaker role over to you and then you can begin. Okay. You can begin.

Bob Blair:

Good afternoon. And thank you, Jennifer, for the opportunity to participate in today's seminar.

Because liner shipping companies, unlike public port authorities, are private businesses -- rather than discuss any particular line's strategic plans or investment programs, I'll be speaking in general terms about the issues that the industry as a whole faces in preparing for the anticipated continued strong growth in container cargo in the decades ahead.

Liner shipping – the carriage of containerized cargo on regularly scheduled sailings – is part of a complex freight transportation system, part of the supply chain for US imports and exports. What liner companies do to handle forecast growth in containerized cargo will affect, and will be affected by, what happens in the rest of the freight transportation system.

But to begin, let's look at some numbers on current container cargo movement in the U.S. trades.

SECOND SLIDE: 2003 U.S. International Waterborne Trade

As the figures show, containerized cargo represents about 60 percent of all US international waterborne trade in value -- more than 490 billion dollars worth of imports and exports.

In volume terms, that's more than 21 million twenty-foot equivalent units (or TEUs) of cargo. TEU is the standard unit of measure for volumes of cargo carried, as well as a short-hand measure for the size of containerships. One TEU is equivalent to the volume of cargo carried in one 20-ft. long container. And containerships are rated by the number of TEUs they are designed to carry. For example, the largest ships operating today are over 8,000 TEUs vessels – meaning they are rated to carry 8,000 20-ft, boxes, or as is more common in US trades, 4,000 40-ft. long containers.

Cargo volumes in the US trades, are not only high, but have been growing rapidly. For example, volume growth from 2002 to 2003 was 7.9%. And that followed an annual growth from 2001 to 2002 of 10%.

It is also worth noting how volume figures for container imports compared with export figures: The ratio last year was almost two (actually 1.88) import TEUs for each one export TEU.

Although America's containerized trade is a worldwide enterprise, our Asian trades -- as the ranking of our major trading partners in containerized trades shows -- are particularly important. And that, of course, means that containerized freight moving thorough US West Coast Ports will remain an especially pressing concern.

To give one example, the Southern California port pair of LA/Long Beach handled roughly 36% of all US containerized trade in 2003. And if you look solely at US imports, LA/Long Beach handled roughly 43 percent of all containerized imports.

In short, America's ocean container cargo is already at high levels. Projections for future growth vary, but typically forecasters expect a doubling of foreign waterborne container trade within the next decade.

That will mean

THIRD SLIDE: Cargo Flow

I include this very simplistic schematic on cargo flows to emphasize a couple of important points before I discuss liner shipping's efforts to meet the demand for increased cargo carriage.

It follows that investment in improved intermodal infrastructure outside the ports gates – dedicated highways and rail services – will be one critical element, and perhaps the critical element, in meeting the challenge of America's forecast trade growth.

SLIDE FOUR: Challenges and Trends

The biggest challenge that the liner industry faces – and its a positive prospect from the industry's point of view -- is the strong growth in containerized cargo, especially coming out of Asia.

To meet that growth, liner companies are continuing to invest heavily in new and larger container vessels to handle the growth, and to the extent possible capture the economies of scale that large vessels offer.

But there are related challenges that go along with strong cargo growth. For example, there's the problem of trade imbalances—particularly in the Asian trades.

Trade Imbalances

US imports from Asia are, on a volume basis, nearly twice U.S. exports. It's important to understand that liner shipping is a scheduled service and a two-direction enterprise. If over 7 million TEUs of cargo arrive at West Coast ports in one year, but less than 3 million TEUs are exported through those same West Coast ports – the 4 million TEU difference has certain consequences.

One consequence is that millions of empty containers must be sent back to Asia to reposition the boxes needed to carry yet more inbound cargo. That means millions of containers being hauled back to Asia without any paying freight.

If the trade were balanced, that is if a similar number of containers were moving in both directions, importers would pay for the inbound moves, and exporters would pay for the outbound moves.

But, since the empty containers are needed in Asia for future import moves, carriers – when trade conditions allow them to– must treat the empty container moves as a cost imposed by the very strong demand for imports, and price accordingly. If trade conditions are such that container repositioning costs cannot be recovered, carriers' revenue suffers and their ability to invest in new equipment, vessels, and facilities also suffers.

For purposes of investment in new vessels and equipment, shipping lines aim to provide sufficient container capacity to meet the demands of the strong leg of the two-way trade. So, in the case of US/Asia trades, they try to order enough vessels to support America's import demands. But, because of chronic trade imbalances, that means that – absent a huge increase in the volume of US exports – vessels returning to Asia with US exports will still be moving a significant number of empty containers.

Security Measures

Another major challenge that both liner companies and ports face is the development and implementation of security measures to ensure that ocean containers will not be used as vehicles to transport terrorist weapons, especially chemical, biological, radiological and nuclear (CBRN) weapons, or as a channel to move terrorists personnel into the US.

Prior to 9/11, international liners shipping focused on moving cargo from origin to destination as rapidly and inexpensively as possible – the chief concerns were commercial need and efficient service. Since 9/11, the concern on speed and efficient service is still there, but now national security concerns have added a new dimension to lines' and ports' planning and operational processes.

The liner industry has been working with designated government security agencies to improve port security, vessel security, and container security. And to do so with minimum negative impact on the speed and efficiency of the basic transportation services provided.

Obviously, if the number of containers imported into the US does double in the next ten years, the need to ensure container integrity, to control access to containers by unauthorized parties, to track the movement of containers, and to provide advance information on what's supposed to be in the containers will also grow. So will the costs associated with providing the new information and security technologies and the additional organizational resources needed.

Improving the quality of container integrity has been a goal that lines and governments have sought to achieve quickly – but that means higher security costs as new programs are fully developed and implemented. And given trade growth figures, one must assume that associated security costs will continue apace.

Environmental Concerns

More and bigger vessels calling at US ports can mean higher levels of air pollution (not only by vessels, but by the truck fleet size necessary to move cargo inland from the ports), more channel dredging and disposal of dredged materials at major container ports, and more potential for invasive marine species carried in vessel ballast water. Those are issues the liner industry and U.S. ports' authorities take very seriously are already attempting to adequately address. Continuing increases in cargo volumes, all else being equal, could heighten environmental concerns.

