# Presentation: 190576

## The Perfect Storm?How do Ports Plan for the Future?

- The Perfect Storm?How do Ports Plan for the Future?

- Congestion

- Freight Growth

- Constrained Infrastructure

- Jeannie Beckett, Sr. Dir. Inland Transportation, Port of Tacoma
- Talking Freight Seminar, June 16,2004

**Notes:**
Bottom line:  we need to start planning NOW for some major efforts to stay ahead of volume increases.  Ignoring this, or not understanding the urgency of this issue puts us in real danger of ending up with a systemic meltdown that could take many, many years to recover from.  Today I have been ask to discuss how ports plan for the future.  In the next few minutes I will try to give you an overview of the basics we in the port industry use to prepare for the future.

## Steps in the Planning Process

- Strategic Business Plans
- Trend Forecasts
- Land Use Planning
- Capacity Studies
- Planning for the Future

**Notes:**
I don’t think we are any different then any other industry when if comes to planning.
Our basic process can be seen here.

## Strategic Business Planning

- What is your Vision and Mission?
- What is your core competencies?
- Where are your Growth potentials?
- Current Customers
- New Customers
- New Line of Business
- New ideas

**Notes:**
When you review your business plan you need to make sure it is still in alignment with your Vision and Mission, 
You need to identify what your core competencies are?  What do you do best?

How do you define success?  - Growth in revenue, growth in volume?  Increased profit? How are you going to achieve these results? 
Where can you achieve this growth?
Current Customers
New Customers
New Line of Business
New ideas

## Forecasts

- World Cargo Trends
- US Trends
- State Forecasts
- Individual Port Cargo Forecasts

**Notes:**
Next I would review Forecasts, from the national level to the individual port level.

This will not be news to anyone, I’m sure – but the statistics are worth talking about again.

Over the last 20 years, vehicle travel nationally is up 78%, while construction of additional road miles is up only 1%.

Over the next 20 years, freight volumes across the country will double; bringing that right close to home – we at the Port fully expect to have DOUBLED our 2002 TEU volumes as soon as 2008.  Over the next 20 years, across the state of Washington we expect volumes to nearly triple.
Based upon those basic facts lets looks at a couple more points of interest before we move on>>

## Issues Are Systemic

- Studied 10 major international ports
- Handle 66% of all containers moving in and out of the country
- All face similar congestion-related problems:
- Sited in dense urban areas
- Limited ability to expand rail yards, roadways and other infrastructure
- New security controls may exacerbate congestion by drastically slowing movement of goods

- According to GAO’s 12/03 Freight Transportation Study...

**Notes:**
The issues are systemic to most of us. Freight is beginning to get more attention.  The GAO did an intensive study of the problems associated with freight transportation, planning and funding in December 2003.  The results shouldn’t come as a surprise to anyone:  
Discuss bulleted points

## Issues Are Systemic

- _Freight movement projects_ receive limited visibility during planning and prioritization
- Limitations of federal funding for multimodal projects – single mode focus
- No comprehensive evaluation approach to implement most effective projects

- According to GAO’s 12/03 Freight Transportation Study

## Trends Effecting US Ports

**Notes:**
Let’s look at a couple of trends that effect these 10 ports

## Slide 8

**Notes:**
First we are seeing the movement of Asian Manufacturing Centroid shift farther to the west as well as the increased use of all water services thru the Panama canal

## Slide 9

**Notes:**
There is also the movement toward a western bound trade route to the East coast thru the Suez.

## Slide 10

**Notes:**
As we know ships continue to increase in size

## Slide 11

**Notes:**
These larger ships generate more truck and rail movements over a very concentrated period of time, vs a larger string of smaller ships moving the same amount of cargo.

## Port Land Use Planning  What do You want to look like           when You grow up?

- Terminal
- Waterways
- Roads
- Rail

- Looking inside your Port

**Notes:**
Now that we know what we want to be when we grow up based upon our Vision, Mission and Strategic Business strategies.  We need to look at our port’s land use plans to see if the two match.  Here we need to review our cargo forecasts, our terminal expansion plans, the waterway width and depth, and the road and rail access to these  expanded terminal.

## Forecast of Cargo Opportunities at the Port of Tacoma

- Actual

- Forecast

**Notes:**
Here is Tacoma, you can see we see our selves as a major container port with lots of growth projected.  But we also have the desire to continue to be a diversified port with auto, BB and other commodities as well.

