AAPA Air Quality Seminar

April 29,2005Tay Yoshitani

Senior Advisor, NAWE

Our MTO PerspectiveCommunity Concerns

TrafficAir QualityEconomic Impact

Effort Underway Terminal Technology InvestmentsPierPass Air Quality Initiatives PMSA

Challenges & RisksOpportunitiesQuestions

Agenda

Momentum of California PortsLarger vessels/express serviceFrequency of serviceScale of distribution centersCompetitive east bound ratesCapacity for growth

Importance to Local Economy

JobsBusiness RevenueTax RevenueLocal Business’ Portal to Global Economy

Port Economic DevelopmentVs Community Concerns

Antipathy toward PortsCommuters competing with Trucks

20 yrs vehicles 72-80%; road miles 1-4%

Air Quality NIMBY Toward Infrastructure

Challenges to Socal Cargo FlowTerminal Space

Rail Capacity

Freeway Capacity

Security Processes

Environmental Impacts

Legislative Initiatives

Labor Supply

Trucker Supply

Causes of CongestionYTD Volume Up >10%, not 5% as projectedProductivity down 9%, not up 10% with tech

Rail delays & equipment shortagesincreased dwell time and labor needed in yards

PMA ResponsesAllocation of labor Added 2,000 longshoreAdded 3,000 casuals

300,000 lottery entriesProcess took 120 days

Better Labor Supply & Demand Forecasting

Lessons LearnedSmall changes can have huge impactsPhysical Capacity

Velocity

Reliability

Flexibility

Effort Underway:Terminals

Process Upgrades Equipment UpgradesPermitting AgreementsPierPassLess “Free Time”

TruckingAppointment Systems & CoordinationFleet Replacement Chassis OwnershipTriangulation of Trips

VesselsLarger VesselsSpeed Reduction ProgramLimited Cold IroningUse of Higher Quality FuelsSelective Catalytic Conversion Technology

Terminal Process ImprovementVelocity of Trucks in TerminalsImproving 9 steps=less congestion, idling, emissions1. Broadcast of availability/status information2. Automated yard planning3. Appointment systems4. In gate security process5. Container data capture in gate6. Instruct trucker at in gate7. Deliver/Receive equipment in yard8. Roadability Check9. Outgate Security Process

Streamlining Security Processes

Streamlining Gate ProcessesIn Gate Trucker Interface

OCR Capture of Data

RFID Tracking of Truckers

Improved license read accuracy Identity & Purpose at In-GateReal Time CheckImproving Interface in Yard

Terminal Equipment upgradesDiesel Emission Reduction

Replacement of equipmentCatalytic convertersCrankcase filtersID Tags

Trucking during non-commute hours

Private Sector Proactive Collaboration

Establishing port standardsOvercome competitive pressure to do less

Better use/development of shared assetsRegional infrastructure

Risk/cost sharing by commercial meansEfficient non-legislative approach

Enabling Off Peak Ops

Simple and not very new idea: open terminals when traffic is low & roads clearBut night operations so far unsuccessful

Cargo interests sought private sector approachEnable off peak operations rather than just tax day time moves

BarriersHistory of failureHigh cost LegalityHuge VolumesMany PlayersDiversity of InterestsChallenges to legislation

Seeking a Private Sector Solution

Finding legal forum to collaborate

Establish guiding principals

Investigating workable solutions

Developing consensus within industry

Developing consensus outside industry

Planning

Establish Guiding Principals

Pursue system wide efficienciesCommon technology Industry wide disciplined approach

Develop & operate transparently Practical evaluation & planningAwareness of political realities

Investigating Workable ApproachesConstituencies Analysis Required

1. Cargo Interests2. Motor Carriers3. Truck Owner/Operators4. State & City Policy Makers5. State Regulatory Authorities6. Federal Agencies7. Port Authorities & ACTA8. Ocean Carriers

1. Labor Availability 2. ILWU Contract3. Technology Providers4. Costing Study5. Terminal Operation Impacts6. Tax analysis7. Shipping Act Analysis8. Security Plans & Developments

Focused on Focused on extending hours of extending hours of port operations to port operations to improve traffic improve traffic and air qualityand air quality

If not this, what?If not now, when?

