FEDERAL MARITIME COMMISSION

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 PUBLIC FORUM ON PORT CONGESTION

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 MONDAY, SEPTEMBER 15, 2014

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 The meeting of the Federal Maritime

 Commission convened in San Pedro, California,

 pursuant to notice at 9:33 a.m., Mario Cordero,

 Chairman, presiding.

 PARTICIPANTS:

 MARIO CORDERO, Chairman

 Federal Maritime Commission

 EUGENE SAROKA

 Executive Director

 Port Authority

 JON SLANGERUP

 Executive Director

 Port Authority

 THE HONORABLE JANICE HAHN (D-CA)

 U.S. House PARTICIPANTof Representatives

 THE HONORABLE ALAN LOWENTHAL (R-CA)

 U.S. House of Representatives

 Panel One:

 ROBERT CURRY SR.

 California Cartage Company

 ALEX CHERIN

 Englander Knabe & Allen
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 1 PARTICIPANTS (CONT'D)

 2 BERNARD VAUGHAN

 Flexi-Van Leasing, Inc.

 3

 BOB WYSOCKI

 4 Sears Holdings Corporation

 5 LISA FERGUSON

 MIQ Logistics

 6

 MICHELE GRUBBS

 7 Pacific Merchant Shipping Association

 8 H. KEITH LESNICK

 DOT - West Coast Regional Gateway Director

 9

 Panel Two:

10

 FRAN INMAN

11 Majestic Realty

12 BRUCE WARGO

 PierPASS

13

 RICH DINES

14 Port of Long Beach Commissioner

15 MICHAEL J. JOHNSON

 Harbor Trucking Association

16

 MICHAEL MAYOR

17 Mayor Logistics, Inc.

18 RICH NAZZARO

 Toll Global Forwarding

19

 Panel Three:

20

 EDWARD DENIKE

21 SSA Containers

22

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 1 PARTICIPANTS (CONT'D)

 2 ERNESTO NEVAREX

 3 JUAN CORONA

 4 SANDY LANGFORD-COTY

 Los Angeles Customs Brokers

 5

 JOE WRIGHT

 6 Mazda North American Operations

 7 PABLO CAMACHO

 Teamsters Union

 8

 JACQUELINE AGUIRRE

 9 TTSI

10 HECTOR VALENTINA

11 BURKE SMITH

 The Dependable Companies

12

 EMMANUEL GOLDSHIED

13 Amazon Trucking

14 RICK CURRY

 Gateways International

15

 SRI LAXMANA

16 C.H. Robinson

17 HOWARD WALLACE

 Los Angeles Harbor Grain Terminal, Inc.

18

 RYAN BROWER

19 Weber Logistics

20 VAL NORONHA

 Digital Geographic Research Corporation

21

22 * * * * *

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 1 P R O C E E D I N G S

 2 CHAIRMAN CORDERO: Good morning. Thank

 3 you so much for all of you taking the time this

 4 morning to attend this forum. Anyone here from

 5 San Francisco? Good, good. Dodgers 17,

 6 (laughter) Giants 10. Thank you for being here.

 7 On a more serious note, again, really

 8 appreciate you attending this forum. Let me say

 9 from the outset the Federal Maritime Commission is

10 holding four of these forums across the nation.

11 First one to be held here, and then, of course,

12 we'll have one for the east coast in Baltimore,

13 Southeast Charleston, New Orleans for the Gulf,

14 and those are the four.

15 This is an issue that we're approaching

16 as an issue that impacts the nation, and let me

17 make myself very clear: This is not about the FMC

18 visiting a particular gateway and saying you're

19 congested. That is not what this is about, and

20 that's why we're having four regional gateways.

21 But the fact of the matter is no matter what

22 Maritime periodical you pick up, the talk of the

Page 5

 1 day is congestion and avoiding a crisis of

 2 potential congestion, not just in the nation, but

 3 in Europe. Example: Rotterdam, Asia. Example:

 4 Hong Kong.

 5 I'd like to thank very much the two new

 6 port directors who are here: Eugene Saroka, John

 7 Slangerup. Again, congratulations on your new

 8 position and very much appreciate you being here

 9 for this dialogue. And also I will recognize the

10 Congressional representatives we have here as I

11 move forward with my formal comments, and I also

12 want to recognize the chairman of the Coast Guard

13 and Maritime Transportation Committee Duncan

14 Hunter, who is not here, but did submit his

15 comments of which he is very concerned about this

16 whole issue with regard to maritime

17 transportation.

18 So, with that, let me move forward, and

19 again, good morning. Welcome to the Federal

20 Maritime Commission's Public Forum on Port

21 Congestion. Let me first thank the Commission

22 staff for their efforts in preparing this event
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 1 and the Port of Los Angeles for hosting us. By

 2 the way, the staff is very excited about coming to

 3 Los Angeles because I keep telling them how great

 4 the weather is; let's get away from the heat and

 5 humidity. So, obviously I was wrong. But the

 6 Commission is moving forward with the first forum

 7 scheduled about our nation's major gateways.

 8 The objective is to facilitate dialogue

 9 among those affected by the consequences of port

10 congestion, including port authorities, maritime

11 terminal operators, ocean common carriers, and the

12 maritime workforce, truckers, and the beneficial

13 cargo owners, and ultimately the public who rely

14 on this industry to provide steady and efficient

15 flow of goods to their hometowns, places of

16 business, local stores, often without knowing how

17 critical efficient ocean transportation is to

18 their personal lives.

19 Thank you for coming here, and thank

20 those who have submitted written statements in

21 advance; many of you have. Following the

22 discussion, I encourage you to submit further

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 1 comments and feedback.

 2 The mission of the Federal Maritime

 3 Commission is to foster a fair, efficient,

 4 reliable, international ocean transportation

 5 system. Official cargo handling at ports of entry

 6 is essential to maintaining a reliable supply

 7 chain and ensure sustainable maritime commerce.

 8 Excessive traffic or gridlock at these

 9 ports threaten the reliability of ocean

10 transportation. Delays increase transport costs,

11 frustrates cargo owners, and decrease productivity

12 and profitability for marine terminal operators

13 and truckers alike.

14 Port congestion is neither a new

15 challenge nor a localized one. It is a national,

16 even global, issue affecting the international

17 shipping community. At the port of Hong Kong, the

18 maritime terminal operators struggle to

19 efficiently maneuver containers with severe space

20 constraints that will lobby to the Hong Kong

21 government to release more land to expand their

22 container yards. As I referenced before, in

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 1 Europe the largest port, Rotterdam, has issues of

 2 their own.

 3 In the United States, port congestion's

 4 a topic which is not limited to one region.

 5 Rather, a concern at all our major gateways. East

 6 Coast ports will require greater handling capacity

 7 to accommodate the new Panamax vessels. As many

 8 of you know, President Obama signed the Water

 9 Resource Reform and Development Act in June of

10 this year. The legislation will assist the East

11 Coast ports in having the infrastructure required

12 to handle the bigger vessels.

13 Even as the East Coast ports begin to

14 compete for cause from large vessels, the

15 efficiency and vitality of the West Coast ports

16 remains crucial to international commerce. Seven

17 percent of all U.S. goods imported from Asia

18 arrive here in the West Coast ports. Forty

19 percent of all those imports arrive through Los

20 Angeles, Long Beach alone. That's the virtual

21 gateway of U.S. imports. West Coast ports are the

22 essential first step in ensuring the efficient

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 1 national transport of inborn cargo and with such

 2 high volumes. West Coast ports, especially in the

 3 Southern California area, are also more

 4 susceptible to excessive congestion.

 5 The Federal Maritime Commission aims to

 6 mitigate congestion by partnering with members of

 7 the Maritime international transportation

 8 industries to identify and resolve factors which

 9 contribute towards congestion. As we worked

10 towards solving some of these systemic problems

11 that cause congestion, input from those who

12 experienced these firsthand are valuable, and this

13 is exactly the reason why we're here.

14 Again, thank you for your personal

15 participation. I look forward to hearing from the

16 stakeholderes. Before we being, let me introduce

17 the Commission staff that are present today: Mary

18 Hoang, the Chief of Staff of the Federal Maritime

19 Commission; Tyler Wood, Deputy General of Counsel;

20 Ray Pearson, Director of Office Economics and

21 Competitive Analysis; and Rebecca Fenneman, the

22 Director of the Office of Consumer Affairs and
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 1 Dispute Resolution, also known as CATERS.

 2 CATERS offers alternative dispute

 3 resolution services to all segments of the

 4 industry, including issues related to the location

 5 of cargo, dealing with defaulting operators,

 6 interpretation of tariff rules or leases,

 7 including disputes over documentation. Our CATERS

 8 unit can provide assistance at any stage of a

 9 dispute. It is a confidential process and

10 voluntary, so if any of you have these types of

11 issues feel free to talk to Rebecca today or

12 contact her office in the future.

13 Now I am very honored and proud to turn

14 this over to our Congressional representatives,

15 Representative Janice Hahn and Alan Lowenthal.

16 Now, being in Washington, D.C., I could tell you,

17 and nothing that I'm sure you don't know, you are

18 so fortunate in Southern California to have two

19 representatives who are doing such great work and

20 really know what the needs of our maritime

21 community are for this nation. I will add that

22 they both reconfigured their schedules to be here

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 1 this morning because as soon as we're finished

 2 here in the morning they have to take the first

 3 flight out to D.C. With that, let me welcome

 4 these representatives, and I'll commence with

 5 Congressman Alan Lowenthal and then I'll defer to

 6 Congresswoman Janice Hahn.

 7 MR. LOWENTHAL: Thank you, Mario. I

 8 want to thank you for convening this hearing and

 9 for everyone for coming. Again, my name is Alan

10 Lowenthal. The last 22 years I've come to really

11 appreciate and to work with all of our ports, but

12 especially Long Beach and Los Angeles, and

13 understand that they're the economic engines that

14 generate the good jobs that benefit our region and

15 our nation. So, the critical importance of the

16 ports.

17 Over the years, I've tried to support

18 the good actions of the port and economic

19 development of the port, but I've also worked

20 really hard to lessen some of the negative impacts

21 of port development, especially congestion and

22 environmental degradation. That's the kind of

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 1 issues that I worked on when I was in the state

 2 legislature and also as a city councilman when I

 3 was asked by Commissioner Cordero to address this

 4 on U.S. port congestion, examining some of the

 5 causes, impacts.

 6 I struggled on how I was going to

 7 actually frame what I was going to say. How am I

 8 really going to talk about and give a benefit to

 9 the group? I've been meeting with both John

10 Slangerup and also Gene Saroka to get to know each

11 other and the new leadership here in the ports.

12 There was something that Gene said to me this past

13 week that really struck a chord: That for all the

14 good works that we've been doing, and we have been

15 doing good work in Southern California, it is time

16 to raise the bar again.

17 We are at that point where we need to

18 come together and raise the bar and to take us to

19 the next level. That struck me, and I wondered if

20 there's some lessons in raising the bar. How do

21 you bring everybody together? What are some of

22 the case studies of the maritime industry that

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 1 worked? What are some of the things when we've

 2 raised the bar? Goodness knows, Janice knows, and

 3 I know, the ports have raised the bar many times

 4 over the last number of years.

 5 I'm going to give one example of

 6 something that I think really has some impact here

 7 about how I participated in it. Not only me;

 8 Janice was a city council member at the time. She

 9 worked on it at the city council level. But 10 or

10 11 years ago, I could not get across the 710

11 Freeway. The congestion on the 710 Freeway 10 to

12 12 years ago to 15 years ago was outrageous during

13 the daytime. You just could not get out of the

14 port complex. I had realized for many years that

15 the terminal operators and those in the industry

16 had been working to try to resolve this. How are

17 they going to extend these hours?

18 I, at the end of about 2003, '04 year,

19 had just had a small victory in the state

20 legislature against the opposition of a lot of

21 folks, including some people here, I had passed

22 and gotten to the governor a bill on truck idling;
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 1 how we're going to limit truck idling. That bill

 2 passed both houses of the legislature, we put in

 3 limits, and it was signed by the governor.

 4 Many people in the industry came to me

 5 and said, we'd like you to come and talk about

 6 what you did, but also, give us some idea about

 7 how we're going to take it to the next step. How

 8 are we going to work together? We've been trying,

 9 as an industry, for years to get everybody on the

10 same page. We all know it's the time to have the

11 ports open more than day hours. It was time to

12 move forward. There were lots of people working

13 on that; as I mentioned, Janice was working, a lot

14 of other folks were working on that issue, people

15 in the industry. Is there something that you can

16 do?

17 I challenged them. I was invited before

18 the Harbor Association or PMSA -- I'm not sure who

19 it was -- and I challenged them. I said, look.

20 You had a year. Being successful, not saying I'm

21 going to be successful again, but I will give you

22 1 year to come up with a way that the industry

Page 15

 1 comes up with their own proposal, because if you

 2 do not come up with that proposal, you're going to

 3 watch, and I'll work with you, I am moving a bill

 4 through the legislature that is going to mandate

 5 that the ports stay open, and it's going to be run

 6 by a public entity, that's what we're going to do.

 7 But I will go away and not be seen again if you

 8 can get your act together and do it.

 9 Everybody said great, great, and so

10 people didn't believe I could get it through, and

11 all of a sudden that bill began to move. It moved

12 through the state assembly; it passed that. It

13 got through the state senate, and as it's getting

14 towards the end of the year, I began to have more

15 and more meetings with the industry. As they

16 began to see that this bill was getting through,

17 it was going to be a state entity now that was

18 going to do it, the industry all agreed among

19 themselves to come together and to come up with

20 what they considered their solution, which was the

21 PierPASS solution. That was a major step forward

22 because the step was -- I'm not saying you need

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 1 that kind of pressure. It was how do you put

 2 pressure on people to do what they know they had

 3 to do all along because this was their issue.

 4 They wanted to do that.

 5 I'm not saying that was the only reason

 6 to create it. There was lots of other reasons and

 7 things, but it did put pressure on them. The bill

 8 had been through the legislature, ready to go

 9 through the governor; then came PierPASS. As we

10 know, for the first 6 months of PierPASS more than

11 thirty percent of the containers were moved to

12 night. Now almost fifty-five percent of the

13 daytime moves are at night. Forty million

14 containers have been moved at a time when they're

15 not competing with California moguls. My people

16 in Long Beach. Not only does it help the industry

17 are very grateful that they're not having to

18 compete during the daytime hours. We did it

19 without expanding the terminal footprint. It

20 created more capacity to move containers by and we

21 used our resources in a better way.

22 So, what about here today, maybe, what

Page 17

 1 we've done? I'll conclude with this: Where we

 2 are. PierPASS has been a great experience on

 3 relieving daytime congestion, but I think everyone

 4 is saying where do we go from here? How do we now

 5 move the ball forward? We're not saying things

 6 aren't being done right. We're not attacking.

 7 We're just saying it is time, maybe without having

 8 a threat, for everybody to come together and

 9 figure out how do begin to raise the bar again.

10 How are we going to help the truckers in terms of

11 turn times?

12 We moved much more goods. We had a

13 tremendous amount. Now we have to step back and

14 look at what are those critical issues that we did

15 not address or that the ports themselves did not

16 address and the industry did not address. So,

17 whether it's I've always wanted appointments --

18 I'm not advocating for it now, but I am saying --

19 or whether we have other hours or how we move

20 goods more efficiently during the hours that

21 they're there, it is time to raise the bar again.

22 That's why we're here. We're not here
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 1 because of complaining. We're here because of our

 2 successes. The rest of the nation looks to us

 3 because we did extend the hours here. It is now

 4 time to take it to the next level. Our ships are

 5 bigger, so are our volumes. Efficiency has never

 6 been more critical. This is not going to solve

 7 it. We're going to have to figure out how are we

 8 going to move our resources not just within the

 9 gates; it's the entire supply chain that we're

10 talking about.

11 I'm real excited. How we reduce truck

12 cues, how we manage growth, how we generate new

13 jobs, how we protect our communities are all on

14 the table. It is time to raise the bar one more

15 time. Thank you for inviting me, and I really

16 look forward to hearing what goes on.

17 CHAIRMAN CORDERO: Thank you very much,

18 Congressman. Next I'll defer to Congresswoman

19 Janice Hahn, but before I do that let me just

20 mention a couple things. As the Congressman has

21 referenced, it's time to raise the bar. One of

22 the beauties about Southern California and this

Page 19

 1 port complex, and I experience it firsthand being

 2 at the Port of Long Beach, people do see this

 3 region as leaders when it comes to maritime port

 4 authority issues. I know that for a fact because

 5 when I'm back at Washington I could tell you that

 6 the many people I meet throughout the country, the

 7 Long Beach and L.A. Has a history of that

 8 leadership, and people look to the Southern

 9 California complex to how they address issues that

10 the other regions need to address.

11 One other aspect people talk about

12 congestion from a global perspective. It is

13 estimated by 2018 we're going to have 840 million

14 TEUs, global transactions. Right now we're at,

15 like, 640. The nation, for 2013, moved 30.5 TEUs,

16 West Coast almost 20 million of that. So, it's

17 significant.

18 Last, and again, the whole perspective

19 of this is the alliances, the grand vessels that

20 are here, and more to come. I will last say when

21 it comes to Congresswoman Hahn, Tyler Woods, our

22 Deputy General Counsel, his staff prepares for me

Page 20

 1 a quarterly report on our maritime legislation

 2 that's pending in Congress. I would tell you, and

 3 it's no news to you all, by far the number of

 4 bills maritime related, port related, that's been

 5 moved forward, presented, or conceptualized by a

 6 Congressional person in Congress is Janice Hahn.

 7 Those of you who want to check that with the

 8 Congressional Report, you'd be amazed the number

 9 of bills that are being proposed to address issues

10 whether it be congestion or whether it be for the

11 benefit of stakeholders in moving of these goods.