Freight Infrastructure Development

Even if liner companies were to provide all the vessels and equipment necessary to handle the forecast levels of cargo growth -- and terminal operators and port authorities were to provide all necessary additional resources to ensure that ports could efficiently load and unload container cargo and move rapidly out the gates -- the rail and road infrastructure outside those gates would still be a critical concern.

The ocean transportation system can only be as effective as its weakest link. If container traffic doubles in the next decade, truck and rail capacity (and especially rail capacity) for the inland portion of the system will have to expand significantly, too.

Whether that rail capacity will be there is a major issue of concern. Whether the national highway system will be able to handle the volumes is also an issue of concern. To ensure that there is an adequate upgrading and expansion of road and rail systems is a, perhaps even the, major challenge presented by current trade growth forecasts.

And finally,

Logistics Service Expansion

Liner shipping companies, acting in response to their customers demand for additional transportation and distribution-related logistics services -- services beyond just moving a container of cargo from foreign Port A to US Port B – have been expanding their menu of service offerings. These specialized, often customized, logistics services are frequently offered through an associated logistics subsidiary. As total container cargo grows so does the demand for customized logistics services. From a liner company's planning and investment perspective, the expansion of logistics service offerings means that the carrier-customer relationship is branching out beyond simple ocean transportation. Liner companies are not just ocean transportation providers, but providers of business solutions related to their customers' overall transportation and distribution requirements.

So, with some idea of the major challenges the industry faces, beyond ballooning container volumes, let's look and what cargo growth means for liner company's strategic planning.

SLIDE FIVE: Cargo Growth's Impact

Perhaps the most obvious decisions that shipping lines has to make, in the face of current trade growth forecasts, are how much to invest in new vessels and equipment, and where to put those resources. But those choices are closely bound with related decisions about which routes to operate and what ports to call on.

I should, at the outset, stress the vital importance of customers' preferences in reaching these routing and port selection decisions. Ultimately, the line's larger customers have a key influence on what routes their cargo moves on and what ports it goes through.

Major customers make their own strategic decisions as to

Those decisions are reflected in the shipping services they demand from liner companies. And any significant changes in those customer decisions can affect the line's own strategic planning. If, for example, Wal-mart or Target decide to establish a major new distribution center in say Richmond Virginia, it is likely that the Port of Norfolk, Virginia would soon have liner companies that serve Wal-mart or Target coming in with plans to increase the numbers of vessels calling at Norfolk, and proposals to expand existing terminal facilities.

In short, it's helpful to remember that liner shipping is a service industry. It responds to the demands of its customer base, and changes its operations in response to changes in its customers' commercial needs. Decisions about investment in new equipment, new vessels, route choices, logistics services, and inland transportation are made to accommodate expected demand – and particularly the demands of the line's major customers.

What that means in terms of liner investment in new containers, truck chassis, and vessels is fairly straightforward. As cargo volumes grow, so will investment in equipment and ships. However, a line's service must respond to its customer's needs in terms of final destination of cargo, time sensitivity of cargo, risk of schedule disruption, and the availability of economically feasible alternative routes.

So, for example, at time T a line's major retail customers may have most of their large distribution centers near LA and New York. And those large customers may determine that economically, it makes most sense (including from a time sensitivity perspective) to have their cargo from Asia off-loaded at the Ports of LA or Long Beach and trucked to its LA-area distribution centers and sent across country by rail to their East Coast distribution centers in New Jersey.

But, by time T plus 5 years, the customers may have experienced sufficient growth in new regions that it makes plans to add major distribution centers in Atlanta and Chicago. Moreover, they may, for economic reasons, be planning to buy more products from Chinese manufacturers and fewer from their traditional source in Malaysia. In discussions with the shipping lines that they use, the customers may seek options for moving more cargo from China to Atlanta, and less from Malaysia to New York. To keep the business, the lines will begin planning in terms of adding new routes, increasing available ships and equipment, and altering sailing schedules to accommodate the customers' new plans.

In short, lines take a look at what's happening in the markets of the shippers they serve (or hope to serve) and plan accordingly.

As cargo volumes grow over the next couple of decades -- and depending on how well West Coast ports, terminals, rail operations, and highway systems can accommodate that growth -- it may be that more and more US imports from Asia move through the Panama Canal to East Coast destinations, or even on vessels that transit the Suez Canal and call in Europe before calling on the US East Coast.

Some future cargo that might otherwise have moved through LA/Long Beach to the US Midwest may, depending on rail capacity and costs, move through Tacoma and Seattle. Where tomorrow's cargo flows go ultimately depends on the economic constraints and logistical preferences of the shipper/customer.

Certainly ports that serve large population concentrations such as LA and New York will remain important container cargo ports. And those ports are certainly taking steps to ensure they can handle additional – and larger –vessels, and efficiently throughput higher cargo volumes. The Alameda Corridor in southern California, and New York's $1.6 billion project to deepen its channels to 50 ft. to accommodate larger vessels, are testimony to the efforts US ports are making to be prepared for the consequences of trade growth.

We can also expect that a portion of new cargo volume growth will be crossing the docks at many other container ports around the country. Which means that serious long-term planning, investment, and facilities expansion is going to be necessary in many – not just a few major -- U.S. container ports.

The liner industry, responding to market forces, can be counted on to provide the additional vessel capacity, specialized equipment, terminal facilities, and customized services necessary to handle forecast container cargo growth in the decades ahead. Additional rail and highway capacity remains the critical concern, as does investment in the infrastructure that supports freight movements to and from U.S. ports.

SLIDE SIX: Individual and Collective Responses

I'd like to close these comments with a brief overview of the individual and collective responses by members of the liner industry to meet the challenge raised by forecast trade growth in the US trades.

Individual Lines make the strategic plans, make the investments, and negotiate the contracts that insure that adequate vessel space and equipment will be available as our foreign trade continues to grow.

Those lines make their decisions in response to market forces of supply and demand, and in consultation with their partners in the overall international transportation system. Those partners include:

Operational alliances through which individual lines cooperate to provide new and expanded vessel strings bye sharing the costs and risks of the major investments involved are particularly important. Most major lines now are part of such multi-member operational groups that price their services individually, but cooperate in the provision of greater service options for shippers – with, for example, several lines contributing their vessels to a given service.

