Port of Los Angeles Executive Director Gene Seroka delivered a State of the Port address Thursday that reflected on Americans’ resiliency during the COVID-19 pandemic while looking ahead to economic resurgence.
Seroka said that despite the “unexpected events” of 2020, the port accomplished or significantly advanced all of the priorities he laid out in his address last year. Focus on such priorities as workplace diversity, supply chain optimization, drayage efficiency, zero-emissions equipment and cybersecurity will continue in 2021.
“We said we would stay the course on our industrial and waterfront capital development programs, and we did. We said we would expand our digital services, and we did that as well. We continued to lead in the global ‘smart ports’ movement. We also led the nation in the testing and development of zero-emissions drayage trucks and cargo-handling equipment,” he said.
“In a year of great difficulty, we stayed the course on our priorities,” Seroka said.
‘All of us were stretched’
One of the greatest difficulties was the coronavirus-caused container volume plunge last spring.
Seroka said during 2020, the port’s container business “was the most erratic we have seen to date. By May 2020, our volume had plunged nearly 19%. Then in the second half of the year, American consumer demand created a pandemic-induced purchasing surge that our economy has never seen before. Our second-half volume increased nearly 50%. The week before Christmas, we handled 94% more traffic than the same week in 2019.
“For the calendar year 2020, we processed 9.2 million twenty-foot equivalent units” (TEUs), he said, making 2020 the fourth-busiest year in the port’s history in terms of volume.
“Under the weight of the surge, everybody in the cargo industry took a hit, from ocean carriers all the way to your local package delivery vans,” Seroka said. “All of us were stretched. No one escaped criticism, and we are still moving extraordinary levels of cargo.”
Those levels indeed remain extraordinary. As of midday Wednesday, 32 container ships were at anchor in San Pedro Bay waiting to berth at either the Port of LA or Long Beach.
Seroka credited the International Longshore and Warehouse Union for adapting to the “huge swings in volume. We were down nearly 234,000 labor shifts by August, and that hurt. Then when cargo roared back, the ILWU handled the historic surge masterfully. So did the thousands of port truckers and everyone else moving goods box by box.”
Despite the historic influx of containerized imports, the port saw “deep declines” in nearly all its other lines of business, he said.
“Vehicle import volumes were down, in line with steep sales declines. Ongoing trade tensions continued to depress steel volumes. Liquid bulk volume dropped because so few of us traveled,” Seroka said. “Hardest hit of all were our exports. Rarely have we seen a time when only one in four containers returning to Asia was loaded with exports.”
‘COVID-19 affects everything that we do’
But Seroka said the real story of 2020 is how the port community came together. “The way we responded to the challenges, kept commerce moving and preserved jobs is a story that we will all remember for a long time to come.
“COVID-19 affects everything we do. It has altered the lives and livelihoods of billions. So many have suffered financial hardships — the loss of jobs or businesses. Far too many have endured the loss of family members, friends and colleagues,” he said.
“We focused on what we could do to have the greatest positive impact,” Seroka continued. “We were called to be resourceful. We mobilized and made things work.”
He said that early on in the coronavirus crisis, protocols were developed for sanitizing terminal and telecommunications equipment between labor shifts.
“Liquid sanitizer, however, was extremely hard to find. We were in a pinch until the Los Angeles Department of Water and Power came through with 1,400 gallons of industrial bleach. Our construction and maintenance workers diluted it to CDC standards. They filled spray bottles with the solution and delivered them to every marine terminal here in San Pedro Bay so we could keep cargo moving and our workers safe,” Seroka said.
He said Logistics Victory Los Angeles, which he heads as Mayor Eric Garcetti’s appointed chief logistics officer, became a channel for pandemic-related donations and support last year. Seroka called out French shipping giant CMA CGM “for its numerous donations of PPE, shipping containers, emergency equipment and thousands of turkeys and cooked meals this past Thanksgiving.”
‘We need a workforce that looks like LA’
Seroka also highlighted an executive directive Garcetti signed in June that calls on the residents of LA to “translate our ideals into action.”
“One of the most remarkable experiences of the last year was the profound sea change in the way so many Americans came to accept the reality of systemic racism. Many of us now have a deeper understanding of why we need to fight for racial equity,” he said.
Seroka said the mayor’s directive aims for city leaders and hiring managers to ensure everyone is given the same opportunities to thrive and reach their full potential.
“Here’s what that means for our port: We need a workforce that looks like LA, that reflects the beautiful diversity of this city in the faces of the women and men who come to work here every day,” he said.
Seroka said the port is committed to a workforce training center “that takes a high-road approach to workforce development and advances the goal of racial equity. This includes opportunities for those who have paid their debt to society and are ready to return to the workforce. Programs for high school interns and student worker opportunities for young women and men of color are also in the offing.”