12 So, again, we're so fortunate to have

13 someone like Alan who, in my mind, is the

14 godfather of propelling out-of- the-box thinking

15 when it comes to terminal development and port

16 expansion and doing it the right way -- in other

17 words, sustainable development.

18 With that, now let me introduce

19 Congresswoman Janice Hahn.

20 MS. HAHN: Thank you, Commissioner

21 Cordero, for holding this public forum here at the

22 Port of Los Angeles here in San Pedro, which is my

Page 21

 1 Congressional district. I welcome all of you here

 2 today. It's great to be with my colleague, Alan

 3 Lowenthal. It's been really good for this region

 4 to send Alan Lowenthal back to Congress, and we

 5 are good partners and really are a strong alliance

 6 back in Congress with our other Congressional

 7 members really leading the way and making sure

 8 that they understand the importance of our ports.

 9 We know that here in the region. We know the

10 importance of the ports of Los Angeles and Long

11 Beach. They're America's ports. How important

12 they are to not only our local economy, but to our

13 national and global economy.

14 The topic for today's forum is

15 congestion, and that's a crucial one for our ports

16 and for our ability to be competitive globally.

17 We need to reduce congestion in all aspects of

18 goods movement. As Alan said, that was something

19 I began working on when I was a city council

20 member in Los Angeles starting in 2001.

21 It really came from a trip that my

22 brother, who was then the mayor of Los Angeles,
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 1 led to Asia, and we spent time in Hong Kong and

 2 Shanghai, and I came back with the feeling of --

 3 it seemed to me if we really wanted to raise the

 4 bar, we needed to figure out how to open our gates

 5 more than just 8 to 5, and the 710 Freeway really

 6 was the impetus. At that time, if you remember,

 7 in the early parts of this decade, we were talking

 8 about widening the 710 Freeway. We heard from the

 9 public that was a bad idea and would face enormous

10 obstacles, and things have really shifted.

11 My brother tasked me with one of the

12 harbor commissioners at that time, James Acevedo,

13 to begin holding hearings with the industry on

14 what it would take to begin opening our ports and

15 moving cargo off-peak. We were told it would

16 never happen. Oh, we've been trying to do this

17 for 20 years, Ms. Janice. It's not going to

18 happen. The industry will never get on board.

19 I just didn't buy that, and I said the

20 difference now than maybe 20 years ago is the

21 public. The public is really fed up with the

22 congestion. The truck drivers were coming to us

Page 23

 1 saying, because of the congestion on the 710

 2 Freeway, all of us trying to make that last run at

 3 3 o'clock in the afternoon -- my constituents in

 4 Wilmington were taking pictures of trucks running

 5 over sidewalks so they could get in line fast

 6 enough. We knew that the dynamics had changed,

 7 and it was time to really look at moving cargo

 8 off-peak.

 9 One, unfortunately, jackknife truck on

10 the 710 would really stop that freeway for 4

11 hours, and many of the truckers told me, frankly,

12 they didn't like driving on the freeways with the

13 rest of us commuters. They didn't think we really

14 knew how to drive and many times we caused

15 accidents because we would -- not we, but I'd saw

16 it happen to other drivers -- cut off truck

17 drivers. So, the time was now to use our

18 infrastructure smarter and longer while we worked

19 on maybe gaining support for any kind of widening

20 of our freeway.

21 We worked very difficult days here at

22 the Port of Los Angeles in meetings with all the

Page 24

 1 stakeholders about off- peak cargo movement. Alan

 2 Lowenthal, at the state level, was crafting

 3 legislation. Between the two of us, I believe, we

 4 really did help to form the foundation for

 5 PierPASS. I think off-peak shipping changed the

 6 way business was done here at the port, and I

 7 don't ever see us going back to the way it was

 8 before we began four nights a week and on

 9 Saturday.

10 I ultimately would like to see us 24/7

11 some day. I don't think there's a lot of appetite

12 for that right now, but I think ultimately that's

13 where we need to move. It's got a number of

14 benefits: Off-peak shipping; it reduces

15 congestion for goods movement; it makes port

16 operations run more efficiently; it also helps our

17 communities by decreasing congestion during

18 commuting hours and improving air quality by

19 reducing the amount of idling that trucks

20 experience during peak congestion times.

21 As we move forward, I think we need to

22 shore up our off-peak hours. I think part of what

Page 25

 1 we're going to look at at this hearing is the role

 2 of PierPASS, the amount of the mitigation fee,

 3 looking at where these funds go, and I really want

 4 to thank Commissioner Cordero for looking into

 5 these issues. But the rest of the country is

 6 looking at our model. I was up in Oakland on

 7 Friday meeting with the port director there, and

 8 they're definitely discussing how they move

 9 forward with off-peak hours.

10 In Congress I'm fighting for our ports

11 every day. From the first day I was elected in

12 2011, I went back and listened to everyone talk

13 about the jobs and the economy and what we needed

14 to do, but no one was mentioning ports. I was

15 baffled that we could be having this national

16 discussion about our economy and jobs and not be

17 talking about the role that our nation's ports

18 played in that discussion.

19 I started the PORTS Caucus in Congress,

20 and there's caucuses for everything back there,

21 but in the entire history of Congress no one had

22 thought about gathering members of Congress around
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 1 the idea of ports.

 2 It is a bipartisan caucus. I have about

 3 90 members in Congress, both Republicans and

 4 Democrats, who now are engaged in education,

 5 they're engaged in legislation, and the awareness

 6 level for ports has risen dramatically. The PORTS

 7 Caucus, hopefully, moving forward will continue to

 8 be a vehicle for all of your issues. It is,

 9 again, a great bipartisan caucus that wants to

10 move for your issues. So far it's not been

11 controversial. It's something I can find common

12 ground on. I can reach across the aisle and work,

13 and frankly that's what Americans want us to do is

14 to find common ground to move forward your issues.

15 This year Congress passed and the

16 President signed into law, as Commissioner Cordero

17 said, legislation that increases spending for our

18 nation's port infrastructure. I fought very hard

19 for the Harbor Maintenance Tax to be spent rather

20 than to sit in a general fund, a bank account in

21 Washington D.C. with a surplus, and I got the

22 buy-in of many of my members to understand what

Page 27

 1 the Harbor Maintenance Tax meant, what it went

 2 for, and why it was important to spend it. In

 3 July of this year, I continued that fight when a

 4 bipartisan amendment that I was on passed the

 5 House to increase funding for our ports by $57

 6 million improving our gateways to freight entering

 7 our nation.

 8 I'm going to take this fight to landside

 9 congestion because that's I know what we're

10 talking about. I've always heard that the biggest

11 threat to cargo, the reason cargo gets diverted

12 from our ports, is landside congestion. We still

13 see that on our local freeways, highways, and even

14 across the country. Goods from Los Angeles take

15 48 hours to get to Chicago, and then they take

16 another 30 hours to get across that city.

17 This impacts commerce and the cost of

18 goods for our consumers, and we know the local

19 impact of congestion here. Although our

20 communities get great benefits from our ports, we

21 also pay a price on the wear and tear on our roads

22 and our highways and our bridges.

Page 28

 1 President Obama actually called for $2.8

 2 billion of freight infrastructure projects on our

 3 nation's highway and rail. However, as what

 4 happens a lot back there, people don't offer

 5 suggestions on how to pay for these projects. But

 6 I did, and I just introduced a bill called the

 7 National Freight Network Trust Fund Act of 2014.

 8 I think we have copies of that for all of you to

 9 look at. This will help pay for our nation's

10 freight projects.

11 I'm asking Congress to take five percent

12 of the Customs and Border Protection fees that

13 come into our ports and divert those and put them

14 directly into a freight network trust fund to fund

15 projects like dedicated truck lanes, better

16 bridges, on-dock rail, the last mile rail and

17 roads, grade separations, and things that will

18 improve our fright corridors; those are the

19 corridors in this country where our freight

20 travels on a daily basis.

21 By the way, this money currently goes to

22 Washington, D.C. in the general fund and is used

Page 29

 1 to fund who-knows-what programs in this country.

 2 Seems to me everyone, shippers included who are

 3 paying these fees, would much rather see that

 4 money put back into our freight network to improve

 5 goods movement. We don't raise taxes, we put

 6 about $2 billion back into our economy, and we

 7 create more good-paying jobs and keep our ports

 8 competitively strong.

 9 I think it's a good bill. If you have

10 any interest in looking at it and supporting it --

11 I'm trying to get support across this country so

12 that my colleagues in Congress will understand the

13 impact that it could have on moving goods in this

14 country and will support it.

15 Thanks again for this hearing,

16 Commissioner Cordero, and thanks to all of you who

17 come, and thanks to everyone who really is the

18 backbone of the goods movement industry in this

19 country. You are responsible for keeping our

20 economy booming, you are responsible for goods

21 jobs, and you're responsible for our economy

22 really growing and keeping strong for this
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 1 country. It's great to be here.

 2 CHAIRMAN CORDERO: Thank you so much for

 3 your comment, Congresswoman. We have 5 minutes

 4 before the next item on the agenda. I'm trying to

 5 go right on time in terms of approaching each

 6 topic.

 7 Let me just say that in affirming what

 8 you've just heard from our representatives, and

 9 needless to say not only do they have the

10 experience in this industry, but they're putting

11 that experience back to work in Washington. We

12 definitely need that.

13 I was in Charleston last week, and at

14 the Port of Charleston there was an international

15 conference. Bill Margelusa was there, and they

16 were doing a good job, as he always does, whether

17 it's in the West Coast or the East Coast.

18 What was interesting to me is when this

19 whole topic of congestion was being discussed,

20 which includes many facets whether it's truckers,

21 whether it's chassis, railroads, intermodal

22 connectivity, how the different regions of the

Page 31

 1 country have such similar issues.

 2 By the way, they were pretty open about

 3 discussing this, and needless to say, there is

 4 this competitive aspect: East Coast versus West

 5 Coast. But for the Federal Maritime Commission,

 6 again, as I indicated in my opening comments,

 7 we're looking at this as what's best for the

 8 nation. It's a national interest. It's not about

 9 what's best for a port or what's best for a city

10 or even what's best for a state unless that's part

11 of the discussion. But from our perspective, what

12 is best for the nation?

13 Last, before we move on to other item, I

14 will say I met this interesting author in

15 Washington earlier this year, and I bought his

16 book. The author's name is Lincoln Paine. And

17 Mr. Payne wrote a book this year, and the name of

18 the book is The Sea and Civilization. For those

19 of you who are historians like President Drummond

20 is at the Port of Long Beach, it's a fabulous read

21 because the purpose of him writing this book is

22 that successful empires, as was the term used

Page 32

 1 centuries ago, and he studied the history of

 2 successful empires. The first thing they did:

 3 Investment in maritime movement, goods,

 4 international trade. The connection to the sea

 5 was very important.

 6 That is no different now in the 21st

 7 century, and that is why stakeholders like

 8 yourself, whether it's government or the private

 9 sector, it is ever more important to come

10 together, collaborate, and, as Congressman

11 Lowenthal stated, it's time to raise the bar. We

12 cannot wait and further debate these issues for

13 more and more years.

14 Now I'm going to move to the executive

15 directors. Again, we're very fortunate to have

16 not only directors who are relatively new at these

17 ports, not new to the industry, and I will say

18 that I've met with them both, and we're so

19 fortunate to have people who have so much

20 experience in this industry, including the

21 reputation of being visionary and getting the job

22 done. I'd like to particularly thank Gene Saroka

Page 33

 1 for being kind enough to host this forum. I was

 2 very appreciative, and I will tell you you could

 3 tell when you see leadership because it's not

 4 about perception; it's about getting things done.

 5 I was a little bit hesitant on

 6 approaching the Port of L.A. Because me, being

 7 from the West Coast, while we were debating these

 8 ideas, the first things people said: Was there

 9 congestion in the West Coast? Absolutely, from my

10 perspective, that's not the message we're here to

11 do. We're, again, talking about factors and

12 avoiding potential crisis. So, relaying that, I

13 thought, well, why would you want to host a forum

14 on this? The reason is because this Congressman

15 is known for leadership, and as Congressman

16 Lowenthal has stated and Congresswoman Hahn has

17 reiterated and indicated in her work, this is the

18 region where people see the leadership. So, I'd

19 like to really thank you, Gene, for stepping up

20 and hosting this forum.

21 One other comment. Why was it not at

22 Long Beach? The reason: A couple years, we had
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 1 it at Long Beach. We had a similar forum, so to

 2 speak, and it was a bit more of a listening

 3 session. At that point, I had stated that I'm not

 4 biased here when it comes to the two ports.

 5 Anyway, I said next time we come to this area, it

 6 will be at the Port of Los Angeles, and that's, in

 7 fact, what we did. With that, let me begin with

 8 Gene, and he has some comments. Again, thank you

 9 so much for participating, Gene.

10 MR. SAROKA: Thank you, Chairman, and

11 good morning. While the Port of Los Angeles is

12 America's number one gateway for containerized

13 cargo, we also believe our port is a global

14 gateway to industry innovation and solutions. In

15 our experience, the best ideas are born from

16 collaboration, so we are pleased to welcome

17 Chairman Cordero, the FMC, the Congress members

18 for this forum focused on the impacts of and

19 potential solutions for port congestion. To see

20 the broad base of industry stakeholders today is

21 also very heartening to generate these ideas that

22 will take us to the next level.

Page 35

 1 Today's meeting in subsequent forums

 2 will help put the industry stakeholders on a path

 3 to solve traffic congestion issues confronting our

 4 supply chain. I would like to commend Chairman

 5 Cordero for his interest in facilitating this

 6 issue with stakeholders as well as the continued

 7 leadership of Congress members Hahn and Lowenthal.

 8 Thank you all.

 9 Focusing on these issues couldn't be

10 more timely. The nation's in the process of

11 developing a national freight strategic plan.

12 Policies that address the role of ports, maritime

13 terminals, and others within the national freight

14 system need to be informed by people that make up

15 that system. Thank you for convening this forum

16 here at the Port of Los Angeles.

17 From the context of understanding the

18 issues, those that are faced by stakeholders

19 worldwide fall squarely into the category of nice

20 problems to have, growing pains, and other

21 vernacular as the German commerce recently

22 described them. A number of factors are involved

Page 36

 1 here including the following. Larger vessels:

 2 These deliver more cargo than ever in a single

 3 call. Discharging these vessels efficiently is

 4 the first order of business. Terminal efficiency:

 5 We also need to expedite the velocity of assets

 6 and the efficiency of cargo movement in and out of

 7 our terminals. Improving truck turn times: A

 8 goal shared by the trucking community, everyone

 9 across the supply chain, and surrounding

10 communities. Likewise, hours of service issues

11 and forecast of driver shortages are factors in

12 this equation that we all must solve.

13 New shipping line alliances also add to

14 the challenge of complexity for moving cargo

15 today. Ports around the globe are adjusting to

16 new vessel-sharing agreements that have carriers

17 calling at different terminals in a way that's new

18 to all parties involved today.

19 New chassis business models are another

20 factor of our changing landscape. We're playing

21 an active role in working with stakeholders to

22 study these issues, explore solutions such as

Page 37

 1 great chassis pools. There'll be more to come on

 2 this matter during the course of the day.

 3 Information system technology also plays

 4 a key role. We need to leverage current and

 5 merging technologies to create more channels of

 6 real-time communication. For example, we need a

 7 system for our terminal operators to communicate

 8 and share information with each other in real-

 9 time fashion. Other areas of traffic and gate

10 status will also improve efficiency.

11 In the category of solutioning, there

12 are very few one-size-fits-all solutions, but

13 there are strategies for arriving at those end

14 games to move our programs forward collectively.

15 Most of all to take a collaborative approach with

16 our partners -- those here in the room today and

17 those that we will go back and work with outside

18 following this forum. Together with out

19 customers, we're exploring a number of solutions.

20 To name a few: Utilizing free-flow cargo for

21 faster delivery, improving truck dispatching,

22 creating a great chassis fleet, greater
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 1 cooperation between vessel owners and terminal

 2 operators to avoid operational congestion along

 3 with better cargo stowage opportunities moving

 4 upstream and into Asia, further-reaching

 5 locations, and utilization of technology,

 6 potentially appointment systems.

 7 In conclusion, fortunately technology is

 8 improving. Our port community is engaged in

 9 dialogue regarding these issues, and together we

10 will find solutions. International trade is an

11 end-to-end system, and everyone has a role to play

12 keeping the cargo flowing. Congestion challenges

13 affect us all, and we all stand to benefit from

14 working together to find these solutions.

15 Today, through productive dialogue among

16 stakeholders and the FMC, our industry can take

17 steps necessary to tackle these congestion issues.

18 It is important for all stakeholders to focus on

19 the issue, pool our knowledge, experience, and

20 best practices to work together to turn the tide

21 in everyone's favor.

22 I'd like to offer our continued

Page 39

 1 assistance and support for developing solutions

 2 that best serve the nation's interests and

 3 maintaining and growing a national freight system

 4 that supports America's competitiveness both here

 5 and abroad. Thank you.

 6 CHAIRMAN CORDERO: Thank you, Gene, for

 7 your comments. Now I'm going to recognize John

 8 Slangerup, and let me just indicate that none of

 9 this is going to be possible in terms of the

10 collaboration without the buy-in of both ports.