Close cooperation with port authorities and marine terminal operators are also critical to getting higher volumes of cargo off ships and through ports speedily to their ultimate destinations.

The liners shipping industry also cooperates in trade lane groups, called discussion agreements or conferences, to share important supply, demand, and utilization information and trade forecasts. That information sharing supports each line's ability to make its own individual key planning, investment, and pricing decisions with a better understanding of how markets are likely to behave.

Finally, there is an industry trade association for the US trades – The World Shipping Council – that is responsible for coordinating and presenting industry positions to Congress and the various government agencies with which the industry works (such as the Department of Homeland Security, the Coast Guard, the Federal Maritime Commission, the EPA, and so forth) usually as part of a coalition representing all the key constituencies involved in ocean trade...such as port associations and shipper associations.

SLIDE SEVEN: Additional Information

Which brings us to this final slide, showing where those of you interested in additional information about the industry, or some of the challenges it faces, can go for further information.

Thank you.

J. Seplow:

Thank you, Bob. Thank you to the questions that were posted. Give me just a second and I will turn it over to Louis Rubenstein. Okay. Louis, you may go ahead when you are ready.

L. Rubenstein:

Slides 1,2 - Okay. Good morning or good afternoon. I'm going to talk about some of the impacts of freight growth. I will be talking about trends in growth, container shipping basics and how tgrowing trade volume leads to bigger ships and the bigger terminals, some of the restraints on growth, the Port of Long Beach expansion programs, our environmental programs and our new programs to reduce the impact of truck.

Slide 3 - This chart shows the history of U.S. international goods trade converted to billions of 2003 dollars. It goes all the way back to 1963, and you notice that there's a tremendous growth. It's almost constant, except for the last recession. For almost 40 years at a 7% rate of growth. One of the things that has been changing, though, is the rate of growth from Canada and Mexico, North America, has been slowing down and north Asia has been picking up and this is market that would be susceptible to more likely to travel via sea to the Ports of like Los Angeles and Long Beach. If the ultimate destination is the east coast, they would come through a west coast port. Traffic from South Asia, could has two choices. It might be cheaper to go via the Strait of Malacca and the Suez Canal to the east coast directly or they might come to the west coast. Similarly European trade, most likely would go directly to the east coast, and a portion of it would come through the Panama Canal to the west coast. I was surprised when I saw this graph, just to see how little is due to South America. There are a lot of people down there and there is talk about that as being the next big growth area for trade.

Slide 4 - Why has the west coast trade increased? As mentioned earlier there's an overall growth in world trade. Income growth, trade is related to the gross domestic product growth. The decline in tariff barriers, and decline in shipping costs. The west coast has several advantages, the annual increase in the Asia trade has been -- since 1970 averaging 8%. Most of thje current ships used in this trade route can no longer fit in the Panama Canal , which is 106 feet wide, they come to Long Beach and half of our traffic is actually off-loaded to rail and goes to the east coast. We have a very good intermodal rail system in Long Beach and Los Angeles and very good freeway system provided by the state. There's good weather. We have a large local market and a good labor supply for distribution centers. If the ships have to come here to serve the Southern California market they might as well come here to off-load contains for rail shipment to the east coast.

Slides 5,6 - It's not all one way up. There's been some changes in the last few years. In 2003, we lost a little bit of market share on the west coast. Part of that was due to the increased capacity of ports like Tacoma and Seattle and also the Panama Canal increased its capacity a little. We had a work stoppage or lockout, depending how you call it in the 2002, and that made some of the shippers think about, well, maybe there's a better way. You often lose some customers during service interruptions. There's growing freeway congestion in Southern California due to people and goods. It is reflected in the costs that some of the shippers are thinking about. From Long Beach, by rail, shipped goods can -- if off-loaded here reach New York in six days and Chicago in three to four days. One half of all of our goods moves via rail. If they were to go by all water route to the east coast, that could take a week or two longer than that, via the Panama Canal and if the goods are expensive, or there's a demand for them, the shipper will usually choose,the quicker route.

Slide 7 - I want to talk about some basics of container shipping. This will lead into impacts of truck traffic on the highways. A basic rule about container shipping, these are private companies that run the container lines. They try to get as much business as they can. They serve the shipper and try to serve the shippers' need and demand. Alliances have been formed between shipping lines in the last ten years. Now you will see a ship from one company carrying containers from several others. It's somewhat like how the airlines will allow you to have joint routing of tickets. The shipping companies seem to care more about service and market share, than actual costs. Sometimes they'll take more volume on and process it a little bit less efficiently than optimum, but they want to maintain their service to the customers. A sample fee for shipping of goods from Shanghai to Oakland would be $1900, to Chicago, another $600 on for rail. In the reverse direction also to Shanghai the fee may only be $700. That's due to the lack of back haul demand. There's so many more imports than exports and the other interesting thing is the imports are usually higher valued and lighter weight than the exports. Many of our exports are sometimes called urban ore: like waste paper, cscrap metal, coal, coke, from the refineries. These are shipped -- well, actually being coke is not in a container, but waste products are a lot of -- are exported. The outbound containers are heavier than the inbound containers.

Containers are measured in TEUs which is an international standard, even in metric countries. Eighty % of our containers are 40 feet long. We call them FEUs. A typical service for a container shipping line between Shanghai and Long Beach would be a weekly service. The ship might load and unload in Shanghai fourin 4 days, then a 14-day sea journey and then load and unload in North America for four days. So that's about -- over 35 days. If they had, 5 ships then they could maintain a weekly -- five ships then they can maintain a weekly service on that particular route. So there's a lot of investment. Each ship, one large ship could cost $120 million for 6,000 TEU ship. So for that service, it would be a $600 million investment, just in ships. This averages to about $20 thousand per TEU. The operating cost of a 4,000 TEU ship is about $15 per TEU per day. For a larger ship -- over 12,000 TEU ship it is estimated to be about $12 per TEU/day. Now this is a cost. This is one of the reasons that the lines are going to larger ships but the cost is different from what they charge. And what they charge, depends upon how good a customer you are.

