California Marine Transportation System: California Marine Transportation System: Challenges and Potential SolutionsChallenges and Potential Solutions

Presented to:Presented to:

UCLA Policy/Research SymposiumUCLA Policy/Research SymposiumLake Arrowhead, CA Lake Arrowhead, CA

October 26, 2004October 26, 2004

Gill V. Hicks, PresidentGill V. Hicks, PresidentGill V. Hicks and Associates, Inc.Gill V. Hicks and Associates, Inc.

Chairman, California Marine and Intermodal Transportation Chairman, California Marine and Intermodal Transportation System Advisory CouncilSystem Advisory Council

““The Perfect Storm”The Perfect Storm”

Cargo growthCargo growthPopulation growthPopulation growthAir and noise pollutionAir and noise pollutionTraffic congestionTraffic congestionCommunity concerns (“How much is enough?)Community concerns (“How much is enough?)Safety and securitySafety and securityCapacity constraints Capacity constraints Funding limitationsFunding limitationsEquipment/labor shortagesEquipment/labor shortages

I-710 Under Normal Conditions and I-710 Under Normal Conditions and During Shut Down of West Coast PortsDuring Shut Down of West Coast Ports

Lockout disrupted $6.28 billion in trade at Lockout disrupted $6.28 billion in trade at POLA/POLBPOLA/POLB

Managing Growth: A Major ChallengeManaging Growth: A Major Challenge

Ports of Los Angeles/Long BeachPorts of Los Angeles/Long Beach -- 11.8 million TEUs in 2003-- 11.8 million TEUs in 2003 -- 36 million TEUs by 2020-- 36 million TEUs by 2020

Port of Oakland Port of Oakland -- 1.9 million TEUs in 2003-- 1.9 million TEUs in 2003 -- 4.8 million TEUs in 2020-- 4.8 million TEUs in 2020

Daily Truck Traffic to/from LA/LB Daily Truck Traffic to/from LA/LB Ports Will Grow DramaticallyPorts Will Grow Dramatically

34,000

50,000

92,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2000 2010 2020

Rail Yard and Main Line Capacity Deficiencies Rail Yard and Main Line Capacity Deficiencies

ICTF, Hobart and E.L.A. Yards operating at near ICTF, Hobart and E.L.A. Yards operating at near capacity.capacity.

By 2020 shortage of intermodal yard capacity By 2020 shortage of intermodal yard capacity amounting to 9 million lifts per year (dom. + int.).amounting to 9 million lifts per year (dom. + int.).

Main Lines east of L.A. need triple or quadruple Main Lines east of L.A. need triple or quadruple tracking and grade separations.tracking and grade separations.

Colton crossing needs to be grade separated.Colton crossing needs to be grade separated.

Benefits of Alameda Corridor will not be fully Benefits of Alameda Corridor will not be fully realized unless railroad main lines and yards realized unless railroad main lines and yards are improved.are improved.

Atlantic SeaboardTrade value: $34.3B

Jobs: 265,600

SouthwestTrade value: $97.9B

Jobs: 1,003,600

South CentralTrade value: $12.1B

Jobs: 141,000

SoutheastTrade value: $15.9B

Jobs: 191,500

Great LakesTrade value: $25.0B

Jobs: 283,500

Great PlainsTrade value: $8.6B

Jobs: 111,300

NorthwestTrade value: $2.2B

Jobs: 24,000

Source: OnTrac Trade Impact Study © 2001 OnTrac All Rights Reserved.

Impact of International Trade Through San Pedro Bay PortsImpact of International Trade Through San Pedro Bay Ports

Deficiencies Hurt Deficiencies Hurt EconomyEconomy as as well as well as National SecurityNational Security..

Congestion, delays, Congestion, delays, accidents, and freight accidents, and freight transportation costs transportation costs are increasing.are increasing.Goods movement Goods movement facilities have not kept facilities have not kept up with growth.up with growth.Communities Communities increasingly calling for increasingly calling for slow growth or no slow growth or no growth.growth.

Initiatives to Reduce Truck Traffic Initiatives to Reduce Truck Traffic from Ports of LA/LBfrom Ports of LA/LB

Extended Gate Hours (“PierPass”)Extended Gate Hours (“PierPass”)

Virtual Container Yard (Internet matching service Virtual Container Yard (Internet matching service for empty containers)for empty containers)

Increased Use of On-Dock YardsIncreased Use of On-Dock Yards

New Near-Dock Yard (min. 1,000,000TEUs/yr.)New Near-Dock Yard (min. 1,000,000TEUs/yr.)