11 We'll represent to you that when I talk to John

12 about this concept and these ideas and the

13 ultimate objective. He was very much in on this

14 with regard to the importance of the two ports

15 working together, the two commissions working

16 together. I know President Martinez, Vilma

17 Martinez, and President Doug Drummond are very

18 much on the same page with what you have to do as

19 a port complex. With that, let me now defer to

20 Jon who, again, you've already heard Gene's

21 comments, so he affirms the introduction I gave

22 him about his knowledge, his vision. I can say

Page 40

 1 the same about Jon. I'm sure you're going to

 2 conclude that after he makes his comments. Jon,

 3 thank you again for being here.

 4 MR. SLANGERUP: Thank you, Chairman

 5 Cordero. This is a really critical gathering. I

 6 appreciate so much everybody that's participating

 7 with our key elected officials here have been so

 8 instrumental in making things happen for the

 9 ports. Gene, thanks for hosting this. Gene and I

10 are already becoming friends, but we've agreed

11 that we're going to be fierce competitors. But

12 with the history of these two ports we collaborate

13 on every level. It's amazing how much our teams

14 know each other and how well they work together.

15 This bodes well for our ability to tackle problems

16 as a region and deal with the issues facing us.

17 This congestion is no small issue. It's

18 a complex issue. In my view, it's brought on by a

19 number of macroeconomic factors, not the least of

20 which is the fact that we're still recovering from

21 a global economic meltdown. That is what's

22 driving these alliances; that's what's driving

Page 41

 1 these big ships; that's what's making this a

 2 paradigm shift for our industry. These are

 3 driving new thinking about how we deal with

 4 massive ships coming into port disgorging a

 5 massive number of containers and having to deal

 6 with that in record velocity times.

 7 We're having to deal with a trucking

 8 industry that is struggling to make money doing

 9 this. We have some issues here facing our friends

10 within the trucking industry where people don't

11 want to do that job in the future. There's going

12 to be a shortage of drivers if we don't figure out

13 a way to have everybody succeed. Everybody in the

14 entire value chain from the ship operators, from

15 the BCOs, and certainly our terminal operators,

16 and, of course, our truckers that connect all

17 these dots, all of them have been suffering

18 economically through this period of time.

19 We have to figure out a new system for

20 making this whole process economically viable and

21 efficient because we're going to lose business if

22 we don't, and I'm not talking just about L.A. Or
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 1 Long Beach, but the West Coast is going to suffer.

 2 There's lots of people popping up to compete with

 3 us for the volume that's coming across the

 4 Pacific, and we can't let that happen.

 5 I'm hoping, Chairman, that this maybe

 6 results in more than just words. I hope this

 7 meeting results in some concrete ideas, feedback

 8 from all you here. I don't care how harsh it is.

 9 We need to know truth, we need to deal with truth,

10 and we need to come up with actions. I know that

11 from a port perspective both Gene and I agree on

12 this, we are working together through our teams on

13 a number of key initiatives to make things happen.

14 We will take whatever comes up today, filter it

15 into our system, and make as many changes as we

16 can.

17 Now, as you know, we don't operate our

18 ports. We are partnered with our operators who do

19 that. It's no excuse though for us. We are in a

20 position to influence. We are in a position to

21 facilitate. We can take Chairman Cordero's

22 initiative here and continue to drive that ball

Page 43

 1 down the field.

 2 I think that we are in an excellent

 3 position certainly with the chassis movements.

 4 The things that are happening on the chassis

 5 front, from a management standpoint, are very

 6 close to being resolved, and I think we just need

 7 to take that over the goal line. Chassis are a

 8 big part of the congestion, and I think we can

 9 solve that problem. All the answers are there.

10 The models are defined. They can work. We're

11 getting very close to getting a solution there.

12 I think that from our perspective at the

13 Port of Long Beach, we are focused very much on

14 capital improvements that will also ease some of

15 this -- now, we're causing a lot of problems

16 because we're building a bridge and we're messing

17 around with the highways and causing a lot of

18 problems and forcing our trucking friends and our

19 operators are corroborating as much as they

20 possibly can because they see the big picture and

21 they see the end game.

22 But nevertheless, we are causing

Page 44

 1 problems as we go through this massive

 2 reinvestment in the Port of Long Beach, but it is

 3 going to be good because we are investing heavily

 4 in rail. We are focused on all of the pinch

 5 points or the points of inefficiency in our rail

 6 system to make that a more viable means to relieve

 7 some of this on-dock congestion.

 8 We are focused on efficiency. Rich

 9 Dines, one of our commissioners, is chairing a

10 very, very important committee which has the

11 top-down support on efficiency. He's putting

12 together the kinds of teams we need to look across

13 the entire set of operations. With his experience

14 he's able to speak truth and bring a perception

15 from a really beats-on-the-street kind of

16 perspective about how things really have to

17 operate, so we're working at that.

18 We're looking at tremendous focus on how

19 terminal operations are integrated from an overall

20 supply chain perspective and overall efficiency of

21 logistics movement. These things are the things

22 we can do.

Page 45

 1 What I hope to hear today is as much

 2 feedback as we can about PierPASS: How it works,

 3 what PierPASS might look like in the future. When

 4 Bruce and I talked about PierPASS, we talked

 5 specifically about what is next because it has

 6 been a very, very good first step. But there has

 7 to be a PierPASS 2.0 in my view. There has to be

 8 the next generation of this technology, and it has

 9 to include information technology which has not

10 been applied to the process. In my view, that

11 information technology, which really isn't applied

12 very effectively, at least from my perspective and

13 our collective operations, can really go a long

14 ways towards facilitating a very, very efficient

15 flow of trucks, trains, and movement within and

16 out the port.

17 I'm all for this. I am so excited to be

18 here. I'm very, very pleased that this forum has

19 been put together. So appreciative to the FMC to

20 be willing to do this, and thank you very much.

21 CHAIRMAN CORDERO: Thank you, Jon, for

22 your comments. As Jon mentioned, these are issues
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Page 46

 1 that this port complex and Gene referenced. The

 2 history of this complex is about collaboration

 3 absolutely between two ports, two commissions,

 4 private sector, and public sector. I think here's

 5 another challenge, as Alan mentioned, that we need

 6 to raise the bar.

 7 I'm very optimistic that with the work

 8 that Congresswoman Hahn is doing and Congressman

 9 Lowenthal in Washington, we have exactly what the

10 West Coast is in a strong position to have:

11 Representation here, representation on federal

12 agencies, and representation in Congress. Again,

13 the end game is what is best for the nation.

14 Now, I read three periodicals -- more,

15 but on my desk every morning or periodically is

16 the JOC, of course, Journal of Commerce, American

17 Shipper, and Lloyd's List. You pick up any one of

18 those three at any time, there is a reference to

19 congestion. I just want to emphasize this is a

20 big issue.

21 Just this morning, American Shipper --

22 and you may remember Eric Johnson who was with the

Page 47

 1 Press Telegram and was an awarded journalist in

 2 terms of his work on pollution. This morning I

 3 saw a headline where Eric is spearheading the need

 4 of technology, particularly that of the payment

 5 systems. All this relates to congestion, reducing

 6 cost ultimately for the shipper and the consumer.

 7 With that, I want to also acknowledge

 8 two commissioners who are not new to this industry

 9 who have put a lot of work in terms of what they

10 think we should move on in terms of making sure

11 that not only just a city but all stakeholders are

12 represented and benefited by this industry. Those

13 two commissioners, again, I'd like to recognize

14 Rich Dines and also Patricia Castellanos. I think

15 they're the only two here. Did I miss anybody?

16 But I have spoken to the others previously, and

17 they apologize for their nonappearance. Well, I

18 recognized President Drummond already and Bill

19 Martinez, but clearly we have two leaders of the

20 commission who, again, is about collaboration and

21 working together, which, as the two directors

22 know, is nothing new.

Page 48

 1 Last, before we move to the panel, in my

 2 opening comments I'm going to be also clear on

 3 what the FMC hopes to do with all this information

 4 that we're going to accumulate in the four

 5 regions. You know the FMC work with regard to the

 6 diversion cargo, the Harbor Maintenance Tax issue

 7 that we released in 2012? We're going to parallel

 8 that aspect with congestion so that we could be a

 9 resource for Congress and have a case for needs

10 for the industry and the nation in terms of this

11 very important question about congestion.

12 As Jon mentioned, he mentioned

13 technology is ever more important and the

14 collaboration and also the issue about the trucks

15 and truckers. Years ago, we could talk about

16 trucking and being problematic and these issues

17 being restricted to short haul. Not anymore.

18 Long haul has issues. Driver shortage is ever a

19 crisis right now. Why? The income. The wages.

20 The sustainability of this particular industry.

21 It's important to look at these factors at all

22 levels as Jon mentioned.

Page 49

 1 With that, we're going to move now to

 2 the panel discussion, and I'm honored to have

 3 people from this area who are very well-respected

 4 with regard to the subject matter that we'll be

 5 addressing. We're going to move along now, and

 6 our first commentator will be none other than Bob

 7 Curry. As you know, he's going to be recognized

 8 next week by the Connie Awards; someone who,

 9 again, is the godfather of the trucking industry,

10 and by that I mean much experience, very wise, and

11 has a history of success. Bob, thank you again

12 for being here.

13 MR. CURRY: Thank you very much.

14 Besides representing Cal Cartage, I'd like to

15 think that I represent some of the small truckers

16 who don't get an opportunity to speak.

17 The congestion is really bad, and the

18 turn times that we're getting are really bad also.

19 If you think about our industry, we're regulated

20 on the hours that these drivers can drive during

21 the day, but they're also regulated on the number

22 of hours that they can drive in an 8-day period.
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 1 Many times we've got to shut down the drivers,

 2 sometimes as many as 50 or 60, because they exceed

 3 the hours when there are many containers still

 4 down at the harbor to pick up. Why is that

 5 happening? Because we can't make turn times.

 6 Two, three, four years ago, we probably

 7 did double the number of turns that we do today.

 8 Some of that, I'm sure, is caused by the number of

 9 containers that are coming in from the bigger

10 ships, the amount of space that's there goes up,

11 the efficiency of the harbor is not very good, but

12 also some of it's caused by the lack of chassis.

13 I have to say that the steamship lines arbitrarily

14 decided last year to get out of the chassis

15 business, so now we have three chassis lessors.

16 We can go into a terminal today, and

17 there can be no chassis for a particular steamship

18 line's cargo, yet there's 200 chassis sitting

19 there that belong to another steamship line and we

20 can't use them. This goes on every single day.

21 My operating people tell me that what we

22 normally have on a given day is dispatch the

Page 51

 1 driver to go to a particular berth to particularly

 2 get a chassis that belongs to that line, and then

 3 bring it to another berth because there's no

 4 chassis at that other berth. If you think about

 5 the number of hours that we're spending doing that

 6 when we should be going into a berth, picking up a

 7 load of container, and going out to a customer,

 8 you can see how you eat up the driver's hours

 9 pretty quick.

10 To give you another thought process for

11 you, there is no more land in Southern California

12 around here. All the big boxes are being build in

13 Riverside, 20 miles beyond Riverside. Drivers, if

14 we're lucky, can make one turn, that's all we can

15 do out there.

16 I don't know whether in the harbor is an

17 operation that would make any sense because you

18 got to have qualified labor. If you don't have

19 qualified labor, it doesn't make any sense to

20 bring in people who don't know what's going on.

21 What we really need is the number of hours that

22 you're going to work, make them efficient hours

Page 52

 1 and get the trucks in and out.

 2 We talk about turn times. We don't

 3 measure turn times from the time that they're

 4 inside the terminal. It's from the time he gets

 5 in line until the time he drives out that gate. I

 6 know it'll be a shock to some of you, but some of

 7 the steamship line turn times now are 6 and 7

 8 hours, and that means that that's the only thing

 9 that we're going to use that driver for that day.

10 Nothing else. The drivers don't like it. Even if

11 he's paid standby time for sitting down at the

12 harbor, he's not making any money.

13 This used to be -- and I'm talking about

14 40 or 50 years ago -- truck driving was a

15 profession. It's not a profession anymore,

16 certainly not in this harbor. It might be a

17 profession for long-haul drivers, but you can't

18 get a driver to work anymore in the harbor, and he

19 doesn't want to work primarily because he can't

20 get the turn times.

21 You people who are in charge of the

22 harbor maybe have to come up with an incentive

Page 53

 1 program that tells the terminals to move the

 2 drivers in and out a little faster, and if they

 3 don't maybe there's a penalty program. Penalize

 4 the trucking industry. We're supposed to be there

 5 at a certain time and we don't make it, we should

 6 be penalized too. But we need something that

 7 incentivizes the terminals to move the truckers in

 8 and to move them out. If we don't do that, I

 9 frankly don't know how you're ever going to cure

10 this problem. Thank you.

11 CHAIRMAN CORDERO: Thank you so much,

12 Bob, for your comments. Next we're going to move

13 over to Alex Cherin. Many of you know Alex as

14 being one who not only used to work for a port

15 authority, Port of Long Beach, but now, in the

16 past few years, has put much effort with regard to

17 the stakeholder trucking community. With that, we

18 would be honored to hear your perspective on this

19 whole issue, Alex. Thank you so much for being

20 here.

21 MR. CHERIN: Thank you, Chairman

22 Cordero. I appreciate your time and that of the
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Page 54

 1 other panelists. It is very refreshing to see the

 2 level and the extent of the interest on a national

 3 level in this issue, and it is very, very much

 4 appreciated. I think you can see that by the

 5 turnout here today.

 6 Again, my name is Alex Cherin. I'm with

 7 Englander Knabe & Allen. I also serve as

 8 Executive Director of the Harbor Trucking

 9 Association. I know we're time constrained, so

10 I'll be very brief. It is of three things.

11 Number one: Congestion remains our

12 biggest issue. As Mr. Curry just said -- and I

13 think that his words speak volumes in the

14 industry, he knows this industry better than

15 anyone else -- congestion remains the single

16 biggest issue that we, as a drayage community,

17 face. I'm not saying that in a vacuum. I'm

18 saying that with this context.

19 The HTA represents sixty percent of all

20 the drayage activity and movement in the ports of

21 L.A. And Long Beach. You have sixty percent of

22 all your short-haul truck drivers telling you that

Page 55

 1 wait times and congestion at the terminal gates

 2 are the single biggest issue that they face, and

 3 that has an operational and a financial impact.

 4 The HTA in January of 2013 wanted to

 5 quantify that. Up until that date, it had been

 6 anecdotal as to what turn times were. We, with

 7 our vendor partner, ETU Manage Tech, launched the

 8 TMD study, the Truck Mobility Data study, which

 9 for the last year and a half has tracked average

10 wait time and visit times across all terminals at

11 the Port of L.A. And Long Beach all times of day.

12 I'm not going to bore you with the

13 details of that study. I've been in all of your

14 offices. I've shard that study with all of you

15 individually, but I want to leave you with this

16 one metric. Twenty-two percent of all of the

17 visits, nearly a quarter of all the visits, are

18 taking over 2 hours. That is consistent with

19 another study that was recently alluded to in a

20 Journal of Commerce article last week by Bill

21 Mongelluzzo, and it is corroborated by what Mr.

22 Curry just said.

Page 56

 1 Imagine our ports and our businesses

 2 running on a model where nearly a quarter of all

 3 the visits are taking over 2 hours. It is simply

 4 not sustainable, but I too want to focus on

 5 solutions, and the HTA, as you know, has advocated

 6 for a number of different solutions. We've

 7 participated in the FreightUS Project, which is a

 8 Federal Department of Transportation funded study

 9 looking at how to better integrate technology into

10 moving containers in and out of our terminal

11 facilities. We are big advocates of that.

12 We're also advocates of looking at a

13 24/7 system. How can we move to a 24/7 system to

14 provide a relief valve for some of the congestion

15 that we're seeing? PierPASS has to be a part of

16 this discussion, and I think Mr. Slangerup summed

17 it up perfectly: What is PierPASS version 2.0,

18 and what does it look like? We've grown as a

19 gateway. We've become more complex as a gateway

20 in a good way. How does our PierPASS look in the

21 future?

22 I will leave you with this, and again

Page 57

 1 Mr. Curry alluded to it too. We have been

 2 advocating for years, and I remember being over at

 3 the Port of Long Beach in management when we

 4 talked about this. What is the metric? What is

 5 the metric that we use, that we publish, that we

 6 go out and tell our customer base that we will get

 7 trucks in and out of our terminals in? Is it an

 8 hour? Is it an hour and a half?

 9 The Port of Vancouver recently

10 established the very program that Mr. Curry was

11 just talking about. They reduced a 90-minute turn

12 time into their tariff structure, and they provide

13 a penalty for terminal operators that do not meet

14 that turn time. South Carolina Port Authority has

15 it in their tariff. You ask them, what's your

16 turn time? It's an hour. You ask Vancouver,

17 what's your turn time? It's 90 minutes. If you

18 don't meet it, there's a penalty.

19 I absolutely agree with Mr. Curry that

20 if they do meet it let's look at incentive

21 programs to incentivize our terminal operators to

22 take advantage of that, but we need to start with
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 1 the metric. The fact that we don't have a metric

 2 on this panel is very telling.

 3 I took some heat for this comment at a

 4 recent conference, but I will say it again and I

 5 will stand by it. If you were to ask anybody in

 6 this room how long it takes Domino's Pizza to

 7 deliver a pizza, they'll tell you 30 minutes.

 8 That's a metric. If a metric is good enough for

 9 the pizza delivery business, why isn't it good

10 enough for the ports of L.A. and Long Beach?