Slide 8 - When the ships unload in the terminal, it takes a certain amount of space to accomplish all of this work. Terminals have been getting bigger. Some of the factors that affect the terminal throughput and size are container dwell time, the value of the goods. They try to move high value goods out of the terminal very quickly. The lower value goods, sometimes the shippers will let them sit in the terminal for a few days waiting for the right price to sell them at. So stack height, percent of empties, the crate rates, the number of handlings, the number of sorts ,whether we have scheduled pickups or random pickups and now customs inspection is getting to be important -- more important than it has because more of the containers being held for security inspection. The more containers sitting in the yard not really doing anything, the less work space there is in the yard, and the productivity in the yard goes down.

For planning purposes, most container operators would prefer to have all their containers stored on wheeled chassis. That's the trailer of a tractor-trailer, without the tractor. So that when someone comes to pick up the container, the tractor, or what we call the bob tail can go to that spot and pick it up and hook it up and go. That's the most efficient way to manage the yard.(3800 TEUs/acre/year) with respect to labor costs It's less efficient if you run out of space, then have you to start stacking containers , and when someone comes for a container, you may have to move two or three others to get to the container you want. It's less efficient and we have measured these empirically.7000 TEUs/per acre/per year is about our busiest terminal, about as well as it's ever done. In Europe, they sometimes reach higher throughputs 8500 TEU/acre/year - but they use automatic stacking equipment. But what the terminal cares about most is providing the service their customers need in the available land even if the dollars per TEU increases. Some Asian terminals appear to have higher throughputs per acre than LA/LB. However, if factors such as ship to ship transfers, and dwell times are considered they are very similar.

Sometimes we use on-dock rail yards to try to reduce truck trips and also it's a service factor to -- for the shipping lines. They can represent to their customers that their goods will get to the east coast faster because they will get right on the train the same day. So how much space do we need for that? That's determined primarily by -- by the loading rate for a length of railroad track. Empirically we have observed rates of 10 container lifts per year per track foot. These could be an empty or 20 footer or 40 footer on or off per year. About one acre is needed for every thousand track feet of on-dock rail yard, An on-dock yard with 30,000 feet of track would require 30 acres. At an off-dock rail yards two acres per 1000 track feet are needed -- because you're not sharing all the intermodal trucking facilities within the marine terminal..

Slide 9 - The $1900 fee that the shipper might charge would be distributed as shown in this slide. He might spend half of it in the port-to-port sea transport. And then there's the -- the terminal operations (25%) and the paperwork. And if it was shipped inland, a bigger portion, there would be inland transport costs. Now, the terminals because of the alliances, of the increased business and because of increased efficiency of larger ships, -- the shipping companies have been going to bigger ships. The bigger ships have an impact on the ports that requires bigger terminals. I will give you an example.

Slide 10 - For instance, this ship is not on the market yet, but it's expected in a few years, a 10,000 TEU ship, -- that had a weekly service to Long Beach, let's say 85% of the TEUs were discharged. So half would become off the ship and the other half would go on the ship. Of course, the containers going on the ship would be a lot of empties. Anyway there's about 884,000 TEUs per year. So if going through previous numbers if everything was wheeled, you would need 230 acres for that -- to support that one service. If it was grounded, you would need 125 acres and actually, it would be somewhere in between. But the terminal wouldn't want -- let's say the terminal needed 200 acres. They have a whole lot invested. They would try to get two or three ships a week to fully utilize their staff and equipment -- Now if 25% of this was to leave by rail they would need 22,000 track feet to service that. If you had an on dock rail yard and that require another 22 acres

If 20% of the containers are 20 footers and 80 % are 40 footers the 884,000 TEUs would convert to 491,000 containers per year. Each container results in 1.3 truck trips. And why isn't it one? Because a lot of the truck moves are not totally efficient. Sometimes you have a tractor trailer bring a load to the terminal and pick one up. Sometimes they leave or arrive without any load. It will bring in an import an export container and sometimes they will bring in an empty. And also there's a little bit of -- the terminals also act a little bit as a distribution center for empty containers. Sometimes the shipper will have an empty container, and not need it and they will bring it down to the terminal to -- so they can -- they can rent it out to someone else.

Slide 11 - Here it shows you this -- this chart shows you the history of the size of the container ships. And this is a critical moment, 1984 was the first ship that could not pass through the Panama Canal, 4400 TEUs. Now as they grow, they grow in length, depth and width.

Slide 12 - This is a ship that is -- one of the newest ships, one of the biggest ships we've ever had

8,000 TEU . It's been in our part already.

Slide 13 - Now how big can ships grow? Well, the most important limit is the demand. They serve an economic demand and if the volume is there, a large ship with a weekly service that unloads almost 100% of its items at a terminal is probably the most efficient way for a shipping company to route and schedule ships but there are some natural limits, such a -- well, the Suez Canal -- that's actually natural, no, it's man made. It can handle a 12,000 TEU ship and has a depth of 56 feet . I have read that they are building some new bridges over the Suez Canal. with an air draft of 230 feet. The Panama Canal is limited to 4400 TEUs, but they are planning to widen it to handle 12,000 TEU ships. One natural barrier is the Malacca Strait between Malaysia and Indonesia, it's a 300-mile strait. It is several miles wide and it handled 300 major ships per day and is 69 feet deep, and so that's a natural barrier, and the biggest ship you can get through there is an 18,000 TEU ship. So we know in the long run, this is as big as ships can be economically built. The bigger ships have an impact on bridge heights, channel depths, and widths in addition to terminal size.

Slide 14 - Once the goods come to the port, -- they come to the local market, and more then half go to the east coast for the non-local market. There' are several routes that a shipper can choose between the ship and the railroad.You can go to an on-dock rail yard to a railroad, to non-local destination, 16% of our goods go that way. We have near dock yards about five miles away from the port. Another 13% go that way. So there's 29% that go by rail without getting on the I710 freeway. Then we have off dock rail yards, these are 22 miles away from the port in downtown LA, and these when trucks carry these containers on the freeway, there's a lot of public opposition to that, 13% use this route. We're trying to reduce that. So that's -- that's 16,13,13 or 42% of containers go from the ship to the rail without being opened.. Another 22% will be processed in a local distribution or transloading center before being sent to the rail yard. In a transloading facility goods come from the ship and go to a warehouse or distribution center and repackaged in different containers, which now might also contain some cargo of domestic origin. The DC would make up containers for particular stores and usually use the larger 53 foot container, which is not carried on ships

Slide 15 - The projection of background truck trips are expected to grow about 2% a year, -- but the freight-related container trucks are expected to grow much faster than that, and now we're dealing, actually with a between 2025 and 2030 numbers. It's hard to predict the future but the numbers are, like, three or four times what they are now.