## Potential Uses of Tideflats

**Notes:**
So the first thing we will do is decide what are landscape will look like if our projections are met.

## Widened Waterway At Hyundai Wharf

**732 Ft****	****17 Wide****	****	****20 Wide****	****	****17 Wide**
**749 Ft****	****18 Wide****	****	****20 Wide****	****	****18 Wide**
**790 Ft****	****18 Wide****	****	****22 Wide****	****	****18 Wide**
**850 Ft****	****22 Wide****	****	****22 Wide****	****	****22 Wide**

**Notes:**
What is the depth and width we need in our waterways

## Waterway Improvements Summary - Blair 2005

**Notes:**
Where do we need to make changes?

## Road Network Summary 2005

**Notes:**
On the road side, do we need to build grade separations to separate road from rail?

## Rail Expansion Summary 2005

**Notes:**
We also need to review our rail capacity within the Port, do we have enough loading track, how about support track and even Arrival and Departure tracks

## Capacity Studies

- Road
- Rail

- Looking Outside the Port
- The Last Mile
- Getting your cargo to Final Destination

**Notes:**
But we can’t just look inside the port area anymore.  We need to look at the connections ie the last mile as well as is there the road and rail capacity to move all projected cargo to it’s destination once it leaves the port.

## Slide 20

**Notes:**
We know that the Road network will continue to be pressured

## Slide 21

**Notes:**
As well as starting to look at capacity issues with the Mainline rail roads, Can they handle our cargo when it comes?

## Freight Transportation – the future 	

- Where will the needed capacity come from?
- Who will pay for it?
- Who will Benefit?
- How will “Benefit” calculations be determined?

**Notes:**
Many class 1 carriers are running out of much needed capacity in urban areas with little available land or space to increase operation centers.

More critically, if space could be found, how will the needed capacity be funded?
Alameda corridor cost $2.4 billion, Chicago is looking for $1.5 billion. Where will the funding come from? 
The Chicago project, will only receive $200 million, in total will come from the 6 class 1 railroads, the rest from public investment. At this time no user fees will be assessed for this project.

## Planning for the FutureHow Do We Ensure System Fluidity?

- Planning for things we _can’t_ control or influence
- Planning for things we _can_ control or influence

**Notes:**
So, it’s important that we recognize those things that will continue to involve, both in the industry and outside it.  
A number of things will change that we cannot control.  In those cases, the best we can do is watch and listen closely...heed the advice and counsel of experts and work to position ourselves to take advantage of positive changes and minimize impacts of negative changes.

Perhaps the biggest change we can and will need to effect will be a much great involvement of government at local, state and federal levels as we plan for our future.  The scope of work needed, and the magnitude of cost will be beyond any one organization or even groups of organizations to absorb.

Fortunately, this is becoming clear to others.  We’ll take a look at that in a bit...

## Things We Can’t Control or Influence

- Mode shifts – all indicators point to more intermodal, less road freight
- Longer trains – five years ago, 6,000 ft; near future, 8,000 ft;
- Manufacturing trends – China is hot now, but will inevitably cool down; where will manufacturing go?
- Transloading and Distribution Centers

**Notes:**
As we’ve discussed, everything we’re seeing points to a continued, and even accelerated shift from trucking in long haul corridors to intermodal

In the PSW, 8,000 foot trains are becoming the norm.  Mainlines are looking for every bit of efficiency and cost-containment they can find, and this is one of the easiest ways to achieve that objective.  However, it’s good to remember that up here in the PNW, our rail routes, scenic though they are, force us to obey weight limits for our intermodal trains.

China’s certainly the hotbed for manufacturing now, and it’ll be a long time before they standard of living elevates to a level where it’s no longer cost-effective to do business there – but it will happen.  The $64,000 question is; who’s next?

As intermodal volumes grow, so will transloading and DC’s.  Where they grow will be a decision the retailers influence, not us.  We will have to adapt our planning to those decisions.

## Things We Can Control or Influence

- Operational methods
- Local rail network capacity and configurations
- Entering new or changed market sectors
- Legislative intervention, assistance and regulatory relaxation
- Focused funding, new Public Private Partnerships

**Notes:**
What we can do is constantly adjust our operational methods to increase our efficiencies.  I was talking to a mainline hub manager last week – he stated quite bluntly that, while his yard was operating at a very high level of efficiency he knew he could squeeze out at least a couple thousand extra moves a month just by tweaking his operation.  

That’s something all of us need to keep in mind.

WE can and must plan to find ways to increase our local infrastructure and optimize the configurations of our networks.  

Mode shifts will mean the opportunity to find new markets to penetrate.  Our marketing efforts must be tailored to anticipate those shifts and opportunities.

As I said before, the time will come when continued growth will be beyond our capacities, either individually or jointly to handle.  We’re coming into an age where the only way we’ll be able to meet the growth demands will be by forming public private partnerships, and finding ways to direct federal funding more towards freight mobility.

## Planning For The Future

- From a Rail industry perspective:
- Railroads focus on long end-to-end movements; great for primary markets, not so good for non-end markets
- Inland ports, logistics centers, intermodal facilities are the current buzz
- “Feeding the beast” takes priority on the West Coast
- Freight is cool again, but not in urban areas

**Notes:**
Railroads, as I’ve mentioned several times is maximizing the benefit of every dollar they spend.  Focusing on long end to end movements helps increase their total facility utilization and profitability.  By optimizing end to end scheduling, though, it means that interim markets will often get scheduling that it not optimal for their needs.  What’s good for Tacoma-Chicago haul may not play so well for Dilworth in Indiana.

