Trade Update & Opportunity Outlook. Gene Seroka Executive Director, Port of Los Angeles May 19, 2017

Transcription

1 Trade Update & Opportunity Outlook Gene Seroka Executive Director, Port of Los Angeles May 19, 2017

2 2016 Re-Cap By Lines of Business -.5% +21% +8.5% Liquid Bulk (Petroleum) 93,223,412 barrels Autos (WWL) 199,027 units Containers 8,856,782 TEUs -18% Steel (PASHA) 2,215,390 metric tons Fruit (SSA) 79,386 metric tons Scrap Metal 635,856 metric tons +1.7% Cruise 601,541 passengers in % -15% +21% LA Waterfront Customers/Visitors 2.3 million in 2016 A Full Service Port

3 Trans-Pacific Market Share Overview of The 3 New Alliances 90% of Trans-Pacific Market Share Shipping Line Alliance Outlook by Q THE Alliance Ocean Alliance 2M*+HMM** 29% 41% 21% Trans-Pacific Market Share Agreement Duration Until 2022 Until 2022 *Maersk & MSC until 2025 **HMM until 2020 Agreement Duration

4 Larger Shipping Line Alliances What does it mean for Beneficial Cargo Owners? Sailing Frequencies and Weekly Capacity for Asia to/from San Pedro Bay Ports Second Half 2016 Second Half 2017 Weekly Capacity (TEU): 205, ,900 Number of Eastbound Sailings: by Global Carriers by Independent Carriers 1 4 Source: Mercator Intl. Marine Terminal Selection Shifting of services between terminals causes some terminal volumes to dramatically increase while others are under-utilized Service providers are required to obtain new cargo volume forecasts by terminal (rail, chassis) Increased chassis repositioning requirements Potential impact to truck turn-times 4

5 Over-Capacity A Continuing Trend There are 258 vessels of various size presently on order (2.5M TEUs)* This equates to 12.7% of existing global capacity (approx. 5,000 vessels and 19.9M TEUs)* On routes served by VLCS s, infrastructure and innovation are critical to carrier success *Alphaliner (all info provided as guidance)

6 Implications For Port Operators Drive for higher performance More operational cooperation with shipping lines Technical innovation to manage complexity Increasing Capital Expenditures and Operating Expenses Higher costs for terminal handling Closer cooperation with shipping lines to manage peak Investments Cautious investment by existing terminal operators Terminals live with higher risk and lower return A few port and terminal investors exit the industry Source: Drewry Oct

7 10-Year Capital Improvement Projects: $2.6B Terminal Projects TRAPAC container terminal: Most advanced container terminal with advanced technology for new backland and rail yard 2. Yang Ming container terminal : Reconstruction of existing container berth and expansion of existing rail yard 3. Everport container terminal: Upgraded wharf and backland Cruise Terminal: AMP system expansion 5. YTI container terminal: Upgraded wharf and expansion of TICTF 6. APMT: Expanded rail support and loading tracks, Crane-raising initiative 7. Container Terminal Support Facility (proposed) 6 Transportation Projects 8. I-110 Connector Improvement Projects (completed in 2016) Marine Oil Terminal Engineering & Maintenance Standards Implementation (MOTEMS) Liquid bulk wharves upgraded/replaced (various locations )

8 Process Management Supply Chain Optimization efforts stakeholders Continuing strong engagement with State & Federal Policymakers, including FMC and Departments of Commerce, Labor & Transportation Technology Critical Focus Points in L.A. Increase development and application of Blue & Green technology Strategic Land Use Ongoing terminal modernization projects Re-purposing surplus land to support short- and mid-term cargo needs Terminal Alliances

9 Process Management: Future-Facing Teamwork Deeper Joint-Port Collaboration Dialogue with Supply Chain Stakeholders Develop efficiency programs that improve: Cargo Flow Secondary Conveyance (Truck and Rail) Chassis availability Develop Performance Metrics that can are embraced by Supply Chain Stakeholders

10 Technology: Data Solutions Portal Concept Partnership with GE Transportation One terminal, two steamship lines, and one string of ships Channeled, secure access to data that supply chain stakeholders need Benefits supply chain efficiency, predictability, and reliability Keeps the supply chain flowing

11 Strategic Land Use Chassis Pool Cell Phone Holding Yard / Bobtails 80 Acres (32.37 Hectares) Wheeled Storage Potential Solar Operation Container Terminal Support Facility Concept Gate Entry

12 Outlook & Areas of Opportunity Cargo outlook is strong for 2017 Los Angeles volumes are up 9.98% CYTD, 10.58% for FY starting July 1, 2016 US import growth is forecasted at 6% for the year Near-shoring continues to grow in the North Baja and Sonora regions. Since 2011, Arizona has seen the greatest percentage increase in Mexico imports (20.9%) Warehouse/Distribution Center vacancy rates are declining and new inventory is being developed Warehouse and logistics jobs are attractive and growing in demand EXAMPLE: In Southern California s Inland Empire, brick-and-mortar retailer jobs are declining and shifting to higher-paying warehouse/logistics jobs, according to recent LA Times news reports Q1 median wage in retail, restaurants and other services was $14.08/hour versus $21.85/hour in warehousing & logistics Timing is optimal to look at future workforce development/expansion needs

13 Global Logistics Education Program Three-way MOU between Port of LA (POLA), LA Harbor College (LAHC) and California State University Dominguez Hills (CSUDH) Goal: Enhance curricula, transfer opportunities between LAHC and CSUDH, and internships to better prepare students for careers in logistics Align courses at LAHC (2-year school) with CSUDH to create a more qualified pool of transfer candidates POLA will provide input to ensure integration of emerging and relevant studies into a 4-year Business Administration Bachelor Degree with strong Logistics Concentration POLA s internship program will be expanded to include 15 additional internship opportunities, annually POLA s staff will guest lecture to provide real-world insights POLA will help schools develop much-needed programs to grow local workforce of maritime-related technical and trade jobs

14 Moving Forward At the moment, containerized trade is strong, nationally and in the Southwest region Use the economic upswing to build capacity, promote capabilities, and develop future workforce development strategies Container lines need to find their way to profitability in the coming years Carriers must right-size their fleets and leverage alliance partnerships to reduce excess capacity With the challenges of carrier alliances and big ships, communication and collaboration between carriers, ports and supply chain operators is more important than ever Investment in port infrastructure including 21 st Century technology solutions is critical to future trade growth 14

15 Thank You. 15