Slide 16 - What are the constraints to growth? Well, California's San Pedro Bay ports are actually on land owned by the state, and entrusted to the City of Long Beach, or the City of Los Angeles, -- because they're on wetlands. Land that was below the natural high watermark. There has been -- a lot of it is on landfill. Under the tidal land trust we have restrictions on what we do with any money from there generated in the Port. We can't -- we can only spend it on shipping, and waterfront recreation within the tidelands area. The California laws require us in the coastal act to modernize and construct within the existing boundaries. No new ports are allowed on the coastline. Recently, the state legislature has mandated a truck appointment system that's been implemented. We have to follow the EIR process with the state. Federal laws require for every acre of land that we create from low waters we have to mitigate that by the adding an equivalent area along the bay or the coasst, somehow build another acre or buy those rights, that's a limitation on our growth. And in the last year we've had the Marine Transportation Security Act, we're working with the Coast guard and Customs to make things more secure.

Slide – 17 The community has been more vocal in opposition to Port growth-- in the last few years especially in Los Angeles not so much in Long Beach, until about two years ago, Long Beach was with the expansion of the 710 freeway. This services the port which carries more than half the goods out of the port, out of both ports. There is a plan to expand the I710 and the community has focused on that. Even though there are a lot of worse freeways, more congested freeways in southern California. So the port growth, and opposition could grow, and we need the -- we need the community support to proceed with our infrastructure improvements. So stakeholders in the shipping companies and ports, the freeway operators must become more aware of the community concerns.

Slides 18, 19, 20 - Now, what are some of the our expansion programs? What we've been -- this shows the Port of Long Beach and what we've been trying to do in the last few years. We are combining smaller terminals into larger ones above 300 acres. On Piers E. G, and J terminals a little over 100 acres and combine them into 300 acre terminals. Here, on Pier T is an old navy base, the Long Beach Naval Station and Shipyard. We acquired that and less than 7 years ago and the terminal was opened in September 2002. Pier T will eventually be a 350 acre terminal. Piers A and S land was purchased from the Union Pacific Railroad company; it was an old oil field and we're making that into terminals also. This is the old navy base, Long Beach navy base. So with the terminal program, we're building five new terminals each 300 plus acres to accommodate the bigger ships, the bigger volume and the alliances, and some other changes. The port is investing in the next 15 years $1.9 billion in terminal expansion.

Slide 21 - And there's another big fill that I will show you in a minute that doesn't include -- that's over here. A future terminal may go to Pier W, but the limits, we are constrained in that, we have to find the wetland mitigation credits..

Slide 22 - That we have to somehow make sure that all the goods can get off, out of the port and on to the railroad system or the highway system. And the freeway system can handle it. A lot of this channel widening and deepening poses dredge requirements and this compares the national dredging needs to the pacific coast's dredging needs and they are pretty large. More than half.

Slide 23 - The other impact is -- this shows you one of the bridges the Gerald Desmond Bridge, it has an air draft of 155 feet, and the ships that we use now can just barely get under there and they will be increasing volume, this is going to be part of the future expansion part of the interstate I-710. I-710 is a 24-mile project, and it's a $4+ billion project This bridge replacement is currently not part of I-710 but it's on the state street's and highway code as a future part of 710. So this will be the first part of the expansion.

Slide 24 - And then we also are planning a new bridge here that will have wider towers to allow the bigger ships and a little bit higher. This is a sketch -- one of the sketches of the future bridge.

Slides 25, 26 - We also have invested a lot of money in rail. The two ports promoted the Alameda Corridor. This is the picture of the southern end of the Alameda Corridor just before the trains enter Terminal Island. Over the next 15 years or so, we think we've identified almost $300 million in railroad improvements, which we'll have to pay for. We have applied to the local planning, metropolitan planning organization for rail improvement funds because any -- the traffic we'll divert to rail will take the traffic off the freeways.

Slide 27 - Some of the environmental measures that we're doing, we're looking at alternative fuels for port vehicles to reduce the pollution impact, as we have the yard equipment, diesel equipment reduction program. We're asking the steamship lines to drive a little slower as they approach the port and spew out less pollution. We're looking into cold ironing. This is when the ships are at the dock for -- at the berth for three or four days and use electric power from the shore, rather than their own diesels to generate the necessary power. Their engines are not designed to meet urban area air quality standards. The two Ports have a shortline railroad in the -- in the port. It handles a lot of the short trips and we're negotiating with them right now to try to convert their engines to more efficient or lower pollution locomotives. We've had a program to get better control on the coke terminal dust. Coke is a byproduct of the refining process. It's shipped overseas and used in fuel and steel production but it's -- it's -- it's used in tires too. It's very dusty. And we didn't have good control over it before, and now it's improving.

Slide 28 - This is a graph that shows you marine, and locomotive serving the Ports, contributios to statewide nitrogen oxide generation. Marine is 3% of the total, trains are 6%. If we were to project forward, without any changes in 2020, it would be 16% of the whole state. And this is just a small, small area.

Slide 29 - Similarly for diesel, particularly the emissions. Right now 16% of statewide diesel aprticulates are generated by Port marine or rail, it could go up to 36% in 2020. Since this chart was made the EPA has issued new rules for fuels with reduced diesel emissions. Diesel emissions is one of the reasons that there is a lot of community pressure and we're working hard on the cold ironing.

Slide 30 - Now, they are also asking to us reduce the number of truck trips on the highways and -- or spread them out. Some of the ways we are trying to do this is extend the gate hours. Right now 15% of our truck trips occur at night. Our goal is to divert that to 40% and the state legislature is considering a bill to mandate that. In response to that the industry has developed their own program to forestall the legislator acting. They have an agreement to do -- to work towards that. They will keep their -- they will keep their terminals open during the night and they will charge more to the customers during the day to help pay for the -- as an incentive to switch people to the nights and help pay for the night service.