In 2021, the port will focus efforts on the nation’s economic recovery from the COVID-19 pandemic, he said. That will include “taking a hard look at the cost of moving goods through our port and finding the right mix of levers to grow our market share.”
Seroka said the port will also work to ensure a “more balanced investment approach in our freight system.”
“Over the last decade, federal investment in West Coast ports has trailed other coasts by a margin of 10-to-1. That needs to change,” he said, also calling attention to U.S. trade policies. “U.S. manufacturers and farmers should be among the first to receive dedicated attention from our policymakers. Everyone benefits when we make it easier for American businesses to access foreign markets, create economic opportunities and reduce their carbon footprint.”
Seroka moved on to a topic he addressed numerous times in 2020: the need for industrywide optimization.
“The unprecedented import surge in the second half of last year once again highlighted the need for supply chain optimization,” he said. “Operational inefficiencies impede our industry. That’s not something any one organization can solve on their own. We need everyone at the table — the stakeholders across our supply chain community and the policymakers who must respond to the needs of businesses nationwide that rely on our port.”
A major issue that continues in 2021, Seroka said, is “drayage inefficiency.”
“Long turn times and a lack of dual transactions are especially frustrating for those thousands of hard-working truckers who serve our port,” he said. “Terminal operators can effect positive change in this area. So this month we are going to our board with a proposed truck turn time and dual-transaction incentive program that pays our container terminals for monthly turn time improvements. We not only want faster turn times, we want to keep those turns efficient so a trucker can deliver a box to a terminal and leave with another one instead of going away empty.”
Through the program, which is expected to begin in February, terminal operators will be financially rewarded for moving containerized cargo faster and more efficiently.
‘Data is a critical resource’
The need for digitization is another subject Seroka has returned to time and again.
“The most immediate advance we can make is digital maturity because it makes us more efficient and more effective. In October, our San Pedro Bay ports processed a combined 1.8 million container units. It wasn’t easy or painless but it demonstrated our capability and our potential,” he said.
“Data is a critical resource,” Seroka continued. “Right now the Federal Aviation Administration knows the exact location of every plane in the sky over the U.S. and over the oceans. That system ties in with a global network that keeps the world flying safely and on time. Through our Port Optimizer data portal, we enable that kind of digital maturity in our supply chain so users can locate every container en route to our port and make plans to keep it moving.
“If we want America to improve as a leader in global trade, we need nationwide port data connectivity with agreed-upon data standards and open architecture, a system that provides interconnectivity between major U.S. ports, service providers and the freight they move,” he said.
Seroka said data from the Port Optimizer was used in 2020 to launch The Signal, “a data dashboard using real-time feeds and backed with strong analytics that let us view containerized volume three weeks in advance of its arrival here in LA. That’s a competitive advantage that other ports don’t have.”
In November, the port added the Return Signal “to let port truckers know when and where empty containers can be returned. It helped, but we must continue to push for a portwide truck reservation system to manage the 60,000 truck moves a day,” he said.
Seroka said in further pursuit of digital maturity, he was announcing another data solution, The Control Tower.
“We are developing The Control Tower with our partners at Wabtec in response to other needs and challenges we heard from our industry stakeholders,” he said. “It will provide the port supply chain with high-level metrics, key performance indicators and features that include real-time port-level views of turn times, truck capacity management information and detailed rail velocity metrics.”
To help protect this data, the port is developing a first-of-its-kind Cyber Resilience Center in partnership with IBM. The need is great, Seroka said.
“Since the pandemic began, cyber-intrusion attempts on our IT system have nearly doubled, to 45 million per month. Our cybersecurity safeguards protect us against those intrusions, but other maritime entities have suffered costly and debilitating attacks,” he said.
A zero-emission future
Despite distractions caused by the pandemic, the port has continued to advance its Clean Air Action Plan, Seroka said.
“We are starting to have real discussions with truck manufacturers about what it will take to make a zero-emission equipment market here in Los Angeles,” he said, noting the huge price tag — upward of $10 billion — to transition the port’s drayage providers to zero-emission trucks.
“Last March, our board committed to a clean truck rate to contribute funding to this effort. But achieving this scale of fleet turnover, using technology that is still in development, requires much more than the rate alone,” Seroka said.
Capital improvement projects totaling nearly $473 million also continued in 2020. That work includes “deepening our berths for larger ships and creating more railroad storage tracks, on-dock capacity and rail throughput capacity between our docks and the Alameda Corridor,” he said.
“In 2021, we will keep our focus on jobs, infrastructure improvements, the environment, supply chain optimization and continued development of our commercial waterfront,” Seroka said. “These core areas are where we have focused in recent years and we’re not about to stop, because, if there is something else we have learned from 2020, it’s this: The future is not guaranteed. We all have to build it.”