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# 									City Spotlight: Economic Outlook from the Port of Long Beach, California							

FPC Briefing

Mario Cordero, Executive Director, Port of Long Beach, California

Thursday, September 9, 2021 at 1:00 p.m. EDT

New York City

September 9, 2021

## 								Summary							

        -  The Port of Long Beach, California is the second-busiest port in North America, with 175 shipping lines connecting Long Beach to 217 seaports and handling $200 billion in trade annually. Mr. Cordero discusses the recent completion of the Long Beach Container Terminal (LBCT) at Middle Harbor, one of the most advanced cargo facilities in the world, and how the Port of Long Beach has tackled increased shipping traffic, the challenges of operating safely in a pandemic, and LBCT’s role in alleviating global supply chain challenges.   

NEW YORK FOREIGN PRESS CENTER (Virtual)

MODERATOR: Good afternoon, and welcome to today’s New York Foreign Press Center briefing. My name is Daphne Stavropoulos, and I am today’s moderator. It’s my pleasure to introduce Mr. Mario Cordero, executive director of the Port of Long Beach, California. He is an international maritime industry leader, a Long Beach resident and attorney, who was named to a post as executive director by the Long Beach Board of Harbor Commissioners in 2017.

This briefing is on the record. The views expressed by briefers not affiliated with the Department of State or the U.S. Government are their own and do not necessarily reflect the views of the Department of State or U.S. Government. We ask that if you publish a story from this briefing that you share it with us.

Following his presentation, I’ll open the floor to questions. If you have a question, go to the participant field and raise your virtual hand, and wait for me to call on you. When called on, please enable both your audio and your video, and identify yourself and your outlet.

And with that, it’s my pleasure to turn it over to today’s briefer, Mr. Cordero. Thank you so much for joining us, sir.

MR CORDERO: Thank you, Daphne, and thank you to the Foreign Press Center.

Good afternoon, and welcome, everyone, at the Port of Long Beach. We’re pleased that you could be – that you could join us today here. I know it’s been quite an ordeal recently in New York with the weather, so I appreciate you having made time for us.

So first of all, I’d like to thank the Biden administration for its attention to the country’s supply chain situation. We welcome the appointment of Envoy John Porcari to the Administration Supply Chain Disruptions Task Force. I know that Envoy Porcari brings keen insight to this important task. We’re grateful that the Biden administration is making this a priority, and we stand ready to assist in any way that we can. I look forward to meeting Mr. Porcari and working together on solutions to supply chain disruptions.

Many of you have proudly reported on the fact that we’ve had record cargo, record-breaking cargo volumes here, starting in July 2020 at the San Pedro Bay Port Complex. The San Pedro Bay includes the neighboring Port of Los Angeles and, of course, here, the Port of Long Beach. It is the nation’s largest port complex. After the slow start due to the COVID-19 pandemic, 2020 turned out to be a record year for the Port of Long Beach. We moved 8.1 million containers in 2020. And as you know, 2021 has also been challenging, but we have persevered.

Along the way, we had some remarkable numbers, including our best month ever: over 900,000 containers in May 2021. And now we’ve hit at our best August ever, with more than 807,000 containers, which is up 11.3 percent from the same month in 2020. It is the 13th time in the last 14 months that we have achieved a monthly record. Eight months through this year we can safely forecast that 2021 will be another record-breaking year for the Port of Long Beach.

The record volume of cargo is driven by a surge in imports and consumer spending. Peak season has arrived, and the volume continues. Many of you are following the numbers of ships that wait outside the ports around the world. The San Pedro Bay ports of Long Beach and Los Angeles just last week hit a new high for ships at anchor outside the harbor, with 44 ships. By the end of last week, it was down to 37. The previous high was in February of this year at 40 ships. Keep in mind that’s a number that was reduced to only nine this past June.