MTO’s open port wide during 5 ‘Off Peak’ ShiftsOff Peak Shifts are weekends & second shiftsCargo Interests pay “Traffic Mitigation Fee”

Loaded import and export containers Moving during weekday first shift operations Excludes rail moves paying ACTA fee

Fee is based on cost of programFee and shifts will be phased in

Initial fee during implementation will be $20 TEU

TransparencyTraffic Mitigation Fee based on independent studyStudy & Fee updated periodicallyFee proceeds to cover admin & terminals costPayment processes & data interchanges governed by common schedule adopted by MTO’sElectronic data capture streamlines process

So where are we…PierPass supported by all 13 MTO’sEnabling Agreement filed with FMC in JulyIndependent Cost Estimates August Major Processes Charted SeptemberFMC ReviewCoast Guard Review of Process thru FallOutreach Meetings in Fall Process changes requiredStaffing UnderwayAdvisory Board SelectedTech Vender ACS Selected & Working Tech Letters Under Labor Contract SoonImplementation before summer surge

Goals of PierPassPorts open off peak MTO’s cover their costCargo owners gets efficient solution Truckers get more turns

Less emissions per moveILWU gets more jobsPorts more secureBetter data re cargo mobility

Air Quality

VesselsTrucks

Vessel EffortsLegal challengesLarger Is Better: 2000-2004

Vessel size up 28%Vessel calls down 8%Emission per teu down 30%Before quantifying newer is cleaner

Vessel Speed ReductionLimits of Cold IroningCleaner fuels—Establish sulfur emission control areasSelective Catalytic Reduction Technology

-

2,000

4,000

Vessels/Yr.

Larger Vessels = Less Air Impact

Vessels/Yr. 1,650 1,451 1,457 1,296 1,517

TEU's/Vessel 2,766 3,096 3,222 3,386 3,531

2000 2001 2002 2003 2004

Trucking Initiatives

Improve Trucker Working ConditionsImproving “Turns” thru better processingFear of shortages is improving rates

Appointment SystemsPhase out dirty old trucks

Without hurting the owner operatorsAvoid Re-regulation Attempts & Hidden Agendas

Improving Truck EmissionsLargest, quickest impact Industry Seeking Federal Legislation

To benefit port truckersFleet Replacement/ Improvement Program:

Replace old trucks with cleaner models Older 1/3 are much of problem

Retrofit & improve more recent trucksUse higher quality/alternative fuels

Demonstration program in LA/Long Beach

Already happening to other U.S. and foreign portsBut overall growth rate will keep LA/LB growing despite diversionWith few exceptions, U.S. Ports are at or near capacity with few prospects for significant expansionUnless new infrastructure is built quickly, cargo will move more slowly with enormous environmental impacts

Diversion of LA/LB Cargo

Volume YTD(September Annualized)

0 1 2 3 4 5 6 7 8 9 10 11

NY / NJ

Baltimore

Virginia

Charleston

Savannah

Miami

Houston

Long Beach

Los Angeles

Oakland

Tacoma

Vancouver

Seattle

Port

Millions

2003

2004

2005

2010

TEU’s

Volume YTD(September Annualized)

0 1 2 3 4 5 6 7 8 9 10 11

NY / NJ

Baltimore

Virginia

Charleston

Savannah

Miami

Houston

Long Beach

Los Angeles

Oakland

Tacoma

Vancouver

Seattle

Port

Millions

2003

2004

2005

2010

Constraints:CY 04, 05, 104,000 teu/acre

Volume YTD(September Annualized)

0 1 2 3 4 5 6 7 8 9 10 11

NY / NJ

Baltimore

Virginia

Charleston

Savannah

Miami

Houston

Long Beach

Los Angeles

Oakland

Tacoma

Vancouver

Seattle

Port

Millions

2003

2004

2005

2010

TEU’s

AssumesBuild outGroundingLess DwellRR/Trucks

Constraints@ 7,650

Due to capacity constraints at other Ports, diversion will occur on limited basisLA/LB will continue to have air quality challenges despite diversionOcean Carriers, Terminal Operators, and Truckers will do what they canBut … all above efforts must be accompanied by investments in infrastructure …

Summary Freight Mobility is an Important Issue & assetSupport Highway Bill to Phase Out Dirty TrucksEngage/challenge the industry

PierPass model public/private sector collaborationMore effective use of infrastructureEmbrace best available technology

Avoid legislation that:Lowers efficiency/velocityCreates obvious legal challenges that slow reformHurts US and California competitivenessOutsources good port jobs to Mexico

A

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