11 Thank you. (Applause)

12 CHAIRMAN CORDERO: Thank you very much,

13 Alex. I will tell you, as I mentioned in my

14 opening comments, as I visit ports around the

15 country, this whole issue, the truck discussion

16 and issue related to that, is not unique to this

17 region whatsoever, and that's why I want to

18 emphasize it's a national issue, a national

19 discussion.

20 In addition, as our next speaker will

21 address, chassis. One of the things that the FMC

22 does is we monitor these agreements that are filed

Page 59

 1 with the agency regarding chassis, regarding

 2 PierPASS, and a part of this is our monitoring

 3 that you're seeing here, that we're exhibiting.

 4 These are very, very important issues. With that,

 5 as reference to chassis, I'm excited and

 6 interested to hear Mr. Vaughan's opinion and

 7 commentary on this. Bernie, thank you for being

 8 here, and the floor is yours.

 9 MR. VAUGHAN: Thank you, Your Honor,

10 Chairman. I appreciate the opportunity. I'm

11 representing not only Flexi-Van, but I speak on

12 behalf of the chassis lessors.

13 The Chairman's absolutely correct.

14 Flexi-Van does business in every market and

15 participates in every chassis pool in the United

16 States. The problems that we encounter here are

17 elsewhere and everywhere in the United States.

18 They are probably the worst here, I should tell

19 you. Flexi- Van, in the LABP pool, Las Angeles

20 Basin Pool, it's about 38,000 chassis by the end

21 of this month. We have about 18,000. The other

22 contributors are TRAC, the largest chassis leasing

Page 60

 1 company in the United States, and China Shipping.

 2 But the challenges here are, by a large measure,

 3 the greatest we face in America.

 4 Part of the problem, and the Chairman

 5 and I have talked about this many times, the

 6 industry in general went through a state of

 7 transition where the ocean carriers exited first

 8 the ownership of chassis and then secondly the

 9 provisioning of chassis. That process was much

10 more accelerated than anyone though. Roughly 80

11 percent of the chassis are now owned by the three

12 top leasing companies, and that has presented its

13 own challenges.

14 Flexi's a little bit unusual in that

15 we're not only an owner and an IEP, an Intermodal

16 Equipment Provider, but we also run service

17 centers and ten other major ports in the United

18 States; we have our largest facility in Carson.

19 We look at it from both sides of the fence, and

20 maintenance and repair is really the driver of

21 whether a chassis pool will be successful or not.

22 The M&R costs here are staggering. Our

Page 61

 1 M&R budget for this year will be north of $40

 2 million, so it's not for want of spending money

 3 that we're running into this huge disconnect here.

 4 In addition, our chairman owns Dole, and we're

 5 part of Dole now, so we see every side of the

 6 equation, and we have been supplying the Dole

 7 chassis fleet since 1984.

 8 In terms of the challenges, and I'll

 9 have maybe a little good news at the end of this,

10 the first challenge is an absolute lack of

11 control, meaning we are the intermodal equipment

12 providers. As the chief legal officer of the

13 company, I'm very concerned about the liability

14 concerns. Most of the work is repaired by others,

15 and we try to have good relationships with them,

16 but there's a huge disconnect between paying the

17 bill and having any kind of effective control over

18 and inspecting the equipment.

19 To address the particular challenges,

20 this is number one on my radar in terms of

21 spending my time. The LABP, I'm the head of

22 administration for our company also. We've hired
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 1 additional staff. We've dealt with the IT piece

 2 of it. We have the most staff per capita for

 3 chassis of any of the pools we operate in the

 4 United States. We put in 3,000 chassis with our

 5 partner, TRAC, over the last several months to

 6 help deal with the issues. I've hired a number of

 7 inspectors to go on terminal. We run into this

 8 issue where you want to do a post-repair

 9 inspection, and you're not even allowed to touch

10 the chassis. It's absolutely craziness.

11 The other problem we have is a lack of

12 gate control, meaning there are credit and

13 liability considerations. I don't want someone

14 else's insurance using our chassis going out the

15 gate to make $20, $18, $13 a day. We have a very

16 serious lack of control to weed out the bad

17 apples. It factors into our cost structure, and

18 the good truckers wind up overtime having to pay

19 for that. That's a huge problem, particularly in

20 this port.

21 Another issue we have: The larger

22 ships. The second largest charge after

Page 63

 1 maintenance repair, which is the driver of -- and

 2 this pool is not profitable now, and that's why

 3 I'm here for the next 2 weeks. I've sent the

 4 director of audit and our top pool people, and

 5 they are basically spending 2 weeks here. They're

 6 from out-of-state, and I told them they cannot go

 7 home until they've solved this problem. We are

 8 very much committed to solving this problem.

 9 The larger ships create challenges with

10 respect to repositioning because an alternate

11 terminal -- so, it's this shell gam. Moving a

12 bare chassis is between 4 and 5 days of revenue,

13 so you don't want to be moving 4,000 chassis a

14 week. It'll just eat your profits in a blink of

15 an eye.

16 Another challenge we have, which is

17 industry-wide, is getting good, qualified

18 mechanics. That is not something that's intrinsic

19 to the Port of L.A. Long Beach. I had a long

20 meeting with Dennis Daggett in New York last week

21 to talk about that. We have mechanics at our

22 service center in the Port of New York. We work

Page 64

 1 closely with them to try to improve the quality of

 2 the mechanics. It's a safety issue and an

 3 economic issue.

 4 The last major issue that we have are

 5 the terminals are now considering storage charges

 6 for the pool. Chairman, you're aware there is the

 7 amendment pending. That's fine. That's just a

 8 different business model. We will have to deal

 9 with it. It will become another major cost

10 structure which, over time, will obviously factor

11 into the rate mechanism.

12 In terms of the good news -- and I

13 talked to a number of people out here. We're

14 trying to be part of the solution, and we're open

15 to any and all ideas. Flexi-Van and the LABP is

16 the larger pool. We got together with our

17 competitor, DCLI, a direct chassis, that's

18 ex-fleet of Maersk Shipping Lines. TRAC is also

19 involved because they're the second largest player

20 in the LABP pool. We want to run two pools that's

21 not a gray pool as you mentioned. The pools will

22 run separately, but it will permit the trucker to

Page 65

 1 -- all the start-stop locations will be common.

 2 There are locations now where our customers cannot

 3 drop off because it's a DCLI location. That will

 4 go away.

 5 Because we're competitors and because

 6 I'm an antitrust lawyer by background, we thought

 7 it was prudent, although not absolutely necessary,

 8 we went to the Department of Justice to get a

 9 business review letter. I was told on Friday that

10 we will be getting a favorable letter sometime

11 this week to permit -- and we're ready to go.

12 We've been ready to go for 6 months, and we've

13 hired a third-party vendor to be the scorekeeper

14 and insulate both companies from any

15 commercially-sensitive information. Hopefully

16 we'll get that letter this week. I fully expect

17 the letter, being a business review letter,

18 improving the structure, and we'll go forward and

19 permit the trucker to have some incremental

20 increase in efficiency, that they're not doing an

21 unnecessary backhaul to get a Flexi, LABP chassis

22 out of the DCLI location or -- and that's some
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 1 measure of improvement.

 2 I'll be happy to answer any questions

 3 later, but thank you for your time.

 4 MS. HAHN: Can I ask you one question

 5 now?

 6 MR. VAUGHAN: Sure.

 7 MS. HAHN: I was curious about your

 8 comment about hiring of mechanics. Is it that

 9 they're not qualified when you hire them or we

10 don't have a good pool out there for hiring

11 qualified mechanics?

12 MR. VAUGHAN: It happens on different

13 levels. The short answer is it's hard for us. I

14 have hundreds of chassis mechanics in Flexi-Van's

15 employee. It's difficult for us to get it. We

16 have union and non-union shops. It's hard for us

17 being off-terminal to get mechanics. I told

18 Dennis Daggett I was going to start charging them

19 tuition because what happens is they come to our

20 facility, and then when a job opens on the pier --

21 and God bless these guys, everyone wants to better

22 themselves -- they move to the pier jobs.

Page 67

 1 There are training programs. We have our

 2 own training programs. We find that we do most of

 3 our training in-house, and most of the people we

 4 get are green. They have some mechanical

 5 experience, but they're not trained. This is, I

 6 think, a national shortage. In terms of reacting

 7 to these chassis shortages, we have about 5.5

 8 percent of our LABP fleet out of service now. We

 9 have asked, implored our vendors to try to staff

10 up chassis mechanics.

11 There's a practical issue also that

12 oftentimes the chassis mechanic -- I see this much

13 more on the East Coast -- will get pulled off

14 chassis work to do the more profitable container

15 reefer work. There's some other factors, but

16 there is a shortage. They're very good jobs;

17 they're very good-paying jobs.

18 MS. HAHN: Thank you. Frankly, that's a

19 whole other issue, Alan, that I've always feel

20 some of these really good jobs, there's a real

21 lack of -- in our community colleges, we've taken

22 vocational classes out of our high schools, and

Page 68

 1 where else -- but particularly in the hardware are

 2 -- shouldn't we begin figuring out some funding

 3 stream to really ramp up the classes for the next

 4 workforce that both ports are really going to

 5 benefit from? I think that's a real lack in our

 6 educational system in the harbor areas. We're not

 7 looking at these jobs as being really good jobs,

 8 career jobs, and these kinds of skills aren't

 9 being offered anymore in our community colleges,

10 in our high schools, our Harbor OCC, Wilmington

11 Skill Center; a lot of those have gone by the

12 wayside. It's unfortunate.

13 MR. VAUGHAN: Hard, green mechanics we

14 generally look to have some welding experience,

15 and then we can build on that ourselves.

16 MR. LOWENTHAL: I'm going to follow up

17 on that question. Another point that you

18 mentioned, and I'm not sure I heard it correctly,

19 is that when you do get mechanics, they tend to

20 want to move towards the pier jobs also, to leave.

21 Is that because they're differential in pay? Tell

22 me why you now have mechanics working, and all of

Page 69

 1 a sudden they see greener pastures around?

 2 MR. VAUGHAN: I'm really speaking on

 3 behalf of Flexi-Van though. Let me use Kenilworth

 4 as an example, the Port of New York, where my

 5 corporate headquarters is and we have a 43-acre

 6 repair facility. There is no structured overtime

 7 in our regular shop. We can run our business in

 8 the ordinary course of business. We're not moving

 9 cargo, so we don't need three shifts.

10 On the terminal, of course, you need --

11 some have three ships, some have two. I'm sure

12 everyone's aware of this whole jurisdictional

13 fight about hiring mechanics in the port of New

14 York, New Jersey, and they're trying to fill

15 hundreds of jobs. There's a jurisdictional fight

16 between the Waterfront Commission and the ILA on

17 that. So, you have that aspect of it.

18 We have four unions and we have also

19 non-union shops. In other places, once the person

20 is trained, if they can get into a union, God

21 bless them with enhanced benefits and overtime, so

22 that's another way we lose them. A place like
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 1 that would be in Charleston; we have an operation

 2 in Charleston.

 3 CHAIRMAN CORDERO: We're going to move a

 4 long. We're not going to have a break here, and

 5 again, in the interest of time, these

 6 representatives have to take the first flight back

 7 to D.C.; I want to make sure they listen to all

 8 the panelists here.

 9 Moving right along, Bob Wysocki of the

10 Sears Holding Company, and again appreciation of

11 your perspective, a very important one, in this

12 chain of goods movement.

13 MR. WYSOCKI: We're (inaudible) that you

14 guys are providing, and hopefully we'll get to the

15 bottom of this. (Laughter) I meant that in

16 general. I know I was going to call you Ms.

17 Janice because I heard you called yourself that,

18 but you seem like you get things done. I

19 appreciate that.

20 You mentioned 48 hours to Chicago or

21 something like that. It's taking right now, at

22 this present time, 1 to 2 weeks to get on a train,

Page 71

 1 and then once you're on the train it's 2 weeks

 2 from there. If this is our Super Bowl month for

 3 Sears Holdings, and this is our fourth quarter

 4 right now, we have merchandise not getting to our

 5 stores. Mr. Curry states that it costs more

 6 money. Well, Mr. Curry sometimes will send a bill

 7 to me for the more money that he's spending. I

 8 can't keep doing that. That's not going to

 9 happen, so together we all have to figure out how

10 to do this better. However you want to do it and

11 get our buy-in, we are ready to help out. Just

12 let me know how we can help you. Thank you.

13 CHAIRMAN CORDERO: Thank you, Bob.

14 Moving on to Lisa Ferguson, and Lisa's with the

15 OTI Customs Broker, one of my favorite

16 constituencies. Lisa, thank you again for being

17 here. Again, your perspective is one that, again,

18 I became very much aware after being on the FMC,

19 more so than during my days here at Long Beach, so

20 thank you, Lisa.

21 MS. FERGUSON: Thank you. Good morning.

22 It's an interesting topic. As I grew up in this

Page 72

 1 port -- I went to Long Beach State, I went to Long

 2 Beach Poly. I graduated in the tower when it was

 3 first opened, so I have an international business

 4 background from high school.

 5 When we start talking about

 6 communication, we start talking about the interest

 7 of technology and the interest of teaching and

 8 learning. Sometimes we tend to forget that piece.

 9 It would be really nice to hear where we're going

10 with that. It would be great to be able to send

11 our freight charges in a point and a click without

12 having to cut a live check, send a messenger, wait

13 that 24-hour turnaround for that freight to be

14 released. It's necessary in some environments,

15 but for the most part that's a non- necessity

16 today. Everything should be wireless, paperless

17 as much as possible.

18 We start talking about where do we go

19 and what we want to do, technology is the only

20 way. That's the only way we see in our community

21 of freight forwarders that would be best served.

22 How do we know where our freight is? How many

Page 73

 1 times do we get that phone call that I can't find

 2 our container. It would be nice to know where

 3 that location is.

 4 I worked at a steamship line as well.

 5 We used to have that. Coming off the wharfage,

 6 you would know exactly where it was standing.

 7 Whether it was on chassis or not, at least you

 8 knew where the freight was. Not perfect, but

 9 close to it.

10 When we started looking at this and I

11 started talking with my teams around the U.S.,

12 some of the things that came up is we'd really

13 like to go back to appointment time. We're all

14 for that penalty piece. You give me the time that

15 I need to be in, you give me that half an hour,

16 45-minute window, my trucker can't get in there,

17 let's talk penalty, fine, but at least they were

18 given a time and a structure. We used to do that

19 a very long time ago, but we've gotten away from

20 that.

21 Enter why: The larger vessels. It's

22 just getting your hands around what we have and
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 1 the growth that we have. We were asked to bring

 2 some pieces to the table, and I think that if we

 3 could get payments to the port faster we could

 4 alleviate some of that. I think that the exam

 5 piece that we had turned around very quickly.

 6 Again, having to send another check down to the

 7 port to release, if we had that in a technology

 8 piece. If we could get an integration or some

 9 type of feel between the ports altogether, so

10 whether that being a Descartes system or something

11 that will push out to our forwarders who want to

12 live in that environment. We're pulling that into

13 our technology today for tracking for our clients.

14 They currently get that information from our piece

15 of technology pushed out. They get the

16 information in from the rail telling them where

17 everything is. As a community, if we could really

18 have all of that in once place, it's somewhere to

19 go. That was what I brought today. Thank you.

20 CHAIRMAN CORDERO: Thank you, Lisa.

21 Again, as you referenced the importance of not

22 only technology but the time and cost factor, when

Page 75

 1 I was in Charleston last week, during the question

 2 and answer period somebody from your community, a

 3 freight forwarding company, asked me the question

 4 about turn time and educated me how delay here

 5 impacts them there. That's why this is not only a

 6 local issue, and it's not an issue of just impacts

 7 of local distribution of goods. It impacts the

 8 chain. Thank you so much for your comments.

 9 Now I'm moving to someone that's new in

10 this industry, in this region so to speak, Michele

11 Grubbs. Michele, thank you for your advocacy and

12 the time that you spent in this industry

13 representing the interests of the terminal

14 operators and carriers. Again, interested to hear

15 your comments on this. Thank you so much.

16 MS. GRUBBS: Thank you, Commissioner

17 Cordero. We really appreciate you putting

18 together this forum on the important topic.

19 Congressman Lowenthal and Congresswoman Hahn, it's

20 great to see you. Thank you very much for your

21 leadership. Gene and Jon, we really appreciate

22 your willingness to work together with the

Page 76

 1 industry to solve these solutions.

 2 My name is Michele Grubbs. I am the

 3 Vice President of the Pacific Merchant Shipping

 4 Association, and we're very thrilled about this

 5 forum being held today. What we all want is a

 6 truly honest, hard look in the mirror by all

 7 segments of the supply chain. Such an evaluation

 8 process is not an easy one, but it is necessary as

 9 we, the Southern California trade community, move

10 forward. Solutions need to be found for these

11 problems with congestion in order for us to remain

12 the U.S. largest gateway at the Port of Los

13 Angeles. I think we've all heard right now from

14 many of the speakers about what is giving rise to

15 the congestion at the ports: The large vessels

16 that arrive bringing massive amounts of cargo in a

17 very short period of time, the changing in the

18 historic model of chassis, the random nature of

19 pickup and delivery of cargo, often with little

20 notice but with the expectation of immediate

21 service, cargo stowage on vessels, peaks and

22 valleys of terminal activity at various hours of

Page 77

 1 the day and night, and implementation of new and

 2 larger vessel-sharing arrangements and new carry

 3 alliances.

 4 It's worth noting that taken alone each

 5 of these factors have evolved in response to

 6 demands for increased efficiency, flexibility in

 7 service, and to cut cost for customers. But each

 8 of these and more have also been cited as leading

 9 to congestion, increased cost, frustration at the

10 terminals, once again proving that the supply

11 chain interactions are very complex and don't lend

12 themselves to simple answers.

