Strategic Changes Afloat at the Port of Long Beach

In advance of I.CON ’15: The Industrial Conference, NAIOP sat down with Dr. Noel Hacegaba, Chief Commercial Officer with the Port of Long Beach, to talk about recent trends impacting ports and initiatives to optimize the supply chain.

NAIOP: What trends are impacting the supply chain?

  1. The deployment of mega vessels: Container vessels calling at the Port of Long Beach have nearly doubled in size over the past five years. This surge in volume per vessel call requires new approaches to handling cargo at the terminal and moving it through the gateway. The need for increased efficiency and velocity has never been greater as a result.
  2. The concentration of vessel sharing alliances between ocean carriers: As ships have grown in size, ocean carriers have entered into joint vessel sharing agreements in order to maximize economies of scale. Although vessel agreements have existed for many years, the concentration of these new alliances has had a major effect on the supply chain as cargo is now transported on multiple carriers and arrives at multiple terminals. The spreading of cargo across vessel carriers and terminals requires greater coordination between the alliance partners and between the ocean carriers and the terminal operators, railroads and dray companies.
  3. The implementation of an interoperable “gray chassis” fleet: Following 50 years of owning and managing chassis, ocean carriers decided to get out of the chassis business, which is now run by independent chassis companies. Until March 1, four separate companies provided the nearly 100,000 chassis in the San Pedro Bay. The lack of interoperability between the four chassis pools resulted in a chassis shortage that was considered a major factor in port congestion experienced last fall. As of March 1 of this year, three of the four chassis pools implemented a “pool of pools” model that introduced chassis interoperability, which is expected to improve the availability of chassis throughout the San Pedro Bay Complex. This gray chassis fleet will help facilitate the efficient movement of cargo into and out of the port on truck.

NAIOP: What are some of the most important technological advances that you have seen improving efficiencies in the supply chain?
Hacegaba: The development of Middle Harbor at the Port of Long Beach promises to introduce immediate and significant efficiencies. This 300-plus acre mega terminal will have the most advanced systems and cleanest equipment in North America. The tallest cranes in the world will have the ability to move twice the number of containers and the yard operation will feature an automated system that will be operated by zero emissions vehicles. With a twenty foot unit equivalent (TEU) of 3.3 million, Middle Harbor alone will be larger than all U.S. ports except Los Angeles, Long Beach and New York/New Jersey.

In addition, there is an initiative underway at the Port of Long Beach to optimize the supply chain by developing a common information system that integrates the entire supply chain. The goal is to inject visibility into the supply chain and share non-proprietary information on a common platform so that cargo can be more easily tracked along the supply chain. It is expected that such optimization will improve efficiencies, increase velocity and reduce costs along the supply chain.

NAIOP: Which components of the supply chain present the most challenges with regard to industrial real estate?
Hacegaba: Any choke point along the supply chain can slow the movement of cargo, which affects its delivery time. Industrial real estate space is maximized when cargo moves quickly and efficiently. The best way to ensure efficiency and speed is by optimizing the hand-offs. All the hand-offs points along the supply chain are important to achieve the reliable delivery of cargo to the distribution center and beyond.

Hear more from Hacegaba and a venerated panel of industrial experts discussing Connecting the Links: Supply Chain Strategies for Success at I.CON ’15, June 10-11 in Long Beach, California. See the conference website for details on who attends, hot sessions, and project tours.

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