TERMINAL EFFICIENCY AND PRODUCTIVITY

Overview

The Port of Los Angeles is one of the world’s largest and busiest trade gateways, and combined with the neighboring Port of Long Beach, ranks fifth globally in terms of annual container cargo throughput. Currently, the two ports handle more than 14 million twenty foot equivalents (TEUs) per year, approximately 43% of containerized trade entering the United States.

Studies indicate that the demand for containerized cargo is expected to continue its phenomenal growth for at least the next 25 years, and that cargo could nearly triple over current levels. Clearly, the ability for the Ports of Los Angeles and Long Beach to accommodate this growth is crucial to the continued health of the local, regional, and national economies.

The Port of Los Angeles has eight existing container terminals that have been developed in various stages over the past couple of decades. These terminals feature a total of approximately 1700 acres of backlands to store containers and 25 berths that handled 8.5 million TEUs in 2006. The Port's most recently completed projects, the Pier 300 Terminal in 1997, Berth 100 in 2002 and the Pier 400 Terminal in 2004, provided nearly 860 acres of backland and 12 berths. In other words, these three projects created over 50% of the Port's total facilities devoted to container purposes. The ability to handle future containerized cargo growth will require facilities and improvements that will improve efficiency and productivity within the existing terminal footprints. This will allow the Port's terminals to operate with higher densities, improved cargo velocity and increased reliability.

Working with terminal operators, the Port of Los Angeles has numerous projects and programs to help improve the efficiency, productivity, and overall utilization of container terminals. These projects and programs involve improvements to wharves, rail infrastructure, backlands and new technologies that are described in more detail below.

Wharves

The Port has a multi-faceted approach for improving the overall efficiency and, therefore, the throughput capacity of wharf facilities. One key area involves the accommodation of larger container vessels. The dramatic increase in the size of container ships over the past few years is in response to a number of factors, including the economy of scale and the overall growth in cargo coming from particular market segments. The Port of Los Angeles is moving forward with the Channel Deepening Project that will deepen its navigation channels to -53 feet.

In step with the increase in draft capability for the Port is a program to upgrade and reconstruct our wharves to accommodate this increase in water depth, larger vessels, and larger cranes to handle the bigger ships. Currently, the Port has 12 berths with depths of -53 feet, which are the berths built within the past several years. Plans are under development to upgrade most of the remaining berths for operations with this depth and also to handle the larger and heavier cranes. It is expected that this wharf upgrade program will be completed in approximately 10 years.

Rail Infrastructure

On-dock railyards are a key feature of any container terminal and have a dramatic effect on terminal efficiency. These railyards offer the terminal operator with the added benefit and flexibility of loading cargo directly onto trains within the terminal. Intermodal cargo typically stays on the terminal only 1-2 days, as opposed to 4-7 days for other container cargo. This has a direct effect on the ability to improve the velocity of cargo, and thus, the overall throughput of a container terminal.

The Port of Los Angeles has built four on-dock railyards within the past decade that provide direct rail access to seven of our eight container terminals. In 2005, Port of Los Angeles terminals processed 24.5% of total throughput via on-dock rail. The Port's long term goal is to increase this amount to 35% of total throughput. Plans are underway to construct an additional on-dock facility for the one terminal currently without direct rail access. Future plans also call for expansion of all four of our existing yards over the next 10 to 15 years to accommodate our anticipated growth in overall volume.

Backlands

The effect of increased utilization of terminal facilities has been most evident in how the operations on the backlands have changed over time. In years past and at lower throughput densities, the majority of inbound or imported cargo was stored on the terminal on chassis. This type of operation is commonly referred to as the wheeled mode and was efficient for operators because it allowed them to store the container in its final state until ready for pickup by a truck driver. But as for higher cargo volumes through the terminals became evident, the terminal operators found it necessary to change their operating practices to grounded or stacked operations. Containers are now stored and sorted in piles on the terminal, as opposed to the wheeled mode of operation, thus achieving a much higher density and utilization of the land. This mode requires the use of additional pieces of terminal operating equipment and often requires a change to the terminal layout. The Port is working with terminal operators to design backland space to accommodate grounded modes with a minimum of change. This provides our terminals with a high degree of flexibility to respond to changes in cargo flow rates.

New Technologies

There have been a number of recent changes in the uses of advance technologies at Port container terminals that are designed to improve efficiency and productivity of operations. It is becoming common practice to see terminals operate with Optical Character Reader (OCR), Automatic Equipment Identification (AEI), Electronic Data Interchange (EDI), and other technologies such as cameras that are all designed to speed up the processing of containers through the terminal. This equipment and software are designed to collect, store, and transfer all of the necessary data electronically in an efficient and seamless manner across all terminal processes. These systems also increase the quality of such information by eliminating multiple input errors and reducing the number of faulty transactions. As a result, gate processing times have been dramatically increased over the past few years with the increased use of new technologies.

The Port of Los Angeles continues to work with customers to ensure that the proper infrastructure is provided to support these advanced technologies. The Port provides conduits, power feeds, and fiber optic capabilities in the design of all gate facilities and at other critical locations throughout our container terminals so that maximum flexibility and opportunity to utilize advanced technologies are provided.