13 As San Pedro Bay ports have grown over

14 the years from 5 million TEUs to over 14 million

15 TEUs annually, the traditional manner we have

16 managed marine terminals will not suffice for the

17 future. Cargo volumes are projected to grow

18 toward the 20 million container mark in a few

19 years. The marine terminals have invested

20 hundreds of millions of dollars in new gate

21 systems and technology to improve the delivery of

22 containers. These systems have improved our
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 1 ability to handle the increased cargo flow, but

 2 now we are limited by our business model.

 3 Here in San Pedro Bay Ports, we

 4 regularly service 10,000, 12,000, and now 14,000

 5 TEU vessels. With such a dramatic volume increase

 6 per vessel, the traditional method of handling the

 7 containers must change. The future of cargo

 8 delivery needs to evolve into a process that is

 9 more productive for all parties, more cost

10 effective, and meets the needs of the entire

11 supply chain. One that looks not just to

12 transportation companies for a solution, but

13 requires cargo interests to take more ownership of

14 the landside.

15 Solutions are not found in simple

16 mandates but in shared responsibility. You've

17 heard a number of possible solution. I'd just

18 like to offer a couple more, and a couple are

19 similar to what we've heard.

20 The first one though is the utilization

21 of the free-flow method to allow faster delivery

22 of cargo off the marine terminals freeing up

Page 79

 1 much-needed space and providing truckers with

 2 quicker turns. For the past 30 years, containers

 3 have been delivered by having a trucker arrive at

 4 the terminal requesting a specific container. The

 5 majority of the time the terminal is unaware that

 6 a trucker is coming for that specific container

 7 until they arrive at the gate. This requires the

 8 trucker to wait for the terminal to locate the

 9 container, to get it out of a pile, moving on

10 average three containers to reach it. This method

11 is inefficient, costly, and time consuming for all

12 parties in the supply chain.

13 The Marine Terminal Operators Group in

14 Southern California, Wickintoa, is proposing a new

15 method called free flow. When a vessel discharges

16 80 or more containers for a specific shipper or a

17 specific location, the containers will be

18 designated and stacked within a special area and

19 terminal. These containers will be delivered in a

20 peel-off fashion to a participating trucker in the

21 queue.

22 An important departure from past

Page 80

 1 activities, our trucks will not pick up a

 2 designated container and more importantly, the

 3 terminals would not need to shift other containers

 4 in order to access the container requested by the

 5 trucker. Instead, truckers would simply pick up

 6 the next one on top of the sort pile designated

 7 for a particular shipper and destination.

 8 From a terminal perspective, one RTG,

 9 Rubber Tired Gantry crane, usually delivers an

10 average of 8 to 10 containers per hour. Under the

11 free-flow method, it is expected to deliver as

12 many as 20 containers per hour. From a trucker

13 perspective, the free-flow method will provide a

14 trucker with quicker turn times and an ability to

15 move more containers.

16 Another solution, and as we talked

17 earlier on this panel, is the creation of a gray

18 chassis pool to ensure the availability of an

19 adequate supply of chassis, easing the burden of

20 terminal operators with regard to providing on21 dock space for multiple chassis pools and

22 mitigating the cascading effect on truckers with

Page 81

 1 regard to down time. The gray chassis pools

 2 should have transparent operating rules.

 3 The Port of Long Beach and Los Angeles

 4 has formed a stakeholder group to review and

 5 recommend an operating model the industry can use

 6 to solve the current chassis problems. We're

 7 waiting for the final report to be issued with the

 8 group's recommendation.

 9 Lastly, we recommend utilizing

10 appointment systems with meaningful windows to

11 spread the flow of cargo and eliminate the wide

12 fluctuations in terminal gate activity.

13 This is not meant to be a comprehensive

14 list, but it's a start and requires a new attitude

15 and shared responsibility by all segments of the

16 supply chain. PMSA members are prepared to work

17 with everyone to improve the flow of cargo and

18 increase velocity through San Pedro Bay ports.

19 Thank you.

20 CHAIRMAN CORDERO: Thank you so much,

21 Michele. Next we're going to move to our

22 Department of Transportation West Coast Regional
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 1 Gateway Director, Keith Lesnick. I will say that

 2 at the federal level, as I reference what the

 3 objective and the mission of the FMC, the

 4 Department of Transportation and Secretary Fox, I

 5 know this is a big area of discussion. Two weeks

 6 ago, I met with the administrator of MARAD, and we

 7 had all-day discussions and meetings with Japanese

 8 leaders in the international transport industry.

 9 These issues are, again, global.

10 One of the data that was referenced was

11 very important. You look at the population of the

12 United States, by 2050 it's going to grow by 100

13 million. This area alone right now in

14 California's 38 million. Think what that's going

15 to be -- our population right now is 350 growing

16 100 million. The whole aspect of the goods

17 movement, retail, consumer spending is a huge

18 impact on our economy.

19 This debate, again, is not only right,

20 it's -- like, Bernie, you've raised the bar

21 actually. You won't let your staff go home until

22 they saw the solution. Maybe we should do that.

Page 83

 1 Anyway, now I'm moving to Keith. Again, thank you

 2 so much for being here, Keith, and thank you again

 3 for all the work you have done in DOT with regards

 4 to some of these issues.

 5 MR. LESNIK: Thank you, Chairman. I

 6 very much appreciate the opportunity to be here

 7 today. I wanted to say first that California, and

 8 Southern California in particular, are very

 9 fortunate to have two members of Congress who

10 actually understand what goes on inside the gate

11 of a port. To us in Washington, that's

12 particularly valuable.

13 As someone who began their career on the

14 Hill, I know two things: One, that the PORTS

15 Caucus isn't just another caucus. It's actually

16 what brings all of you to the Transportation and

17 Reauthorization table. In my mind, it takes the

18 place of the old Merchant Marine Committee that

19 used to operate and was so valuable to all in this

20 industry and I wish some day would be returned

21 into Congress. Also as someone that worked on the

22 Hill, I know how important it is to get to the bus

Page 84

 1 or the airport on time, so I'll be very, very fast

 2 with what I've got to say.

 3 The main focus of our work at the

 4 maritime administration is integration of water

 5 into the whole transportation system, in

 6 particular the port community and our port

 7 infrastructure. The Chairman already referenced

 8 the fact that we're going to grow over 100 million

 9 people probably by 2050. All those people are

10 going to need to have things. They're going to

11 need to buy things. They're going to have wants,

12 needs, and 95 percent of all of those things will

13 still arrive on a ship, and they'll have to cross

14 a dock, and they'll have to be delivered to

15 someplace else in America. That's where our focus

16 is at the Maritime administration at the

17 Department of Transportation.

18 We have two programs -- they're small

19 programs, they're new programs, but the Obama

20 Administration has given us basically the tools to

21 be able to work on those. One of them is called

22 the Marine Highway Program, which is relevant in

Page 85

 1 the sense that in terms of when we talk about

 2 congestion today it's relevant because it can be

 3 used on the margins and on the sides to help you

 4 deal with your congestion issues, experience

 5 inside the goat. I've talked to folks from both

 6 port facilities here about just that, and there

 7 are things that we can do to help improve those

 8 things.

 9 The other one is a program called Strong

10 Ports, and we got the authorization to do that

11 just at the start of the Obama Administration.

12 It's not funded, but it is a program to set up a

13 system: One of education, but two to assist the

14 port community and through partnerships. I heard

15 a lot about partnerships today to talk about

16 planning processes.

17 Now, talking about port planning, master

18 planning here in Southern California seems a

19 little silly because you actually all do it very,

20 very well, and you understand how you interact,

21 interface with your local government and with your

22 state and with the federal government. But most
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 1 of 300-some operating ports in the United States

 2 don't do that.

 3 As you travel around the country with

 4 your hearings, Mr. Chairman, yeah, I think you're

 5 going to hear more of that. You're up here and

 6 some of the other people are here, but most of the

 7 other people are just way down there. That's what

 8 Strong Ports is about. What we're trying to do is

 9 we're trying to drive people to think about the

10 long-term impacts of how their ports operate, what

11 they're going to have to be doing in the future,

12 how they're going to have to be moving that

13 freight, and how they're going to have to get it

14 out of there efficiently. That's what we've done.

15 The last thing that I'll talk about,

16 because I know that time is of an essence, is one

17 thing that's always ongoing: The TIGER Program.

18 It came up again, yes, as part of the Recovery

19 Act, but it's been ongoing, and we hope that it

20 will be continued.

21 I will take a little bit of personal

22 credit for this -- one of the things that our

Page 87

 1 agency has been able to do it is to aggressively

 2 represent the port community in gaining access to

 3 those grants. Since the inception of the program,

 4 we've given almost $500 million out to port

 5 facilities in terms of development infrastructure

 6 grants for the things that they're going to have

 7 to do. Because if you look at the civil

 8 engineer's report, our port infrastructure can use

 9 a little bit of work, as my mother used to say.

10 That's a big thing, and $500 million just doesn't

11 cut it. It's going to be much more.

12 Finally, that's the whole process of

13 this whole thing. There's a shrinking federal

14 pie. It's not going to get any bigger anytime

15 soon. How the ports use their abilities and your

16 sophistication to obtain greater access to that

17 pie so that you can grow your facility and grow

18 the economy. Thank you.

19 CHAIRMAN CORDERO: Thank you so much,

20 Keith. We're going to take a break, but before we

21 take a break here for 10 minutes, I want to really

22 thank both Congresswoman Hahn and Lowenthal for

Page 88

 1 being here and impacting their very busy schedule.

 2 By the way, we have, I understand, representation

 3 from other ports in California: Oakland, Hueneme,

 4 San Diego. Last, I am told in the Bay Area that

 5 they're doing another study -- it's just been

 6 announced this morning -- a congestion study.

 7 This one's being done by the San Francisco Giants,

 8 congestion on the bases. Too many Dodgers. Thank

 9 you.

10 We'll reconvene at 11:20 for the second

11 panel. Again, at 11:20 for the second panel.

12 (Recess)

13 CHAIRMAN CORDERO: Moving forward. I've

14 been told that we have not only started here in

15 this room, but apparently there's a second room

16 now that was convened because of the number of

17 people we have here, so it's great to see Southern

18 California out and trying to have a dialogue and

19 look for solutions in a collaborative way on these

20 very important port, maritime questions. Thank

21 you so much again.

22 We're going to move forward our second

Page 89

 1 panel. Now, after the second panel concludes

 2 they're comments, then we're going to move

 3 forward, time permitting, with the public forum.

 4 That is, those of you who want to come up to the

 5 podium and make comments, we do have a lunch hour,

 6 but we'll take a break for an hour, and then after

 7 that we will continue from the session in the

 8 afternoon to make sure that we have the

 9 opportunity for further commentary with regard to

10 the issues before us.

11 Moving right along, we're going to now

12 move to Fran Inman of Majestic Realty. Again, no

13 introduction needed for Fran not only in terms of

14 involvement in the industry but at the state

15 level, transportation commission, and those of you

16 who know Fran, she's a hard worker, and her heart

17 and passion is in the goods movement. Frank,

18 thank you so much for being here this morning.

19 The floor is yours.

20 MS. INMAN: Thank you, Chairman Cordero.

21 It's a pleasure and an honor to be here. I'm

22 representing in my day job, Majestic Realty, but I
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 1 will add a little perspective from the other hats

 2 that I wear because it's difficult for me to

 3 separate all of those.

 4 As I like to say, every day is freight

 5 day, and I think for all of us here today that's

 6 why we're here. I was just chatting with Gene

 7 briefly, and I said, God bless us one and all --

 8 if I could take a line from Tim Cratchit -- in

 9 terms of it's amazing that we do as well as we do

10 given all of the pieces and how complex these

11 puzzles really are, and they're multidimensional.

12 Most of us operate in a system of systems, and I

13 think that that's the important discussion that we

14 have to say.

15 First and foremost, I just want to echo

16 the words that have been mentioned about

17 collaboration because I think it is important for

18 all of us to sit down and continue sitting down.

19 Most of us have lots of hours and passion invested

20 in this topic, so I would encourage all of us. I

21 know change can be difficult, but it is important,

22 I think, to always raise the bar. I was thinking

Page 91

 1 about over the years we've always said we're

 2 America's gateways, and I think being on the top

 3 sometimes could be the Sports Illustrated

 4 preseason cover you don't want to be on and the

 5 curse of the SI preseason cover image. I think it

 6 is important for us to all stay the top of our

 7 game.

 8 With that, representing Majestic Realty,

 9 as most of you know, we're a long-term Southern

10 California base developer, privately held. We

11 have more than 70 million square feet in our

12 portfolio. That said, I can tell you today that

13 most of our new development, about ninety-five

14 percent of it, is outside this State of

15 California. Still in the U.S., we've stayed U.S.

16 based, but our charge as asset owners were develop

17 and hold, so we've got to skate where the pucks

18 going, as Gretzky said.

19 I think it's important for all of us to

20 make sure that we continue -- clearly we have a

21 wonderful, deep love of ports, and our proximity

22 to our trading partners is so very, very

Page 92

 1 important, but we also have some challenges. From

 2 our perspective, bigger seems to be the mode in

 3 terms of the warehouse distribution facilities.

 4 We have migrated over time. When our company

 5 started some 60 years ago, it was primarily

 6 manufacturing, light industrial, and today it's

 7 dominated by warehouse distribution centers.

 8 Probably the sweet spot for us is

 9 500,000, 750,000 on up, and today we have two

10 buildings that are over 1 million square feet that

11 are under construction. But like I said, those

12 are in different states.

13 For the most part, cross-dock is what

14 we're doing. I was thinking earlier too about our

15 evolution, and historically we have been along

16 rail lines. Our founder and CEO, Ed Roski Sr.

17 always believed that we were part of a supply

18 chain. Most of those around here we take out our

19 rail spurs and put in truck parking because as the

20 models have changed, we've had to change as well.

21 I haven't seen our rail partners here very much

22 today, so I think in the future when we do these

Page 93

 1 make sure that we do have -- our Class 1s are so

 2 much a part of what we all do together in the

 3 supply chain because it's important.

 4 E-commerce is probably the biggest game

 5 changer in the disability side, and it is a

 6 rapidly changing market for all of us. The newest

 7 innovation seems to be the fulfillment centers.

 8 All of us have changed our shopping patterns to a

 9 certain extent; some of us more than others.

10 We're having things delivered, and we want it now.

11 I think that that changes the dynamics for all of

12 us, and it's certainly a challenge for our

13 planners who -- most of them -- when they were

14 trained, they didn't even know what e- commerce

15 stood for.

16 I think it is important for all of us to

17 retool and reconfigure because our business is

18 really based on derived demand, so freight for us

19 for the most part unless it's a manufacturing

20 tenet for us. It is pretty much who else needs

21 what moved, and how can we provide a facility that

22 will meet that need?
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 1 You heard Bob Curry talk earlier about

 2 the challenges with the bigger boxes being built

 3 further and further out. Ours is pretty much a

 4 formula business. We can figure it out what we're

 5 can afford to pay for the land and the economics.

 6 We also have become students of logistics

 7 economics just because we understand that rent is

 8 only a portion of our tenant's decision on where

 9 they're going to locate. At the end of the day,

10 for all of us, it's that end-to-end move that is

11 so very important. We've heard earlier today

12 about some of the hiccups along the way.

13 I think we haven't talked today about

14 energy and the role of energy in all of our

15 collective future, and I've been working with our

16 port partners here and our energy commission. We

17 hosted the chair of the energy commission earlier

18 this year who was on a speaking tour to talk about

19 grid reliability. We tried to move more and more

20 shore power. For sure, our partners in the supply

21 chain need to make sure that as we migrate we're

22 going to have a reliable power. I think as we

Page 95

 1 look at the world of energy, clearly with our

 2 partners who also are -- the laws are built on

 3 derived demand; the role of energy is a key factor

 4 there. I think we need to include those in our

 5 discussions as well.

 6 I also think that timing is so very,

 7 very important. As you mentioned earlier, I do

 8 have the honor and privilege of serving on the

 9 California Transportation Commission. We are in

10 the midst of developing the California Freight

11 Action Plan, which is really, hopefully, building

12 on the work that many of us did collectively for

13 the goods movement action plan in 2006. But when

14 I first joined the commission, I was absolutely

15 astonished to think that we didn't have a freight

16 plan. And then with my work on the National

17 Freight Advisory Committee, it's amazing to me

18 that we haven't had a vision and a plan for our

19 nation as we accept the fact that we do live in a

20 global world and the trading partners and the

21 mobility that we all have and the economics that

22 are derived from that are so very, very important.

Page 96

 1 I just want to encourage you to have

 2 these discussions. I'm learning with the rest of

 3 you. We are landlords just like the ports, so we

 4 are not hiring the various partners directly, but

 5 clearly what we hear from our tenants and our

 6 journey into all of this really came from hearing

 7 from our tenants when they couldn't make their

 8 turns form the port, and that was probably a dozen

 9 years ago.

10 I think we have to really continue to

11 raise the bar, as was mentioned earlier, and

12 really figure out and to find success, and figure

13 out what those performance metrics, and hopefully

14 we can all agree on what success looks like and

15 how to get there. Thank you.

16 CHAIRMAN CORDERO: Thank you so much,

17 Fran. Thank you for your involvement with the

18 National Freight Advisory Committee. I know

19 you've travel to Washington with regard to that

20 role. Southern California was very

21 well-represented also on that committee. Bonnie

22 Lowenthal did a lot of great work with regard to

Page 97

 1 the ultimate objective, a national freight policy.