Economists and supply chain experts expect the cargo surge to continue into the summer of 2022. If the surge continues into the summer of ’22, that means there will be no typical lunar year in terms of a low point, as annually that does occur. January and February can be some of the slowest months of the year at the ports here that serve the trans-Pacific trade routes. However, I expect the volume to be climbing.

So you may ask: What are we doing better to handle this volume? Let it be known that we are partnering with our marine terminal operators and labor in a full-court press to reduce the backlog. One major step that is helping right away is the recent completion of the Long Beach Container Terminal construction project. Aside from a few finishing touches, the third and final phase of the 300-acre terminal is now complete. The project cost $1.49 billion and took 10 years to construct. The result is a state-of-the-art container terminal, with advanced technology and zero emission operations. The terminal is an environmental model. We have electrified with 100 percent clean shore power for ships at berth, expanded the on-dock railyard to minimize truck trips, and constructed green buildings. The 300-acre property is now able to move 3.5 million containers a year. That throughput would rank this terminal alone as the sixth busiest port in the United States. The 4,200-foot-long deep-water wharf can accommodate three mega-vessels at once. The truck turn times at the Long Beach Container Terminal are among the fastest in the San Pedro Bay Port Complex. That’s one example of how in the past we were planning ahead for bigger ships. As it worked out, we were able to add significant capacity exactly when we needed it. The newly completed third phase added one million containers for annual capacity.

We’re now taking steps for short term as well. The short-term – excuse me – the short-term overflow resource – or as we refer to it, the STOR project – is working well to provided much needed optimal capacity for container staging. We’re expanding it from 49 to 64 acres; we will keep it open throughout the surge. But it’s time to look for additional land outside the harbor district to offer even more staging areas to help move container cargo to its destination.

We’ve just launched a truck alert system that updates our port truckers in real time on traffic conditions in the harbor district via text message. We created the weekly advance hauling estimate, also known as the WAVE report, to allow every part of the supply chain to access the information that makes it easier for them to plan their needs for equipment and labor.

We met our most significant challenge, COVID-19, head-on. In August 2020, we opened a COVID-19 testing site right in the port complex, primarily serving the workface of the San Pedro

Bay. We closed the testing site after one year of operation, and our health department continues to provide testing at sites throughout the city. We advocated successfully for early priority vaccinations for our waterfront workers, and vaccination teams from our health department have been making visits to docked cargo ships at both the Port of Long Beach and the Port of Los Angeles since mid-May. Under this program, more than 4,500 international sailors on 300 ships have received one dose of the Johnson & Johnson vaccine. We will continue to facilitate this program as long as it is necessary and there is a demand.

Looking at the long term, what are the solutions? Many years ago, the forecast for the San Pedro Bay ports accurately predicted that the level of cargo we would have in 2021 would be upwards of 19 million containers. And that will be a record, surpassing 2020’s 17.3 million containers, with the nation’s two busiest port complex authorities here at this complex. We know that cargo’s going to increase. Our port complex is projected to have to move 28 million TEUs by 2030. What are going to do to provide that capacity?

I think the answer lies in 24/7 operations. Yes, it’s a long-term vision. High-preforming terminals in Asia already are 24/7, and our supply chain needs to adapt to that reality. With the growth of ecommerce, consumers can shop easily at 4:00 in the morning or 4:00 in the afternoon. They expect rapid delivery. It’s a time that we all accept this and move past the current status quo to 24/7 operations.

Of course, this is going to take time. We need it, because we’re only going to see more volume. It’s time to start addressing how we move things differently in the future so that we can accommodate the expected growth. Thank you.

MODERATOR: Thank you so much for those remarks. We can move into the question portion – the Q&A portion of today’s briefing. If you have a question, please raise your virtual hand and wait for me to call on you. Or you – if you are having audio issues, feel free to type it into the chat, and I will read it out loud.

Maybe to get started, you can tell me a little bit about supply chain predictions for the holiday season, as we’re getting closer?