Inland ports, such as Port of Montana, Minot, etc are gaining in popularity.  So is the idea of large logistics centers.  BNSF in particular is closely investigating the strategy of a “four-corners” concept of logistics parks.  Chicago, Texas, Los Angeles area and Washington would be the most likely sites.  These 1,000+ acre sites feature huge unconstrained rail yards surrounded by businesses.  For instance, at BNSF’s LPC facility (Logistics Park Chicago) has only two ramp/de-ramp tracks – but each one is 16,000 ft.  The facility has 10 storage tracks totaling over 58,000 ft.  Companies like Maersk/Sealand, Hanjin and others have chosen to locate operations there.

Feeding the beast.  That would be the ports of LA/Long Beach.  While predictions persist that these facilities will reach capacity within the next few years – right now, that just isn’t the case.  In fact, at BNSF’s SIG yard in Seattle, regular trains depart southward composed of nothing but empty doublestack rail cars.  While seriously unprofitable, it’s absolutely necessary.  Business is so unbalanced down there (eastbound versus westbound) that if they didn’t get these shipments, their eastbound traffic would stall with in days.  Likewise, PNW steamship lines with facilities in LA/LB are under great pressure to divert cargo southward to keep those facilities profitable.

In our recovering economy, freight is no longer a dirty word.  In fact, freight is often now associated with better paying jobs.  Not as clean as tourism, but certainly more lucrative in the long run.  However, freight operations are being forced out of already-congested urban areas (NIMBY-ism).

## Planning For The Future

- From a Rail industry perspective:
- Rolling stock, crew resources, capacity all in high demand, short supply
- Railroads are opening up to public investment
- Congestion issues are getting attention – GAO report
- Feds will have to pay attention to freight mobility funding – a national concern

**Notes:**
Freight volumes keep growing.  We’re beginning to wonder if, and are trying to come to terms with the fact that this might not be a temporary situation.  With all freight sectors on the rise, everything from rail cars to crews to infrastructure capacity are being stretched thin, and in high demand.

A welcome development is that the railroads appear to be more willing to look at public investment in infrastructure as a way to manage the huge increases that will be called for.  At the same time, the growing congestion on freight lines is catching government attention:  The GAO study of December 2003 –”Freight Transportation, Strategies Needed to Address Planning and Financing Limitations” addressed just this issue – and one of the two key strategies proposed by them dealt with finding better and new ways of financial assistance that “better align public and private expenditures with their respective benefits”.

GAO noted that this issue is systemic and growing, and will soon be a serious national threat to continued vitality of commerce.

## Planning For The Future

- From a Port logistics perspective:
- Planned stowage by steamship lines
- Agile port concept (Direct to Train) will be difficult to achieve
- Visibility is key; know what’s coming at you and when
- Free-flowing trains to inland intermodal yards?	Eliminates much local switching, frees capacity?

**Notes:**
One concept that has been and will continue to be studied is the concept of agile ports.  Since the realities of our relationship with our labor partners make some optimizing methodologies (notably near complete automation of terminals, as is being done in Australia among other places) impossible to implement, this alternative looks quite attractive.  However, it requires steamship lines to commit to planned stowage of containers, a practice that current service models (multiple loading ports of call causing destination-based stowage to be nearly impossible) make difficult.  However, if this concept can be implemented the throughput of terminals and “purity” of intermodal trains would be vastly improved.

Another huge advance that is only now being implemented fully in ports, but which has been far more widely used by the mainlines is visibility of the transportation chain.  Being able to track train movements down to the individual container, and intelligence about each container’s contents, destination, origin and owner, and the actual schedule and movements of the trains will allow better logistics planning at ports and rail yards.  Again however, our labor relationships make even this straightforward initiative difficult to implement.

One generally accepted concept that is close to the Logistics Park design is gaining popularity as a way to optimize operations.  That is, to not worry about “blocking” trains by destination at the terminal facility.  Rather the trains would be loaded exactly as they came off the ship, taken straight out of the port area to an inland processing facility where the trains would then be blocked.   Several benefits accrue from this operattion – valuable rail capacity is freed up in the port area and trains are exited to the mainlines very quickly.  The delay that would probably be imposed by this method would be offset by the gains made by exiting trains quickly and consistently.  Mainline railroads are in favor of investigating this more closely, possibly as part of a “logistics park”.

## Planning For The Future

- From a Port funding perspective:
- Infrastructure improvements hard to justify if not tied to revenue enhancement
- Grant funding is great, but administrative overhead can be onerous
- Competing with passenger dollars
- Funding needs will far outweigh financial capacity in near future

## Questions?