Local Shuttle Trains (containers shipped by rail Local Shuttle Trains (containers shipped by rail to Inland Empire, then by truck to warehouses)to Inland Empire, then by truck to warehouses)

Agile Port (“no-sort” or “block-swap” movements Agile Port (“no-sort” or “block-swap” movements to inland facilities)to inland facilities)

Increased Collaboration and Increased Collaboration and Coalition Building Coalition Building

California Marine and Intermodal California Marine and Intermodal Transportation System Advisory Council Transportation System Advisory Council (CALMITSAC) – a regional subunit of the (CALMITSAC) – a regional subunit of the MTS National Advisory Council created by MTS National Advisory Council created by U.S. Secretary of Transportation (AB2043)U.S. Secretary of Transportation (AB2043)

West Coast Corridor CoalitionWest Coast Corridor Coalition

CALMITSAC Mission StatementCALMITSAC Mission Statement

To foster development of a To foster development of a

Marine Transportation System in Marine Transportation System in California that is safe, secure, California that is safe, secure,

efficient, environmentally efficient, environmentally sound, and capable of sound, and capable of

expanding to meet the demands expanding to meet the demands of the global economy.of the global economy.

SOCAL MTS Infrastructure Needs SOCAL MTS Infrastructure Needs ($ millions)($ millions)

Los Angeles Region Los Angeles Region $8,190 $8,190 San Diego RegionSan Diego Region $3,709 $3,709Imperial County Region Imperial County Region $63 $63Port of HuenemePort of Hueneme $50 $50Port of Los AngelesPort of Los Angeles $1,273 $1,273Port of Long BeachPort of Long Beach $2,785 $2,785Port of San DiegoPort of San Diego $394 $394

TOTALTOTAL $16,464 $16,464

NORCAL MTS Infrastructure NeedsNORCAL MTS Infrastructure Needs($ millions)($ millions)

San Francisco Bay RegionSan Francisco Bay Region $4,886$4,886Port of OaklandPort of Oakland $898 $898Port of San Francisco Port of San Francisco $800 $800Port of StocktonPort of Stockton $300 $300Port of SacramentoPort of Sacramento $31 $31Port of Richmond Port of Richmond $7 $7Port of Humboldt BayPort of Humboldt Bay $279 $279Harbor DistrictsHarbor Districts $12 $12

TOTALTOTAL $7,213$7,213

West Coast Corridor CoalitionWest Coast Corridor Coalition

Modeled after I-95 Corridor Coalition on the East Modeled after I-95 Corridor Coalition on the East Coast.Coast.

Alaska, Yukon, British Columbia, Washington, Alaska, Yukon, British Columbia, Washington, Oregon, California, Baja California.Oregon, California, Baja California.

Gives West Coast states a unified voice: “AGives West Coast states a unified voice: “A common front would cross political boundaries and pry loose federal dollars that otherwise would go to states with a longer history of linking arms.” L.A. Times editorial, July 7, 2004

Increased Funding for Freight Increased Funding for Freight Security and InfrastructureSecurity and Infrastructure

At both the state and federal levels, need distinct At both the state and federal levels, need distinct goods movement and security funding programsgoods movement and security funding programsState and federal programs should provide State and federal programs should provide greater flexibility in use of funds for goods greater flexibility in use of funds for goods movement. movement. New revenue sources at national level should be New revenue sources at national level should be considered; e.g., tax-credit bonds.considered; e.g., tax-credit bonds.To succeed, need to stress national significance To succeed, need to stress national significance of Marine Transportation System and Global of Marine Transportation System and Global Gateways Program. Gateways Program.

Major Funding Policy OptionsMajor Funding Policy Options

Rely on existing funding programs.Rely on existing funding programs.

Establish new revenue at state or federal Establish new revenue at state or federal level.level.

Adopt region, port or project-specific Adopt region, port or project-specific revenue streams.revenue streams.

Goods Movement CoalitionGoods Movement Coalition

Coalition must seek additional funding and Coalition must seek additional funding and press for greater efficiencies in goods press for greater efficiencies in goods movement.movement.Joint public/private partnership projects Joint public/private partnership projects need to be pursued and funded when they need to be pursued and funded when they are in the best interest of the MTS.are in the best interest of the MTS.California must form multi-state coalitions; California must form multi-state coalitions; e.g., West Coast Corridor Coalition e.g., West Coast Corridor Coalition

Core MessagesCore Messages

The California Marine Transportation System is The California Marine Transportation System is an enormous economic benefit to the nation. an enormous economic benefit to the nation. Congress must establish viable funding sources Congress must establish viable funding sources that will allow the goods movement infrastructure that will allow the goods movement infrastructure to keep pace with the steadily increasing growth to keep pace with the steadily increasing growth of this sector. of this sector. The funding needs of the MTS in California are The funding needs of the MTS in California are great and cover a broad range of modes and great and cover a broad range of modes and facilities. The total funding need for the facilities. The total funding need for the recommended MTS projects in California is recommended MTS projects in California is $23.7 billion$23.7 billion ($7.2 billion in Northern California ($7.2 billion in Northern California and $16.5 billion in Southern California.)and $16.5 billion in Southern California.)

Call to ActionCall to Action

Marine Transportation System stakeholders Marine Transportation System stakeholders should take an aggressive role in promoting should take an aggressive role in promoting additional funding for goods-movement additional funding for goods-movement transportation system.transportation system.

CALMITSAC and WCCC look forward to strong CALMITSAC and WCCC look forward to strong partnerships with state, federal and local partnerships with state, federal and local governments, shippers, carriers and other governments, shippers, carriers and other segments of the goods movement industry. segments of the goods movement industry.