MR CORDERO: Well, Daphne, again, the volume will continue – to be candid, the supply chain disruption-related matters are not going to be a short-term solution. The good news is we have a lot of volume. The economy is – the trajectory is moving up, strong consumer demand. But again, because of a confluence of factors with regard to the global supply chain, there will be some delays. So I think, again, we’re doing everything we can here at the Port of Long Beach to have a – as I indicated, to have a full-court press to address any potential efficiency short-term resolutions we could put in place.

MODERATOR: Thank you. We have a question from Emel Akan. Emel, can you introduce yourself and your outlet?

QUESTION: Hello. This is Emel Akan from the Epoch Times. And Mr. Cordero, thank you so much. I couldn’t open my video; I’m sorry for that. I would like to know if you – during this time, busy time, have you increased your fees in the port? And also, have you been experiencing worker shortage, like many businesses in the country? And my third question is: Do you see

any bottlenecks in your port operation arising from the problems from other countries, other ports like China? Thank you.

MR CORDERO: Emel, thank you for your question. Number one, we have not increased our fees. Now, as you know, here at the San Pedro Bay Complex, we’re a landlord port authority model. So our private sector terminals are the ones that actually, obviously run the terminals. They have not increased any fees, nor has the port authority during this crisis.

In terms of the labor shortage, I can represent to you that the men and women on the dots moving these containers, they’ve been working day-in-day-out since this pandemic commenced in early spring of 2020. And again, there is no shortage of labor on the docks. Obviously, we have a lot of volume. Now, I will say that as it relates to the supply chain, there are issues with regard to labor at the warehouse and distribution centers in the region. But again, the whole nation’s undergoing that experience and certainly the supply chain has not been immune with regard to the labor shortage.

And last, I think your question was with regard to the delays and – that have occurred in Asia, more specifically China and Vietnam for that matter. Well, that’s a great question, Emel. As you know, the Southern California Bay Complex here, San Pedro Bay Complex – Port Complex – I primarily, this is the epicenter for imports from Asia to the United States. So anytime there are delays and impacts at the ports of origin, you’re definitely going to see that domino effect here, which is one of the reasons we’ve had these vessels at anchor. And I think I mentioned we’ve hit as high as 44-46 vessels at anchor last week. But – and that’s due – one factor is anytime you close a terminal in China, for example the terminal at Meishan or the Meishan terminal in Ningbo – Ningbo, that gateway moves around 23 to 25 million containers. You shut a terminal down, it’s going to have an impact here in southern California.

Prior to that, as you know, a few months back, there was a terminal in Shenzhen that closed and – or excuse me, in Yantian – that was closed, and again, it had a similar repercussion here in southern California. So suffice to say that the COVID-19 crisis is not over. It’s not going to be over anytime soon. The Delta variant is problematic, so we’re prepared to continue – unforeseen events with regard to the movement of cargo in the global supply chain.

MODERATOR: Thank you so much. Next question goes to Pearl. Pearl, feel free to introduce yourself and your outlet. Go ahead.

QUESTION: Yes, thank you very much. Pearl Matibe here, NewsDay, Zimbabwe. My question is regarding anything you might be able to share in terms of Africa. I know at the beginning of COVID-19, Africa was having some supply chain challenges accessing certain goods related to COVID. But maybe speak not – not only on COVID items, but what is the kind of volume or gap in volume that maybe fell off at the start of COVID, and what does that look like now in terms of movement of goods and shipping towards the continent? Thanks.

QUESTION: Well, Pearl – and thank you for your question – in this movement of international cargo movement, international trade, before the pandemic, there had been two areas that had been talked about as emerging markets, and one of them is Africa. And the other, of course, here in the Western Hemisphere is Latin America. So Africa has become a big player now with regard to the international trade movement. Now, unfortunately for the west coast here in United

States, the volumes from – and the trade with Africa is not as much as it is to the east coast of the United States.