 2 I think, thanks to D.O.T. -- where did Keith go?

 3 Oh, I'm sorry.

 4 Thank you so much again, because again,

 5 one of the questions that you hear people say,

 6 well, we're not doing that bad. We're doing some

 7 good things. As a nation, we still don't have a

 8 national freight policy. When you think about

 9 what Southern California has done through the

10 leadership of people like yourselves and Fran and

11 the others, we can raise the bar like the

12 Congressman said, and that's exactly what we're

13 going to do.

14 Moving forward now, we're going to hear

15 now from Bruce Wargo who has spent many years with

16 regard to the inception of the PierPASS program to

17 what it is today. Again, I'm interested to hear

18 Bruce's commentary because, again, that's one job

19 I would not wan to have given all the trials and

20 tribulations in terms of trying to solve issues

21 and deal with stakeholders. But with all that, I

22 think he's doing a great job. Bruce, thank you so
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 1 much for being here, and I welcome your comments.

 2 MR. WARGO: Thank you, Commissioner, for

 3 having me and inviting me to attend today's

 4 session. If some of this is repetitive for some

 5 of you I apologize in advance, but I think it's

 6 important to mention. Anyway, good morning. I'm

 7 Bruce Wargo. I'm president and CEO of PierPASS.

 8 I'm really happy to contribute to today's

 9 discussion on national port congestion using our

10 San Pedro Bay experience as background. I

11 encourage all the parties to be constructive. I

12 believe everybody in this room would like to see

13 improvement of some kind.

14 As you know, the ports of Los Angeles

15 and Long Beach comprise the largest port complex

16 in America, and according to the Journal of

17 Commerce, the ninth largest in the world. With

18 this level of container volume come complexities

19 that are not present in less-busy ports, and in

20 some ways are unique to our infrastructure and

21 business practices.

22 In 2004, San Pedro Bay experienced

Page 99

 1 severe congestion due to larger ship volumes, rail

 2 car and engine availability, labor shortages,

 3 freeway congestion -- sounds familiar. As a

 4 result of this perfect storm and with the

 5 encouragement from elected officials like then

 6 State Assemblyman Alan Lowenthal and now

 7 Congressman Alan Lowenthal, San Pedro Bay marine

 8 terminal operators with the FMC authority

 9 developed an unprecedented night gate program to

10 mitigate the traffic in and around the port

11 complex. Self-funded and in place for over 9

12 years, the PierPASS off- peak program has moved

13 more than 30 million truck transactions from days

14 to off-peak shifts and continues its primary

15 mission to mitigate traffic in the local

16 community.

17 PierPASS is, without question, the

18 single most effective congestion mitigation

19 program in the nation. Because of a program like

20 PierPASS, we do not see some of the catastrophic

21 congestion issues that happen in other ports like

22 Rotterdam, Manila, Ningbo, China, and Canada.

Page 100

 1 Recently, Port Metro of Vancouver instituted a

 2 night gate program similar to PierPASS, and as it

 3 happened here in 2005, congestion was dramatically

 4 reduced.

 5 With over 35,000 daily truck

 6 transactions monitored by RFID tags, we were able

 7 to accurately and comprehensively track

 8 in-terminal truck turn time and record this data.

 9 Over the last several years, the off-peak program

10 has consistently diverted fifty-five percent of

11 truck transactions to less-congested off-peak

12 hours.

13 PierPASS and its marine terminal

14 operators have also played an instrumental role in

15 enforcement of the port's Clean Truck Program

16 using its computer infrastructure and leveraging

17 the terminal operator requirements for each truck

18 to have an RFID tag to validate against the port's

19 Clean Truck Database.

20 Today we face new challenges. Several

21 of these challenges are beyond the control of the

22 marine terminal operator, but nonetheless

Page 101

 1 contribute to the topic being discussed today.

 2 Port congestion is a global phenomenon.

 3 This subject is getting a lot of attention in the

 4 trade papers, and the common denominator points to

 5 larger ships, the supporting infrastructure, and

 6 business processes. Servicing these larger ships

 7 puts a strain in the support elements such as

 8 chassis, truck power, yard space, rail cars,

 9 available labor, and yard equipment.

10 Additionally, one less tangible contributor is the

11 delivery process that we have built America's

12 largest port operation around.

13 More specifically, let's talk about

14 chassis. Today the chassis model is in a state of

15 transition from one that has been essentially the

16 same for 50 years to something very different.

17 Whether it's small pools, contributory pools,

18 collaborative pools, or gray pools, it's different

19 than it was and now presents new complexities.

20 The model is evolving, but whatever stage it is at

21 present, issues like shortages at location A,

22 oversupply at location B, damaged inventory,
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 1 billing disputes, utilization factors, billing

 2 rates, etc., contribute to congestion and

 3 inefficiency.

 4 With chassis providers acquiring the

 5 previously owned units from steamship lines and

 6 then renting them on a daily basis, we see an

 7 unprecedented chassis shortage at most terminals.

 8 This has a cascading effect on all the other

 9 stakeholders. Trucks get tired of waiting for a

10 chassis to arrive and leave. Containers sit and

11 lose velocity. It increases demurrage costs. It

12 increases terminal cost to manage larger and

13 larger piles of containers, and ultimately ships

14 are going to have to wait to berth all because of

15 a chassis shortage.

16 This is causing significant disruptions

17 now and does not look to get better in the near

18 term. We understand that the Department of

19 Justice is looking at the IEP's proposal to work

20 together, and we encourage the FMC to do what they

21 can to ensure that the chassis providers don't

22 bring this port to a standstill. We need to

Page 103

 1 resolve this issue now.

 2 On the matter of truck turn time, today

 3 import containers are delivered in much the same

 4 way at all terminals using Rubber Tire Gantry

 5 cranes to dig out a specific container by a

 6 specific number in a pile of thousands of

 7 containers for mounting to a truck and a chassis.

 8 This process of complete and total random access

 9 by a specific container number at all times of the

10 day and night moves a predictable 8 to 10

11 container deliveries per hour.

12 It's also made more complex by post-9/11

13 issues by customs exams, VACIS exams, RPM

14 inspections and the like. Although terminal

15 operators have instituted a number of computer

16 enhancements, it's still a very complex and time17 consuming process.

18 Terminal operators have been tracking

19 these trucks with RFID tags now for years to

20 monitor truck turn times for many, many years.

21 PierPASS started publishing these average turn

22 times each month. Unlike some who track limited

Page 104

 1 numbers of trucks and include the time spent in

 2 the street waiting to open up, trouble tickets are

 3 discounted and multiple transactions aren't

 4 counted as single transactions. Terminal

 5 operators in San Pedro Bay look at the net turn

 6 time per transaction as a more honest, accurate,

 7 and representative methodology.

 8 Once you add in a 10 or 14,000 TEU ship,

 9 you start to see these service peaks and valleys.

10 We should all understand that a 45-minute per

11 transaction turn time that was achievable in the

12 nineties may not be so easy today. Expectations

13 may need to be adjusted to a new model, and

14 certainly so when hundreds of trucks show up at

15 the same time and expect 45-minute service.

16 One could almost say that in San Pedro

17 Bay, with over 1000 truck companies and 11,000

18 registered trucks, much of the time trucks are

19 waiting, they're waiting on the trucks in front of

20 them to get into the terminal. It's not

21 necessarily how fast the machines are working.

22 I also feel that truck turn time

Page 105

 1 reflects an existing delivery process, steamship

 2 line practices, and current terminal congestions

 3 and operations. If we want to change the truck

 4 turn time outcome, we need to consider changing

 5 the process. Doing the same things incrementally

 6 faster will not solve the periodic periods of

 7 congestion.

 8 One area that we're exploring is the

 9 process we call free flow, which attempts to

10 identify and deliver en masse large numbers of

11 containers for a shipper or a logistics company

12 and let the shippers sort out the specific

13 container numbers they want. This approach

14 changes the container yard from a storage location

15 for container cargo owners to a more productive

16 link in the logistics chain.

17 A recent PierPASS study has shown that

18 drivers can triple their moves if a terminal and

19 trucking company coordinates this type of

20 delivery. We are currently conducting tests at

21 several terminals and will be working on expanding

22 the process in the future. We encourage truck
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 1 companies to collaborate on consolidating their

 2 volumes, to take advantage of this process, and

 3 improve the driver outcomes.

 4 Next, there's been several comments

 5 about 24/7 operations. Several stakeholders have

 6 brought this issue up of working more hours in the

 7 ports of L.A. And Long Beach to address truck

 8 congestion. Under today's PierPASS off- peak

 9 program, terminals provide 35 extra gate hours per

10 week in addition to the 40 hours at each terminal,

11 and that is more than any modern container

12 terminal complex in this or most countries.

13 Within these hours, we do see peaks and valleys in

14 truck activity with some hours having little or no

15 truck activity at all.

16 Extending operation hours of the port

17 will not necessarily increase the number of

18 containers available to be processed, but it will

19 dramatically increase the cost of operating a

20 marine terminal. Today the PierPASS off-peak gate

21 costs approximately $180 million a year. It is

22 estimated that working around the clock, 7 days a

Page 107

 1 week, would add another $167 million.

 2 At present, there are no major blocks of

 3 time during the current gate operations which

 4 there is minimal truck activity. Given periods of

 5 underutilization, there does not currently appear

 6 to be operational or commercial reasons to

 7 increase the cost to shippers and the supply chain

 8 at a time when stakeholders are looking to reduce

 9 costs.

10 Are there shippers present that would

11 like to pay more for 24/7 operations? They should

12 come forward. If there's been some analysis done

13 on 24/7 operations by either local or federal

14 authorities, it'd probably be a good time to see

15 it and see what the benefits and the costs are.

16 We heard earlier about appointment

17 systems. Right now, of the 13 terminals making

18 17,000 truck transactions per shift or 35,000

19 truck transactions per day, we have only five of

20 those terminals with some type of appointment

21 system for import containers. Reviewing those

22 in-terminal truck turn times reveal that they are

Page 108

 1 both above and below the average and median turn

 2 times for all terminals. This would lead us to

 3 believe that the current appointment system needs

 4 improving to see meaningful improvements to truck

 5 turn times.

 6 It's also important to note that

 7 thirty-five percent of the trucks routinely failed

 8 to make their appointments. If we were to have

 9 meaningful appointments, they need to have smaller

10 windows of times and trucks must make their

11 appointments.

12 I know we've heard before about trouble

13 tickets, and this is an interesting subject.

14 National studies have shown, and local

15 investigations have confirmed, that we see five to

16 seven percent of truck transactions experience

17 trouble tickets. These trouble tickets are caused

18 by a lack of information from the truck driver or

19 misinformation, which in both cases takes the

20 driver out of the process until the issue is

21 resolved. Additionally, that truck will have to

22 be handled a second time and possibly delaying a

Page 109

 1 truck behind them.

 2 Many trouble tickets can be avoided by

 3 checking information prior to arrival at the

 4 terminal. Additionally, in the near future, we

 5 hope to see web-based programs to pre-arrive cargo

 6 into the terminal and expedite the truck

 7 transaction. This would also eliminate these

 8 trouble ticket issues.

 9 In this discussion, it's important to

10 recognize that this is a very complex and

11 comprehensive business. Most solutions are not

12 free, simple, or obvious. We need to spend more

13 time on the root causes of these issues to improve

14 the cargo flow.

15 In closing, the items that I feel that

16 had the greatest impact on port congestion today

17 are big ships and their schedules, chassis

18 availability, trucker productivity across all

19 hours, the delivery process itself, and trouble

20 ticket resolution. Thank you very much, and I'll

21 be happy to take any questions.

22 CHAIRMAN CORDERO: Thank you, Bruce.
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 1 With regard to my opening comments referencing the

 2 role of the FMC, and I mentioned we're holding

 3 four forums throughout the nation, one thing

 4 unique about this particular region, L.A. Long

 5 Beach, is that this is the one area that, as Bruce

 6 mentioned, we have PierPASS, an agreement that's

 7 filed with the FMC, and one that we monitor.

 8 This is rather unique as opposed to the

 9 other three areas that we're going to be holding

10 these forums. Of course, part of that monitoring

11 responsibility that we have is to make sure these

12 objectives are made.

13 As Bruce mentioned, there are

14 challenging issues, but one the things, again,

15 that has already been said not only by the people

16 up here at the front but those of you out there,

17 let's accelerate this discussion with the arrival

18 of the big vessels. Not only is it very good in

19 terms of economies of scale, but it is a model

20 that creates some serious issues that we, as an

21 industry, have to address, and ultimately get to a

22 point where everybody's comfortable regarding the

Page 111

 1 coming of the economies of scale concept.

 2 Last, I will say -- as Bruce and others

 3 mentioned -- this is not unique to this region,

 4 that is the issue of truck times and the issue of

 5 truckers. The scenario that is required for us to

 6 succeed is a scenario where all stakeholders buy

 7 in in terms of not only what we need to do, but

 8 what the results are. Again, those of you in the

 9 trucking community, I know you have some issues

10 and concerns, and hopefully, again, the objective

11 is to make sure stakeholders are satisfied here

12 because it is only then that, again, I think we

13 could walk away and certainly have some comfort

14 that the ultimate objectives are being met.

15 As Bruce mentioned, the challenges are

16 problematic and it's a high bar, but that has

17 never stopped this particular complex from

18 undertaking those type of challenges. With that,

19 let me move forward now and recognize the next

20 panel person, Commissioner Dines, with the Port of

21 Long Beach, and as you know, vast experience on

22 the waterfront. Commissioner Dines, thank you and

Page 112

 1 thank you for your time and making your comments

 2 and having your input here.

 3 MR. DINES: Thank you, Mr. Chairman, and

 4 I also want to thank the FMC staff for hosting

 5 this forum today. First, let me state for the

 6 record that my comments are those of an individual

 7 commissioner, and they do not represent the views

 8 of the Port of Long Beach Board of Harbor

 9 Commissioners or any other port stakeholder group.

10 I've worked in this port complex since

11 1997 as a longshoreman and in my current role as a

12 marine clerk. It is from these experiences that I

13 have developed my views and opinions on the crisis

14 we currently face and the solutions we must work

15 on together.

16 I just wanted to bring up a couple of

17 things from the earlier panel, and when Mr. Curry

18 spoke -- and others did -- possibly looking at

19 what they're doing in Vancouver with a penalty

20 system. The ports have the right to use or

21 tariff. I support working with the stakeholders

22 and offering them a carrot instead of breaking out

Page 113

 1 the stick. That being said, we definitely need to

 2 raise the bar and work on solutions.

 3 With the idea of free flow, free flow

 4 cargo is nothing that's new to our ports. This

 5 idea's been around for many years. I've been

 6 supporting this idea for quite a long time. In

 7 fact, the practice of free flow is something that

 8 we've been using and what we have our land bridge

 9 where we will shift containers from one dock to

10 another docks-on- dock rail yard. It is off the

11 top. It is very efficient. It allows for a block

12 stow of cargo, and we can use hop handlers Rubber

13 Tire Gantry cranes. I think that it's a part of

14 the solution, but it isn't going to correct all of

15 our problems.

16 I hope not to be too repetitive over at

17 Mr. Wargo's comments, especially on the history,

18 but I would like to say -- and I know President

19 Drummond is the historian of the Port of Long

20 Beach -- a little bit of history. From the

21 mid-1990s and until 2006, this port complex

22 experienced annual double-digit growth in
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 1 container volumes. It just kept coming, and it

 2 kept coming ten percent or more every year.

 3 In 2004, we did find ourselves facing

 4 some very serious challenges. We had congestion

 5 in our ports, on our freeways, and in our

 6 neighborhoods. Truck queues outside of terminal

 7 gates grew longer and longer, and we found

 8 ourselves unable to move cargo effectively and

 9 efficiently.

10 Our ports were also considered gross

11 polluters. Many people said we couldn't do

12 anything about port pollution, but leadership in

13 our ports listened to our community and to leaders

14 in Sacramento like now-Congressman Alan Lowenthal,

15 and we embraced changed. The ports adopted the

16 Clean Air Action Plan, and we created a path

17 towards zero emissions. Today, these ports lead

18 the world in environmental stewardship. It is a

19 part of our DNA, and ports from around the globe

20 continue to seek our advice for their own

21 environmental programs.

22 Those same naysayers claiming our ports

Page 115

 1 couldn't go green said we couldn't replace the

 2 entire 3 to 16,000 diesel trucks that drove

 3 containers to and from our port everyday. Both

 4 ports adopted clean truck programs and partnership

 5 with a private industry who in turn invested

 6 nearly $1 billion in very difficult economic times

 7 to replace all dirty trucks with clean new ones.

 8 This successful program has drastically reduced

 9 the amount of harmful diesel particulate matter in

10 our community, and every major port in the country

11 has followed the L.A., Long Beach lead on clean

12 trucks.

13 Now, as we face a crisis that will

14 require renewed cooperation and collaboration to

15 find solutions, we cannot afford to listen to the

16 naysayers of a decade ago. Our ports have a

17 proven record of accomplishing great things by

18 bringing the ports and industry together.

19 To address our congestion in 2004,

20 legislation by Congressman Lowenthal was

21 introduced to require marine terminals to be up a

22 minimum of 72 hours a week, and this equates to

Page 116

 1 nine 8-hour shifts. The marine terminal operators

 2 recognized a need for change, and they formed

 3 PierPASS.

 4 PierPASS provides for off-peak delivery

 5 of containers helping to relieve congestion. A

 6 terminal has options on how many shifts they can

 7 work and how they spread it out, but usually they

 8 worked five day shifts and four night shifts.