We have a study underway to develop a virtual container yard and information exchange to help people who have empty containers to exchange them without bringing their containers to the port. That might reduce our truck trends by 5%.

Caltrans is developing virtual weighing stations, if they can get that going, it will discourage a lot of the less fit trucks from traveling the freeways. These are the ones that are most likely to get into accidents or cause problems.

Electronic seals is a program also that the steamship companies and US Customs are considering. The harbor area truckers are planning to implement machine readable fixed identification tags on tractors, and soon Wal-Mart is going to requires vendors to place radio frequency identification tags all of their goods That's expected to lead to improved trucker and terminal communications and it addresses security issues too. If a truck goes off its path, customers get very interested in that.

We're trying to build another near dock rail yard, within 5 miles of the Ports. We have one

major near dock rail yard operated by Union Pacific RR. The Burlington Northern, the other major railroad is considering another one. The Union Pacific is also proposing to expand their existing yard into the same area. If the near dock yards continues, it could reduce traffic on the I710 freeway.

Shuttle trains where all the goods come on -- come off the ship and go right on to a train and get -- and get shipped to some inland port. There's a plan to upgrade the Alameda Expressway and hopefully that might divert 7% of the truck trips from I-710 freeway. And then again there's the plans to improve the 710 freeway, and the bridge.

Sliede 31 - This chart summarizes again way the split of port traffic between rail and truck.

Slide 32 - As far as shuttle trains two concepts are being looked at, several ports are looking at this too. One is called a block swap, full trains are built at on-dock railroads, but they consist of cars for several destinations, and at some point it could be even another state, these sections are switched and to make up a full train for a different -- for eastern destinations. There's another concept is a no sort shuttle train, unsorted containers are put on the train and everything is taken to an inland port and resorted and there's variation of this concept, some would say even the local goods would be put on this shuttle train and then shipped back into the LA area. Some concepts are just for the intermodal goods. There are some pros and cons of each. They would reduce truck trips, but they actually increase handlings and increase expense.

These are some of the programs that we are looking at to try and reduce the impact of trucks and accommodate future expected growth in container volumes.

And that's my conclusion.

J. Seplow:

Thank you, Louis. We'll now move on to Jeannie Beckett of the Port of Tacoma who will give us the final presentation of the day. And Jeannie, you may go ahead when you are ready.