So – but I do know that, again, as you are aware, Africa in terms of raw materials is a big continent with regard to the raw materials that it has to offer for the export market. But in terms of the consumer market, more and more, as some of these undeveloped countries continue to evolve, and particularly in the African continent, consumer demand in Africa will continue to escalate. So it will be a factor here as we continue to move forward. And like I said, it’s one of the noted emerging markets in this industry.

MODERATOR: Thank you so much. We had a question come in prior to today’s briefing. If you could elaborate a little bit about your cargo-handling equipment, I understand that it makes up the largest zero-emissions fleet on any marina container terminal in the world. So maybe you could share a little bit more about that.

MR CORDERO: Thank you, Daphne. Yeah, we just completed a 10-year endeavor here, and that is the completion of the state-of-the-art terminal, the Long Beach Container Terminal. It’s about a 305-acre area with a capability that we will be moving 3.5 million containers. And of course, the cranes that are there, the ship-to-shore cranes, are as tall as 300 feet in height, and the capability of what they’ll be able to do in terms of servicing mega-vessels that have come to this terminal.

And with all that capability, the most important factor that really commenced this endeavor was the – reducing the impact to the environment, more specifically the air quality impacts. This container terminal is now twice as big – Long Beach Container Terminal – what it once was, and of course, it will be emitting in excess of 50 percent less of emissions from that operation.

So I think from an environmental perspective it’s a great project, and I think the cargo handling equipment there is, again, state-of-the-art. And so we’re very proud not only with regard to what that means to reduce the environmental impacts – as you know, for the Port of Long Beach as well as the Port of L.A., our goal is to have zero emission cargo-handling equipment by the year 2030. So we are certainly moving progressively on that road.

MODERATOR: Perfect. Well, thank you so much. There is a question from Felicia. Felicia, please go ahead and introduce yourself.

QUESTION: Hey, my name is Felicia Akerman. I’m with the Swedish business daily Dagens Industri. You talked earlier about moving to 24/7 operations. What are the main obstacles for that to become a reality, and what would be a realistic timeframe?

MR CORDERO: That’s a great question, Felicia. As I indicated, the 24 model is not new. I mean, we have to look – all we have to do is look at Asia in terms of how they operate. And I think in terms of what are the obstacles, no matter what industry that you look at, anytime you move from a status quo model to more of a visionary model, there’s always questions and legitimate questions for that matter. But I think one of the big questions that are a legitimate question with regard to obstacles that people raise is: What is the cost that’s involved? And there is a cost issue to this. However, from my perspective, what is the cost of doing nothing? And you could probably see that the impact of delays and a rise in consumer prices, that’s a considerable cost that far exceeds whatever financial cost results from moving cargo 24/7.

And in terms of how long this would take to accomplish, I think admittedly it’s a long-term vision. And by the way, it’s not any particular sector that’s responsible or that has the obligation for this. My vision is one of the supply chain, a 24/7 supply chain, particularly at a complex like the San Pedro Bay complex here at the Port of Long Beach, where, like I said, we’re going to be moving 19 million containers this year, TEUs. And in fact, the latest estimate as of yesterday by staff, we may reach 20 million. So you cannot move that volume with old models of yesterday.

So I think it’s going to take time to get to a 24/7 operation, and I think what I foresee is incremental steps to do that, where, for example, you might have five days/16 hours a day, rain or shine those gates will be open. And when that happens, Felicia, my prediction is the supply chain will adjust to that. It will be a domino effect. Because for this to be effective, it’s not just the marine terminals. It has to be the truckers, the warehouses, the railroads.

And – but again, I think the last I’ll say to this question, which I think I really appreciate this question, is when you stop and think about it, 24/7 is not new with regard to the international carriers. Those vessels are 24/7. When they arrived at any port, the expectation is you load and unload that carrier day in and around the clock, day and night. And of course, in the United States, if you ask class one railroads, they are 24/7. So it’s a vision, and there are obstacles, but certainly not unrealistic, so I believe time will prove me correct.