 9 PierPASS charges a traffic litigation fee for

10 import and export containers during peak hours,

11 which is considered the day shift. Currently, a

12 beneficial cargo owner is charged a $133 traffic

13 mitigation fee for a 40-foot container.

14 At a time when our ports faced stiff

15 competition from other U.S. West Coast ports, from

16 Canada and Mexico, you need to focus on reducing

17 costs to port customers and not increasing them.

18 Today, our $133 PierPASS fee forces many shippers

19 to bypass our ports and explore more cost20 effective options. In my opinion, we are chasing

21 cargo away, and this fee is no longer sustainable.

22 The success of the PierPASS program has

Page 117

 1 come from the shifting of over fifty-five percent

 2 of container movement by trucks to off-peak hours.

 3 Unfortunately, we regularly see trucks begin to

 4 queue outside of marine terminals started at 3:00

 5 p.m. These trucks and their drivers will wait

 6 outside the terminals until 6:00 p.m. when the

 7 PierPASS fee is no longer charged.

 8 Truckers do not earn money waiting

 9 outside terminal gates. Just as important, trucks

10 don't generate revenue sitting idle. Truckers can

11 only work a total of 11 hours a day with a 1-hour

12 lunch. Terminals that offer both shifts can be

13 open from 8:00 a.m. until 3:00 a.m., and one may

14 close three 1-hour periods during the day for

15 longshore lunch breaks and for a shift change.

16 Ten PierPASS shifts do not align with one trucker

17 shifts. However, if we open our gates 24 hours a

18 day, we can get two full truck shifts in that

19 period. This is a much more efficient use of

20 driver time and truck utilization. We can no

21 longer deny port truck drivers the opportunity to

22 earn a living wage.
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 1 When PierPASS started, large container

 2 ships averaged about 5,000 TEU. Those were the

 3 APL ships that Jane's former company used to run.

 4 Today, 19,000 TEU ships are being built, and

 5 14,000 TEU ships regularly call at our ports. The

 6 demand for 24/7 gates is coming from these next-

 7 generation mega-sized ships. These ships are here

 8 to stay with even bigger ones on the way.

 9 These ships can have more than 10,000

10 total moves to unload and load. They need to be

11 turned around quickly, so terminals work these

12 vessels 24 hours a day, around the clock. These

13 megaships are causing terminal capacity issues as

14 they have outgrown the current PierPASS model. In

15 my opinion, it does not make sense to have vessel

16 operations 24 hours a day while restricting

17 delivery and receiving operations for truckers to

18 only 8 or 16 hours. We can and we must do better.

19 Our two ports need to work closely

20 together in partnership with our terminal

21 operators, labor, truckers, and our beneficial

22 cargo owners to build a sustainable program to

Page 119

 1 improve terminal productivity and increase

 2 capacity while reducing cost to efficient

 3 operations.

 4 I support the creation of a Joint Powers

 5 Authority similar to the Alameda Corridor model.

 6 The Alameda Corridor is truly a great success

 7 story having been built on time and under budget.

 8 The ports run ACTA, and we can create a similar

 9 JPA that the ports could govern, and we would hire

10 an executive director and professional staff to

11 management.

12 Now, of course, our terminal operators

13 need to be compensated for the additional costs

14 that will occur. A sustainable fee structure

15 needs to be put in place to ensure this. We

16 should consider discarding the traffic mitigation

17 fee altogether and move to a simple transaction

18 fee. Each transaction may cost between $10 and

19 $20, which is a small fraction of the current $133

20 charged by PierPASS. If we have 35,000 truck

21 moves a day, that's well over $10 million a year

22 or $10 million a year. Get $10 a transaction,

Page 120

 1 that's $100 million.

 2 As a starting point, we should target

 3 the current level of revenue collected by PierPASS

 4 for reimbursement to terminal operators on a

 5 per-transaction basis. Again, I'm not trying to

 6 take money away from terminal operators with this

 7 idea. It would be a starting point. They need to

 8 compensated for their additional costs. This

 9 would create an incentive for terminal operators

10 to operate more efficiently while shippers should

11 and could expect fees to be reduced by eighty to

12 ninety percent.

13 The Joint Powers Authority would develop

14 intelligent software to run a real-time

15 appointment system. This technology exists today,

16 and it is time to implement it across the San

17 Pedro Bay ports. Terminal operators will be able

18 to more accurately predict their labor demand

19 needs to provide consistent good service while

20 reducing costs and turn times. It is simply

21 unfair to claim that there will be an increase in

22 annual costs for a port-administered program that

Page 121

 1 will have an entirely different fee structure than

 2 the PierPASS program.

 3 In my opinion, it is time for the ports

 4 to take the lead. The ports have a vested

 5 interest in the efficient operations of our

 6 terminals. PierPASS has had some success, and it

 7 has served its original purpose, but it is time to

 8 move forward. The ports are well positioned to

 9 create a new, sustainable program that will

10 benefit all port users while continuing to

11 guarantee terminal operators a revenue stream to

12 help offset additional costs.

13 I was thinking of a name. Perhaps we

14 could call it GATES. It could stand for Gate

15 Appointment and Terminal Efficiency System or

16 whatever we come up with. One thing is certain:

17 The ports have visionary leaders in Jon Slangerup

18 and Gene Saroka, and I would not bet against our

19 success on anything we do.

20 The FMC has the responsibility to review

21 discussion agreements pursuant to the shipping

22 act, and the FMC has a history of encouraging
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 1 agreements for ports to facilitate discussions on

 2 operations and matters of common interest. Mr.

 3 Chairman, special interests may claim the cost is

 4 too high to move the ports to 24/7 gate

 5 operations. I conclude my comments by raising the

 6 question to everyone here: What is the cost of

 7 doing nothing? Thank you for your time and the

 8 opportunity to speak today.

 9 CHAIRMAN CORDERO: Thank you,

10 Commissioner, for your comments.

11 Moving along, we are now going to

12 recognize Michael Johnson with the Harbor

13 Transportation Association. Michael's been very

14 involved in the trucking community, including the

15 California of Transportation Association, and

16 suffice to say you've been here quite a while to

17 make the appropriate observations in terms of

18 taking this to the next level or taking you to the

19 next level. Thank you so much, Michael, for being

20 here. Okay, Logistics Technology.

21 MR. JOHNSON: Good morning, Chairman

22 Cordero, Congressman Lowenthal, and to you, Janice

Page 123

 1 Hahn -- oh, she's gone -- and the executive

 2 directors of both ports and my esteemed colleagues

 3 on this panel. I'd like to thank Chairman Cordero

 4 for bringing this public forum together. This is

 5 a giant step forward. I wonder why the

 6 stakeholder leadership has not considered this

 7 approach in the past.

 8 I started my transportation career 34

 9 years ago as a driver picking up break bulk, loose

10 cargo, and containers from the ports of L.A. and

11 Long Beach. The landscape has changed

12 dramatically over those 34 yeas, but one thing

13 remains constant, and that is truck congestion.

14 Today, I am speaking to you as president

15 of the Harbor Trucking Association. As you've

16 already heard, the HTA is a coalition of Los

17 Angeles and Long Beach intermodal carriers whose

18 purpose is to advocate, educate, and promote

19 strategies with all goods movement stakeholders

20 and policymakers that will sustain emission

21 reductions, provide a dialogue for intermodal

22 truck efficiency, and keep cargo and jobs in

Page 124

 1 Southern California ports.

 2 And I'm speaking to you as the manager

 3 of the L.A. And Long Beach Transportation

 4 Division Port Logistics Group. Just to give you a

 5 little background, Port Logistics Group operates

 6 over 3 million square feet in City of Industry

 7 facilities -- thank you, Fran Inman -- a 26 acre

 8 facility in Long Beach or Rancho Dominguez, as

 9 well as similar-sized facilities in Clifton,

10 Secaucus, Newark, New Jersey, and Sumner,

11 Washington, or Seattle.

12 Congestion affects our entire supply

13 team network and the customers that we service.

14 PLG operates approximately 250 drayage trucks and

15 moves 70,000 containers annually. We've gathered

16 here today to talk about congestion and the

17 negative impact it has on the competitiveness of

18 all the stakeholders in the San Pedro Bay port

19 complex. We have all been witness to the

20 congestion that (inaudible) ports and the

21 consequences. It is time that the industry, ocean

22 carriers, marine terminal operators, beneficial

Page 125

 1 cargo owners, trucking, and the port authority

 2 take a proactive approach to this problem.

 3 The solutions to congestion are complex,

 4 and they are obtainable if all of the stakeholders

 5 come to the table, leave their egos at home, and

 6 agree to solutions. It is not just a trucking

 7 problem, and it will require an industry solution.

 8 If I can borrow a phrase from my colleague, Alex

 9 Cherin, there are four topics I want you to

10 remember about my conversation with you this

11 morning: Technology, labor, interchange

12 agreements, and the gray chassis pool management.

13 To technology, while the entire world

14 has taken advantage of the emerging technology,

15 especially the benefits of handheld devices, port

16 authorities throughout the nation, labor, and the

17 marine terminal operators have virtually ignored

18 the fundamental benefits of this technology. The

19 HTA, Harbor Trucking Association, Truck Mobility

20 Data or TMD or turn time study, has brought a

21 valuable 1-hour metric to this industry that can

22 be argued as the standard that every marine
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 1 terminal should be expected to achieve.

 2 As I have stated in numerous

 3 presentations, marine terminal operators have very

 4 little information why the truck is in line until

 5 it reaches the pedestal and the truck driver

 6 communicates with the ILWU clerk. This lack of

 7 communications prior to the arrival of the truck

 8 creates many problems and does not give the marine

 9 terminal adequate time or information to

10 efficiently service the thousands of trucks that

11 visit each day.

12 I'm fortunate to be involved in a

13 possible solution to this problem through my work

14 with the Gateway Cities Council of Governments,

15 the ITS Working Group, the U.S. Department of

16 Transportation and Highway Administration. The

17 Flate Advanced Travel Information System, or

18 FLATIS, is showing a great deal of promise as

19 being tested in this port. FLATIS and similar

20 technology has the potential to resolve many of

21 the port- related congestion issues we are facing

22 by providing a preplanning mechanism.

Page 127

 1 This technology allows communication and

 2 planning through computer systems and does not

 3 rely solely on human intervention to make it work.

 4 It allows the drayage trucker and the marine

 5 terminal to preplan. This type of planning is

 6 virtually nonexistent today. If implemented

 7 port-wide, it could revolutionize the industry.

 8 Number two: Labor. ILWU labor must

 9 adapt and embrace the changes in technology.

10 Every ILWU employee, including casuals, must have

11 the knowledge of building and training necessary

12 to operate systems at each marine terminal. They

13 must focus their mindset on productivity and

14 safety. ILWU has built a legacy that is not

15 necessarily perceived as productive or

16 performance. This must change.

17 Port drivers, the men and women driving

18 the port drayage trucks, must be given the same

19 opportunities and chances to build better lives of

20 independent contractors or employees. As ILWU has

21 been treated with dignity and respect, the truck

22 drivers depend on ILWU labor to move the trucks in

Page 128

 1 and out of the marine terminals in a safe and

 2 efficient and timely manner.

 3 The next point is the UIIA or Uniform

 4 Intermodal Interchange and Facilities Access

 5 Agreement, better known as the UIIA. First of

 6 all, I believe that this agreement is necessary.

 7 However, because of inefficiencies, gate closures,

 8 and congestion of marine terminals, it is unfairly

 9 slanted towards the benefit of the equipment

10 providers. The LMC must sign and agree to the

11 terms in its entirety in order to conduct business

12 with the ocean-carrier-owned equipment, which used

13 to cover containers and chassis.

14 This has all changed since the

15 privatization of the chassis. We understand that

16 the equipment agreements are necessary to protect

17 the assets in use, however, the efficiency of the

18 marine terminals, daily gate operations, and

19 closures directly impact the motor carrier. By

20 virtual disagreement, the providers can charge any

21 amount they sit for per diem.

22 There is no correlation in the agreement

Page 129

 1 that ties hours of operation, productivity, and

 2 accountability of that marine terminal to the per

 3 diem cost the ocean carriers are charging. Per

 4 diem costs are strangling the license motor

 5 carriers with no oversight tied to the

 6 productivity of the marine terminal. This

 7 one-sided agreement must hold the relationship

 8 between the equipment providers and the marine

 9 terminals that are hired to perform these

10 transactions accountable for nonproductivity and

11 relief from the charges.

12 To chassis, the shift in ownership of

13 the most vital component of port drayage, the

14 chassis has shifted from ocean carriers to leasing

15 companies. The result of this shift has placed

16 the initial cost of the chassis directly on the

17 shoulders of the individual trucking companies who

18 have no control over how the assets are managed,

19 deployed, or used. Vessel sharing agreements have

20 led to an unproductive model as it pertains to the

21 return of empty containers and the chassis that

22 they are riding on.
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 1 Look at the port today. Chassis are

 2 simply not available in the numbers needed to keep

 3 the cargo flowing. The cost of repositioning the

 4 badly needed equipment has largely been placed on

 5 the motor carrier, and the management of the

 6 numerous pools that are operated on the pool and

 7 rail complexes must be able to accommodate the

 8 changes in port volumes and be available where

 9 needed.

10 Solutions. First, the port must set

11 minimum standards associated with the movement of

12 trucks in and out of the marine terminal. I'm

13 highly critical of the continued lack of

14 leadership from both ports in this area. If the

15 marine terminal's management and labor can

16 continually and efficiently discharge and reload

17 vessels within a forecasted time frame, why has it

18 taken so long to begin to focus on truck turn

19 times?

20 The reason is simple. The vessel

21 operation has a price that must be paid by the

22 vessel operator to the marine terminal. There is

Page 131

 1 no financial incentive or penalty that motivates

 2 the marine terminal operator to focus on truck

 3 visit times. Once we tie the productivity of the

 4 marine terminal to assist them with incentives and

 5 penalties, there will be, without a doubt, a much

 6 greater focus on truck visit times. There must be

 7 a financial incentive to move the trucks within

 8 the 1-hour metric.

 9 24/7 gates and the restructuring of the

10 PierPASS concept. Traffic mitigation is necessary

11 with this many trucks arriving and departing the

12 port complex each day. PierPASS fees are only

13 charged on approximately 27 percent of the total

14 number of containers that pass through this

15 gateway. The concept of PierPASS was to add

16 additional gates to improve the flow of trucks to

17 two shifts rather than one. This was really the

18 first step to mitigate the effects of emissions

19 from the thousands of trucks left idling in the

20 streets waiting to be serviced at the L.A. Long

21 Beach marine terminals.

22 The PierPASS concept improved bayside

Page 132

 1 traffic conditions from the discretionary cargo

 2 that was traveling by truck to the various

 3 importers and distribution centers in the region.

 4 It was never intended or financially structured to

 5 handle 50 to 60 percent of the cargo that passes

 6 through this gateway, and the intention was to

 7 have two complete shifts operating uniformly for

 8 five shifts a week.

 9 Today, the marine terminals close their

10 gates when they feel the need with no concern for

11 the productivity and cost this places on the motor

12 carrier. This must change to a 24/7 operation

13 paid for by a restructured fee concept. The fee

14 restructuring pays for the extended gates and

15 labor, produces an efficient, economic powerhouse

16 of a port complex not seen on the entire planet.

17 The gray chassis pool must be implemented and

18 efficiently managed, providing benefits to the

19 motor carrier and marine terminal operator. We

20 must have adequate numbers and types of equipment

21 available when needed. I see the day coming when

22 trucks will be more likely to hold onto the

Page 133

 1 chassis and move them from terminal to terminal

 2 without the incumbences and delays we see today.

 3 Trained, productive labor and labor

 4 management that is willing to accept the

 5 challenges that new technology brings and the

 6 foresight to embrace it. Lastly, all stakeholders

 7 must be at the table in a continued effort to

 8 remain relevant to the challenges this port faces

 9 each day. All of us: The port authority, the

10 beneficial cargo owner, the marine terminal

11 management, ILWU labor, and trucking must come

12 together and continually work on these solutions

13 to make this the most dynamic and efficient port

14 in the world.

15 I thank you for the time that you've

16 allotted me.

17 CHAIRMAN CORDERO: Thank you, Michael,

18 for your comments on these challenging issues.

19 Next we're going to go Michael Mayor of

20 Mayor Logistics. Mr. Mayor, thank you for being

21 here this morning, and again, interested to hear

22 commentary given your segment of the industry.
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 1 MR. MAYOR: Thank you, Commissioner. If

 2 it's not broke, don't fix it. It was far too long

 3 the mentality of the goods movement in our

 4 industry. Over the years, capital investments for

 5 improvement in our infrastructure have been

 6 substantial but not enough to keep pace with the

 7 growth of our U.S. economy.

 8 There is an intricate web of

 9 dependencies within our supply chain, and port

10 congestion is one of those. It cascades into

11 failures outside the transportation model and far

12 reaches across the United States. Its

13 consequences are direct upon our U.S. economy,

14 directly to the California southern ports in terms

15 of the warehouses that we service. We no longer

16 have a threat of losing our competitive edge in

17 the ports because many of our customers have

18 shifted a lot of their cargo to the east, reducing

19 congestion in the west. But as cargo moves east,

20 so will the congestion.

21 A continuous dialogue regarding

22 information about the current issues needs to be

Page 135

 1 strongly emphasized. As Commissioner Dine stated,

 2 the task force to represent these parties needs to

 3 be involved directly.

 4 Technology is what PierPASS is. They

 5 started out as a technology company, and they must

 6 evolve like all other good technologies.