J. Beckett:

Great. Thank you. Based on time, what I'm going to do is try to go quickly through the first part, which talks about some of the trends that our previous contributors have already identified and then spend the time on actually how we at Tacoma apply these things. As you have seen, I think that in the port industry, we apply strategic planning in the same process as many other industries do. We look at strategic business plans, we look at trend forecasts, we look at land use planning, capacity studies, and we also continue to look into planning for the future. When we looked at strategic business planning, we do the same as many others. We look at our vision, our mission. We look at what our core competencies are. We look at what our success factors. We look at where our growth potentials are. And I would challenge you all to look at where your growth potentials are, are they current customers? New customers? New lines of business that you can get into or just out of the box new ideas? We talked about forecasts in the previous two presenters so I'm not going to spend a lot of time here but we look at the world cargo trends, the U.S. trends, state forecast trends we have just done a Washington state forecast trend of all of our cargo types. So we include that and then we look down to the detail of what our individual ports would forecast. Back in December of '03, the GAO came out with a study that looked at the ten major international ports and they found that 66% of all containers moving out of the U.S. come through those ports. And that they all face similar congestion problems. That they were cited in dense urban areas, that they had limited ability to expand their rail, their roads, and other infrastructure. So we're going to have to talk about that in a minute, how port Tacoma is looking at that as well as the security controls that TSA is putting on us, and other federal agencies are going to even inhibit us even further. They also looked at the movement of freight, that it's limited to the visibility during the planning and prioritization of both the state and the MPOs, the local districts when they look at it, that it's not a large encompassing planning process. We also are very limited by federal funds where, that comes in and it's -- with we look for federal funds, its a single mode focus. Its no the looking at the whole supply chain. As well as they identify that there's no comprehensive, evaluation approach that looks at the most effective projects. We talked about earlier the changing of the Asian, markets to where the manufacturer is coming from and in the future, will same land bridge bringing it to the west coast and putting on train continue or will it go more from the south Asian countries through the Suez to the east coast and maybe back to the west coast. These are all things that we feed to look at as we design our ports. We talked about the side of container ships where they are going. We talked about -- Louis identified for 10,000 TEU ship, what that did to intermodal design, what that did to the roads. We at the Port of Tacoma are 70 to 75% intermodal. So we look at it primarily from the rail side. We are very good at moving our cargo directly to the rail, getting it out of town. We do not have the local base that LA Long Beach enjoys, so our primary focus is moving cargo directly to Chicago and easternly. So what we are trying to do is figure out when these big ships come, how do we move 26 frames that are generated if and out of the port by each of these ships? So what do we do when we look at it at a port specific? We look at the terminal. We look at the waterway. We look at the roads and we look at the rail in a comprehensive means. We first start with our cargo forecasts. As you can see, the Tacoma is expecting the same growth that we expect in the U.S.. At least doubling, if not tripling in the next 20 years but we also expect not only containers to grow, but to at least have stable growth in our autos, our logs and some of our other break book activities. So as we plan, we have to look not only at containerized but the other diverse cargos that we carry. This is a picture of what we start with, when we look at land use. We first identify by color, just in the schematic of how do we see our tide slides in the future. So what this indicates is the yellow is what we vision container terminals to be, we look at, you know, where is the support for that? Where is the break? And we look at when we grow up, what do we want to look like? We then look at, okay if that's what we want to do, what do we need to do on our waterways? Do we need to widen them? Do we need to dredge them? We then look at where the challenges are. This is an example of one of our water ways. Where is the challenge going to be in that waterway to be able to take the long ships, the big ships, and let me see if I can get the pointer. We have a congestion point here, where it is not wide enough. We have to dredge here. We have a turning basin here. The challenge is, if this yellow is going to continue to grow as container terminals, how do we provide the infrastructure for that? We then look at the road network that's going to service those terminals. When we look at the same -- excuse me, the same areas, the terminals here, the terminals there, where are our choke points for the road networks? These hashed areas indicate where we think we knee ed to have a grade separation for road and rail. When we look at our rail expansion, we do the same thing. Where are we going to provide the support track for our on dock intermodal? We have three on dock intermodal rail yards presently. We're going to a fourth. How do we continue to service those? Or we have the fluidity that our previous speakers talked about. We also need to look at capacity space. Not only do we need to look at the tide flats and within our control, but we also need to look at that last mile. How do we move the cargo from our terminals to the rail head, to the freeways, and how do we get it to the final destination? When we look at projections of freight in 2020, we see that our roads are going to be continuous to get more congestion. Our -- we've looked at where the rail is going, the -- it will continue. As you see up here in Chicago, anything going to the east coast from the west coast has to come through Chicago, whether it's Tacoma-Seattle, LA-Long Beach or Oakland, has to come up that corridor to Chicago. So we're spending a lot of time figure out that Chicago challenge. We also need to look into the future on where is that capacity going to come from? Who is going to pay for it? Who will benefit from it? And how do you calculate those benefits for those that you are going to ask to pay for it? We also need to look at -- for that system fluidity, planning for things you can't control or influence and also planning for things you can control and influence. When we look at things that we can't control, those are the modal shifts that we have talked about. Looking at all indicators point that there's going to be more rail, that we're going to try to move things from truck to rail and move it that way. That there will be longer trains, five years ago, they were limited to 6,000 feet. Near future they are expected to go to 8,000 feet on the west. In the east, I understand that they can go much longer, because of the flatness of the terrain. On the west coast, to get over mountains we need to be shorter. We weigh out faster tan we usually hit our length and that's due to the products that we're bringing n. We talked about even though the eastbound for us is the heavy, the eastbound is our export, is usually heavier, but you also have a mix of empties. So you are carrying air, along with your agricultural products or your recycled products, it balances out the weight of the train. The challenge is the sittings. You cannot have a train pass another train unless you are able to pull that first train off to a sitting and that sitting limits the size of trains that can be moved east and west. We're also looking at the manufacturing trends. China is hot right now. But where will the next manufacturing center be? Also looking at the change in transloading and transportation centers, where are those going to be -- distribution centers, where are those going to be in 20 years? We know right now they are near the ports of LA-Long Beach. We have them in the east coast near the major ports but are they going to be more inland? Are they going to be at some of the smaller ports, Tacoma-Seattle that brings in now those -- smaller niche ports Tacoma-Seattle that brings it in those and puts it back on rail and get it's to the inland distribution centers things that we can control or how we operate, both influencing our terminals that we lease to customers, how they operate. We talked about whether it's a wheeled operation, or a stacked operation or maybe even looking into the future on other technology ways of stacking things. But it also is a challenge of if you are stacking, it takes longer. It increases your dwell on the terminal. Versus just looking at moving your containers directly to the train and reducing it to all of that that that's going to an inland destination and increasing the capacity of your terminal through the movement of that -- those containers quicker. We look at the local rail network capacities and configurations. These are things that we can influence, that we cannot always control, but we can influence them whether it is your main line or your local belt line that moves your containers to your terminals to the main line, there is pressure points that you can use to look at that. Also looking at entering or changing market sectors. Those are things that you can control that you can choose to do. Challenges are also on the legislative piece that we all have governmental affairs staff. And we choose which legislative pieces that we jump into. Also focusing on funding and where new public/private partnerships need to be developed. When we're planning for the future from the rail industry side, the railroads are focusing on end-to-end movements. They don't want to do the switching at an inland destination, or switching at the primary destination. They want to do the hook-and-haul. So we have to work with them to provide that opportunity that they are looking at their core business and we are developing our core businesses. On the inland ports, and logistics centers, we need to look at how do we use those concepts? We've done some research, and it's looking at how you influence your terminal operators and your shipping lines to avail themselves of these new opportunities. We also have the challenge on the west coast, if as we continue to feed both LA Long Beach and as well as the west coast, on looking at things of how we can get the cargo to that end destination. Right now, freight is cool, but not in the urban areas. So what we're trying to figure out is how do we move it as quickly as possible, especially if it's going to inland destinations or to the east coast, how do we move it as quickly as possible, without affecting our communities to those destinations. From a rail industry perspective, they're looking at rolling stock. I'm sure you all have heard of the challenges that UP has had with their crews -- challenges that UP. has had with their crews. They are both on the east coast and the west coast, all the main lines are looking at capacity. They all have shortages as we go into peak of equipment. We're looking at how do we help them? How do we influence them? How do we keep them updated on the projections that we're seeing by helping them along so they can make better plans, future plans. They are starting to be open to public investment but how do we play in that game? How do we as public ports work with that, the local ready to provide support, whether it's financial or legislative support to provide that capacity? Congestion is always going to be an issue. We need to all work together on those things. Also the feds are starting to pay attention and it's starting to be a more national concern than a local concern. From the port logistics perspective, that -- logistics perspective that we need to work with our shipping lines to look at stowage plans based on final destination, versus just on local destination that's your niche. Instead of it just being a that combination based plan, we need to plan it by final destination, whether that be New York, through the land bridge, Chicago, Memphis, it needs to be stowed, more efficiently to provide us availability to move that cargo. Quicker to the train and move it out of town. We've talked about the agile ports concept which is a direct-to-train concept which but it will be more difficult to achieve because you have the labor issues on not of moving it direct to train, but the cargo still needs to be sorted somewhere place and why do you sort that without having to touch that cargo multiple times? I think visibility is a key. If the more we know of what is coming, the more that the whole system can work together. I have worked with the BN recently and they are asking to push that logistics knowledge back to when the ship leaves Asia that they know what's coming at them, so that they can plan their equipment balances. And I also think that we feed to look it at the concept of to we free flow trains to inland ports, or are there other ways to work that cargo? We also need to look at the infrastructure improvements that are hard to justify, that may not be tied to revenue. We need to look at grant funding, but grant money is not free. There's administrative overheads that we have to be realistic about. We are also competing with passenger dollars, passenger rail dollars. So how do we work with our state and passenger rail to be able to provide better rail for both freight and passengers? And also on the funding needs, are always going to outweigh the financial capacity. So how do we prioritize the improvement so that we get the biggest bang for our buck? And with, that I think I open it up to questions from all.