MODERATOR: Thank you. The next question comes in from Manik Mehta. He’s a syndicated journalist. He says, “You are mainly a container port. Do you also have any break bulk traffic? Could you give figures for your container traffic in the first eight or six months of this year compared to last year? Long Beach is known as a gateway to China, but there are other markets than China. Where do you see good business potential? What about Southeast Asia and particularly – excuse me – India, which is a huge market? Thank you.”

MR CORDERO: Well, there was an earlier question regarding emerging markets. We talked about Africa and Latin America. But with regard to the epicenter of manufacturing, it has been China for many, many years, and in the short term it will continue to be China.

However, we have seen that manufacturing base move to Southeast Asia – more specifically, Vietnam. And, of course, China – excuse me, India has been talked about for many years about the potential that India has, which it does have much potential. So I think as the years come, I think you’re going to see the manufacturing movement – that is, the global manufacturing movement – start shifting.

To what extent I don’t know, but obviously this whole question really commenced with the trade war that the prior administration took on, and, of course, when that trade war occurred – which is still on, by the way; I mean, the tariffs have not gone away – then, of course, it was a question in terms of shippers starting thinking China plus one; that is, your manufacturing base being China, but you have an alternative such as like Vietnam. And I think that’s going to be a continued viable discussion and I think – I know India is doing all it can to make sure they continue to move towards a competitive level to offer – to be a player in this international water cargo movement.

So yeah, so I think, again, we’ll probably see more of that.

MODERATOR: I want to give an opportunity to the two individuals who’ve called in to ask a question. If you have a question, I believe you can press *6 to unmute yourself. We can always come back.

This administration has placed quite a priority on infrastructure, and I was wondering if you could talk a little bit about the role ports play with the – President Biden’s plan.

MR CORDERO: Well, from a port perspective, it’s welcome that we have an administration who talks about ports. When President Biden was introducing his American infrastructure plan, and not only did he say highway and bridges, he also said ports. And right now, as it’s being proposed, ports will be a beneficiary of specific funding as it relates to the nation’s infrastructure.

Now, of course, is it sufficient funding? We could argue that we need so much more dollars to really remain competitive here in terms of the maritime port infrastructure. However, it is certainly appreciated and it’s a milestone whenever you have an infrastructure project – excuse me, an infrastructure plan moving forward through our congressional leaders, but there’s specific language in terms of what it means for ports and inland waterways. So again, from my perspective it’s welcome news and it’s a breath of fresh air to have an administration that not only talks about infrastructure in terms of bridges and highways but also what that means to the maritime port community.

MODERATOR: Well, thank you so much. I’ll give everyone just a moment more to raise their hand to get in one last question. If you do, please raise your hand, your virtual hand, or let me know via the chatroom.

I can put our journalists who are on the Zoom today in touch with some of your colleagues, Mr. Cordero, for follow-up questions, and I will also be sharing a press kit that has been put together by your team. So with that, I believe we – I can give you the floor if you have any last comments or anything you wanted to say before we wrap up.

MR CORDERO: No, I just wanted to thank you, Daphne, and the Foreign Press Center for this opportunity, and again, the – obviously, when we talk about the extent of consumer demand here in the United States, I think the good news in terms of what that has brought with regard to e-commerce and the whole dynamic of what I say, having an Amazon state of mind, I think the port authorities – not only just the Port of Long Beach; I will represent that the port gateways across the nation are stepping up and are doing the best we can to make sure we move that cargo, because, again, it’s a new day today. The American consumer expects their shipments tomorrow, right, and that’s why I’m strongly advocating that when you have a change in terms of the expectations of how that works, port authorities need to also think out of the box in how we change our models. So for the Southern California Port Complex, the nation’s largest port complex, that change for me is the strive for 24/7 operation.

MODERATOR: Well, thank you so much for giving your time. I really appreciate it. Thanks to everyone who joined us today. As – to recap, today’s briefing was on the record. I will share a transcript as soon as it’s available, and again, thank you so much and good afternoon.

MR CORDERO: Thank you.

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