J. Seplow:

Thank you, Jeannie. I hope everybody enjoyed all of these presentations. But we do have a few questions that were typed in that I'm going to read and we'll try to wrap everything up by 2:30. If I don't get to all questions I have the presenters email addresses on the slide showing on your screen and there's also the freight planning LISTSERV which I encourage you to ask question. The first question is for Bob Blair and the question is how wide and tall is a 20-foot long container?

B. Blair:

I'm not an expert on that.  Boxes are 20 feet by about 8 feet, and I'm not sure of the third dimension.  I should point out that in the U.S. trades, as was shown in the Long Beach presentation, most of the containers are now 40-foot containers.  That's because we have a bigger, more important trade, and we have bigger ships to handle it

L. Rubenstein:

I can help, Bob.

I think they're 8.5, most of them are 8.5' high.

And some of them are 9.5', They are 8' wide.

J. Seplow

Thank you. Louis, the next question is for you and the question is: when is the 12,000 TEU on the Panama Canal expected to be open?

L. Rubenstein:

I don't think anybody knows that. That's a plan that they have at the Panama Canal and while I was waiting I looked through my notes from a presentation that Panama Canal representatives gave us in December and it doesn't actually give you a construction date. They are doing their master planning studies now. They are going to be completed within a few months and one of the things they have to do is estimate demand. It will cost them $5 billion to expand the canal for one direction of traffic, and $10 billion for two. So they have to justify the travel demand -- justify that expense and raise the money. A lot has changed at the Canal in the last few years, because when the Government of Panama took it over, from the United States a few years ago, they started improving it. They are closer to it, and it means more to them. So they are really trying to expand it and use it as a outside of Chicago. They have a park in Texas. They are looking at emphasize ago a Memphis facility and the fourth basic corner would be down in the LA basin or the east side of the LA basin.

J. Seplow:

Okay. Thank you. Louis, can you briefly discuss how the truck appointment system works?

L. Rubenstein:

It's privately operated. Terminals -- the shipping lines have their own web sites and their own terminal systems and appointment systems, but several -- there are two prime companies, Emodal and Voyager Tracking. There websites are: www.emodal.com, and www.vtnocal.com. They each handle appointments for several shipping companies. These are the two prime leaders and I don't know the exact mechanics of it. If a shipping line has an appointment with a trucker they will try to take the container out of the stack the night before so when the truck comes to pick it up, they -- they don't have to wait as long. I know the trucks have to make a reservation for their container and look up the container number when the container is ready for pickup.

One of the obstacles I heard about the system is truckers don't like to schedule their whole day with appointments because sometimes the first appointment might be a little bit late, and then it doesn't leave them any flexibility. However, since we have started our -- what we call our Lowenthal program (after the assemblyman), I think it's been pretty successful and from what I heard is the State has fined one shipping terminal in Oakland for violating the 30-minute rule of having a truck being in a queue with its engine on for more than 30 minutes. So -- and it's -- it's -- one of the big reasons for going to an appointment system is if a terminal has an appointment system, and is working reasonably well, they are excused from fines for trucks that do not have appointments.

J. Seplow:

Thank you. And before I move on to what will be the last question for today, I want to thank Eric Johnson for typing in about the container heights for all of you out there, and you can see on the screen as well. The typical container height is 8'6" and the typical width are 6' and some containers less than eight feet are used and there's a web site on there that's listed as the source. We're not going to be able to open the phone lines fir questions due to the interest of time, but I will ask one more question and this is for Louis and Jeannie and the question is: how would opening the Panama Canal to larger ships affect congestion at west coast ports and east coast ports?

J. Beckett:

I will try it first. What our analysis is, is that there's still the balance of do you want to pay more? And get your cargo there faster to your destination? Or are you willing to go on a slower route and pay less? What we see is the auto parts, the electronics are going to continue by land bridge, but are a tan furniture may go on and all water route to the east coast, as well as products that are delivered all year round. Products that can be put in a slower transportation system because it's feeding the supply chain one box a week, two boxes a week, and you can set up your inventory appropriately.

L. Rubenstein:

Well, we have our thoughts along the same line. We really haven't done any formal analysis on that yet. But, again, it's the higher value goods the shipper will not to want to spend an extra two weeks to take the all-water route to the east coast. The money on the investment of the goods, for example a computer could be $100 -- I just bought a computer chip for over $100 a pound. So they will go the faster route. For the lower value goods there is more likely to be some shifting of the market. So there would be some loss of our rail trips to the Panama Canal route. But then some of the goods that come from Europe might also come from the other direction via the Panama Canal. So we don't have a firm number on that yet, When we had the work stoppage two years ago, I think our -- for a while, our volume went down, by about 6%, and I think we lost that to the -- mostly to the Panama Canal route.

J. Seplow

Before we close out, Bob, did you have any input on that question.

B. Blair:

I think they have answered it.  Simply, you'd have a new option.  And, depending on what the economics are for various customers, and what was happening with the West Coast's ability to improve its rail and truck systems to handle the increased volumes, the change would be hard to predict exactly. It would create a new option.

J. Seplow:

Thank you. Unfortunately that's all the time we have for questions today. Again, if you do have further questions, please post them to the LISTSERV or contact the speakers directly. Thank you, Bob, Jeannie, and Louis and thank you all for attending today's seminar. The recorded version of this event will be available within the next week on the talking freight web site. The next seminar will be held on July 21st and is entitled straight movements and the environment. We will have speakers from the U.S. Environmental Protection Agency, the Federal Highway Administration, and a Metropolitan Planning Organization. If you haven't done so already, I encourage you to visit the talking freight web site, as well as the freight planning web site and sign up to for this seminar as well as future ones. I encourage to you join the freight planning LISTSERV if you have not already done so. So thank you, everybody and enjoy the rest of your day.

Updated: 03/29/2011
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