 7 Currently, PierPASS has placed fifty- five percent

 8 of their moves to the night time. We have

 9 aggregate data over the history of PierPASS, and

10 we believe that using this data we should be able

11 to create a task force and be able to not fragment

12 the industry as much as the appointment systems

13 and terminals have created currently.

14 Smart phones, onboard truck units,

15 tablets, and social media is connecting the world

16 at a revolutionary speed. The world is a much

17 smarter place, and we believe that the

18 communication that happens between the terminal,

19 the shipper, the consignee, and the trucker is too

20 fragmented. That being said, in the history of

21 mankind, those who learn to collaborate and

22 improve most efficiently have prevailed. Thank

Page 136

 1 you.

 2 CHAIRMAN CORDERO: Thank you very much,

 3 Mr. Mayor. We're going to move forward with Rich

 4 Nazzaro, and after Mr. Nazzaro's commentary we

 5 will commence the open forum. It is now 11:20.

 6 We're going to take a break at 11:30 for lunch and

 7 reconvene at 2:00 o'clock. Mr. Nazzaro, the floor

 8 is yours.

 9 MR. NAZZARO: Thank you, Commissioner,

10 Chairman. I'll be brief. We're running a small

11 trucking fleet; only 50 trucks. We have about 80

12 drivers. Every day they're facing the challenge

13 of this congestion, and the problem seems to be

14 not that there's congestion -- that the

15 communication is horrible.

16 What I mean by that is that between the

17 steamship lines and the ports, no one ever tells

18 the truth. No one does. Everyone there tells you

19 life is grand. There are no lines. But you can

20 ride up and down that bridge, and there are trucks

21 waiting 2 and 3 hours to get in.

22 We're running multiple shifts at

Page 137

 1 multiple times, so we're working within the hours

 2 of this port, and we're doing everything we can to

 3 be part of a solution, not a problem. But the

 4 only problem that I'm seeing is that the trucking

 5 community has to always be the solution, that we

 6 have to deal with all the problems. No one else is

 7 becoming the solution.

 8 You stop PierPASS, we don't complain.

 9 It's part of what it is. We run day and night.

10 Do you know how many people pay PierPASS in my

11 business? Everybody. Even though the numbers

12 don't reflect that, they pay it so that they have

13 the opportunity to pick up day and night. You

14 might say, well, only 55 or 27, whatever your

15 number is, to go in during the day, but that's

16 only because to balance it we go at night. The

17 people pay for day and night because they know of

18 all the congestion here.

19 We have to really, really look at what

20 we got going here. What's really going on? You

21 have a labor issue on a constant basis. Terminals

22 are just shutting down because they're either
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 1 protesting, striking; they're doing something

 2 every day. There's no consistent shifts. You

 3 come in Monday morning, this terminal closed for a

 4 reason. You come in on Thursday, there's another

 5 closure. No, we're going to open up on Saturday

 6 because we're not going to have a Friday night

 7 gate. Meanwhile, half the terminals are closed

 8 because they say they don't have the volume.

 9 What do we do? Do we just keep on

10 spending money, be a part of this? If you're

11 going to run a system that says Monday through

12 Friday during the day and then Saturday's an extra

13 day, everybody needs to be open. It can't be at

14 their leisure because then me, as a trucker, what

15 do I do? I pay per diem, $85 for one day, and it

16 just keeps on increasing. Nobody cares. Nobody

17 wants to hear about the problem.

18 We're trying to be a solution. We can't

19 be a solution without the help of everyone in the

20 industry. But how do we continue to fight this

21 battle when it just never ends? It's not easy to

22 just sit here and say, oh, we've got a problem,

Page 139

 1 we've got a problem, we've got a problem.

 2 I don't believe we have a problem every

 3 day, but I will tell you this: There used to be

 4 congestion sporadic during the year, a couple

 5 weeks. Now it's become the norm. That's the

 6 problem. It's the norm. It's not a norm the way

 7 you have a problem for a couple weeks, something

 8 happened. No, this has become the norm of the

 9 industry, and it's become acceptable.

10 My customers don't want to hear about

11 it. I think I speak for a lot of people in the

12 room, nobody wants to hear about it. We're here

13 today, that's great. But the question is what's

14 going to happen tomorrow? We can't even figure

15 out what to do on a day-to-day basis, never mind

16 the long term. I don't think we're going to

17 resolve this long term because I don't think

18 there's enough land down here at the port to take

19 in all these containers.

20 Now what do we do? There's no land, no

21 chassis available. You say, hey, let the trucker

22 get the chassis. Where am I putting it? I don't

Page 140

 1 have a piece of property. So, I go from a 3-acre

 2 yard to a 10-acre yard? Where is that yard going

 3 to be? Out in the Inland Empire? That doesn't

 4 help me any.

 5 We're not going anywhere right now, and

 6 it's really, really a sad situation. The people

 7 that work for me and work for our company, I feel

 8 bad for them every day because they fight so hard.

 9 I have tell you, that's what this is about -- the

10 day-to-day life of all the people, whether it's a

11 dispatcher or driver. Everybody deserves to earn

12 some money. I have no problem with the drivers

13 making money. I think they deserve it. It's 2015

14 practically. To pay a guy $20 an hour or better,

15 why not? He needs to make a living.

16 It's an industry that wants to go

17 backwards, and we need to go forward. That's what

18 I'm scared of. I'm scared that we're going to go

19 backwards and not forward, and then everyone in

20 this whole country's going to be saying, what

21 happened? What happened is there are no resources

22 to get the job done.

Page 141

 1 CHAIRMAN CORDERO: Mr. Nazzaro, again, I

 2 appreciate your commentary. In the interest of

 3 time, with the correct time is we're about to

 4 approach 12:30 for our lunch break. Let me just

 5 conclude with a commentary.

 6 I think as you referenced and as I

 7 referenced earlier as you heard the speakers, this

 8 is a national issue. It is not restricted to a

 9 regional problem. Again, one of the things you

10 said that is very interesting is the question is

11 what are we going to do tomorrow? That's an

12 appropriate question because if we do nothing and

13 the status quo continues, whether it's in this

14 region or any other region in the country, we will

15 have a crisis.

16 But again, on a sense of optimism here

17 -- and I think earlier you heard people say --

18 this particular port complex has a prior history

19 of taking on challenges and having the leadership

20 to succeed. Again, I myself, when I came out of

21 the Port of Long Beach in 2003, and you all

22 remember the issues before us, whether it's with
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 1 Port of L.A. Or Port of Long Beach, and the Clean

 2 Truck Plan, the Clean Air Action Plan, and a lot

 3 of people recognized challenges as you have, Rich,

 4 and perhaps the impossibility.

 5 But on a sense of optimism, if you use

 6 that as a parallel, the sense of optimism really,

 7 out of this room, should be real, flowing, and

 8 growing because you have undertaken challenges in

 9 the past, and you will again not only for the

10 betterment of this region, these ports, this city,

11 this State of California with a 38 million

12 population of consumers, but for the nation. With

13 that I will close, and we will reconvene at 2:00

14 to have the public forum with regard to the

15 comments from those of you who have been patiently

16 waiting. Thank you so much.

17 (Recess)

18 CHAIRMAN CORDERO: In the interest of

19 time, we're going to move forward. I know there

20 are people coming up on the elevator from

21 downstairs.

22 Thank you so much those of you who are

Page 143

 1 here this morning and are returning here for the

 2 afternoon session. It's evident of the fact how

 3 important this issue is to have a dialogue and to

 4 further stimulate collaboration. As you heard

 5 this morning, basically what I'm hearing this

 6 morning is the interest to collaborate and the

 7 interest to address an issue that's so important

 8 not only to this region, but throughout our

 9 gateways and the nation.

10 We heard commentary with regard to

11 setting standards, objectives, using metrics, that

12 is so important, and technology. I think there's

13 a lot to be said in terms of this particular

14 region, this particular port complex, and the

15 leadership that has exemplified it in the past. I

16 feel very good about the commentary I heard this

17 morning.

18 I also again want to thank and sincerely

19 appreciate on behalf of the Federal Maritime

20 Commission the participation of these two great

21 executive directors. Obviously you could see it

22 by the fact that they have dedicated most of their

Page 144

 1 day to be here how important it is to them. They

 2 want to make sure that we listen to the

 3 stakeholders, and it's an issue that I know, in

 4 discussing with this issue with them personally,

 5 they take it very much at heart. I'm looking for

 6 good things to happen despite the tough

 7 challenges.

 8 The afternoon session will be a

 9 commentary session. I look forward to hearing

10 from some of the stakeholders. I know that part

11 of this question also involves shippers and

12 railroads. Now, I will tell you this: In my

13 position, I've the opportunity to meet with many

14 stakeholders, including those from the shipping

15 industry and railroad industry, and I think it's

16 fair to say that though sometimes you may not be

17 visible at public forums like this one, I think

18 it's very fair to say and emphasize how important

19 they believe this issue is.

20 With that, we're going to move forward.

21 Who I have first to address the forum is someone

22 who, again, needs no introduction with regard to

Page 145

 1 this industry, more particular in the marine

 2 terminal operations -- Ed DeNike. Ed, thank you

 3 so much for accommodating your schedule and

 4 actually flying in to be here. Without any

 5 further ado, I'd like to welcome Ed DeNike.

 6 After Ed makes his comments, then again

 7 we'll go down to hear your comments, your

 8 suggestions, your resolutions, and solutions

 9 because what we're trying to get here is not so

10 much just complaints about it. Let's get to the

11 real discussion about how we solve this as a

12 maritime community.

13 In the interest of time, preliminarily,

14 I think I'm going to give -- with the exception of

15 Ed -- Ed, you could talk all you want; there's no

16 time limitation. I say that because here's a

17 gentleman who has poured his lifetime, his career,

18 into the industry and has been a part of

19 containerization as we know it today.

20 But thereafter, we're going to allocate

21 3 minutes per speaker because, again, I know

22 there's probably a number of you that want to
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 1 share your input and your views. Thank you so

 2 much. Welcome, Ed DeNike.

 3 MR. DENIKE: Thank you, Chairman

 4 Cordero, Gene, Jon. It's good to see both of you.

 5 I came down this morning because I feel that what

 6 we're doing here today is crucial to our industry.

 7 SSA has seven large container terminals on the

 8 West Coast. We have about twenty to twenty-five

 9 percent of the man hours. We are the largest

10 employer on the West Coast, and we also operate in

11 most every other port in the United States.

12 I wanted to talk about turn time. First

13 of all, I wanted to make sure that everybody

14 understands it's a misconception for people to

15 feel that terminal operators don't care about

16 truckers. We also own a large truck company in

17 that report. We also see what it takes and how

18 hard these guys work, and it's difficult for them

19 to make a decent living.

20 On the other hand, we're not sure what

21 to do about it. When you operate a terminal as we

22 do, you're talking about a very large expense.

Page 147

 1 Each shift is between one hundred and one hundred

 2 thirty thousand dollars a day. We try to do a

 3 good job. When I say 'we' I believe I'm talking

 4 about all the terminal operators.

 5 One of the most important reasons that

 6 I'm here is because I understood that there was a

 7 concern about whether or not PierPASS should be in

 8 operation. I can tell you that we handle,

 9 sometimes, four or five hundred trucks an hour at

10 several of our terminals. This port, L.A. And

11 Long Beach, is the only port in the country -- I'm

12 calling it a joint port -- that we really have a

13 night operation, and it's saved us. Without

14 having a night operation, we couldn't survive.

15 PierPASS has done a great job for us,

16 and I think they've done a great job for the other

17 terminal operators in that when we started this

18 years ago, when the state was looking at mandating

19 night operations, the concern that we had as

20 terminal operators is how are we going to get

21 reimbursed for this?

22 Our contracts with the steamship lines

Page 148

 1 are clear. We get paid for Monday through Friday,

 2 8 to 5. Anything other than that we don't get

 3 paid for. It's difficult to determine or to

 4 imagine us trying to be open hours other than 8

 5 through 5, Monday through Friday. A cost for a

 6 longshoreman today is anywhere between $900 and

 7 $1300 a day. One person. Again, a well-running

 8 terminal hires 100 to 130 guys a day.

 9 The thing that we're experiencing right

10 now is that truckers aren't getting in and out of

11 the terminal in the time that they need to get in

12 and out of the terminal, and all they can see is

13 it's the terminal operator that's not doing the

14 job. The fact of the matter is is there are

15 things that we can't control.

16 To date, we have two major problems. The

17 one, I understand, people have already talked

18 about is the chassis shortage. I, just this

19 morning, told one of our biggest accounts we could

20 not handle their ships any longer at one of our

21 larger terminals here because they can't supply

22 chassis. We're working two gangs on ships today

Page 149

 1 when we should be working six and seven gangs

 2 because we have nowhere to discharge containers.

 3 We have containers that are what we call

 4 stockpile. I can remember if a terminal operator

 5 had 10 containers stockpiled out of an area where

 6 they can't deliver, it was an absolute

 7 catastrophe. Today we have thousands that are

 8 outside the transfaner delivery rows because we

 9 don't have chassis to deliver them.

10 This isn't our fault. In some of our

11 terminals we have guards that have to remain in

12 what we call a chassis pit because the truckers

13 wait for chassis that are coming in. Then when a

14 chassis comes in for a certain line, they'll fight

15 for that chassis because they've been waiting

16 there, sometimes hours, for that chassis to come

17 in. A guard has to determine who was there first.

18 The truckers looking at this, I'm not

19 sure that they understand that this isn't us. We

20 don't own these chassis. These chassis belongs to

21 our customers or our customers had leased them

22 from somebody who's supposed to be supplying them.
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 1 I can tell you that in Southern California

 2 specifically, if there was the required amount of

 3 chassis much of this problem would go away.

 4 Another part of it is when we started

 5 this day and night operation, the same truckers in

 6 a lot of cases drive day and drive night. There

 7 was not a dedicated day shift and a dedicated

 8 night shift for truckers. We have to pay people 8

 9 to 10 hours a day when they come to work. If you

10 look at the terminals from 8:00 to 10:00 in the

11 morning, it's empty. No trucks there. Years ago

12 before PierPASS or any other port, if you go at

13 6:00 in the morning, sometimes they line up the

14 night before. There's a huge amount of trucks

15 waiting to come in when the terminal opens.

16 Today there's not very many at all

17 because they worked at night. Then they come in

18 at 10, 11 o'clock, and they work for the rest of

19 the day, and in most cases after lunch at 10, 11

20 o'clock, they go home.

21 In the meantime, we're paying full

22 shifts. At 8 to 10 hours a day, $1,000 to $1,200

Page 151

 1 a person, 100 to 130 people, 8 hours, not 6 hours

 2 and not 5 hours. We need the trucking community

 3 to have a more even flow of when these trucks are

 4 going to come in.

 5 Now, that being said, the problem is

 6 much better today than what it was when we started

 7 a couple years ago, but it's still a problem. If

 8 you come to our terminals at 11 o'clock tonight,

 9 you won't see many trucks there. If you come to

10 our terminals tomorrow at 8:00 in the morning, you

11 won't see very many trucks there. If you come to

12 the terminals at 10:00 or 11:00, you're going to

13 see a line of trucks there. You come at 3:30, 4

14 o'clock, you're going to see a line of trucks.

15 We can't man up labor for spurts during

16 the day. We have to have even flows throughout

17 the day to make any sense financially to be able

18 to service these truckers.

19 Now, as I said, I can go on about other

20 things too, but these are the two major items.

21 It's items like that that we need to discuss. I'd

22 like to suggest that we have these kinds of

Page 152

 1 meetings between people like us and truckers.

 2 Truckers need to know we're not against them.

 3 Believe it or not, we're trying to make money like

 4 everybody else. The system today in this industry

 5 is difficult to make money. We're all in the same

 6 boat here. We're not making a boat of money and

 7 not trying to do the job. We're trying to survive

 8 like everybody else, and I think terminal

 9 operators are trying to survive; all of them.

10 I just felt the two things, number one,

11 again, PierPASS has done a wonderful job as far as

12 we're concerned because we get reimbursed. We

13 were worried about from day one how we were going

14 to get reimbursed. PierPASS has been very fair

15 and reasonable and accurate on how they reimburse

16 terminals for the night work.

17 You hear the 24 hour, 7 days. We can't

18 operate two full shifts, as I said. How are we

19 going to operate three shifts? It's good to say

20 we want to be open 24 hours, 7 days, but we have

21 to figure out how that's going to happen. Today,

22 we're open two shifts; we're maybe working a shift

Page 153

 1 and a quarter.

 2 I think that's about it, and I

 3 appreciate you listening. Thank you.

 4 CHAIRMAN CORDERO: Ed, thank you so much

 5 for your comments and your views, and I think in

 6 the spirit of what we have today is, again, this

 7 interest of all working together and collaborating

 8 and studying the very important issues. The

 9 common objective is that we move towards

10 efficiency and address cost issues and so forth.

11 Thank you again for particularly taking the time

12 to fly in.

13 Now, as we move forward, I would like to

14 invite you, the public, to make the commentary.

15 Having taught at the community colleges for many

16 years, it's always interesting when you open it up

17 because, by our nature, no one wants to be the

18 first one. Oh, well, there you go. We have one.

19 Let's start. I'm going to put a

20 3-minute cap. I'm going to be real tough on that

21 because I foresee we probably have a number of

22 commentators. Moving forward, I just want to make
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 1 sure everybody has the opportunity to speak. The

 2 only thing I would ask is state your name for the

 3 record and the company or association that you're

 4 speaking on behalf.

 5 MR. NEVAREX: My name is Ernest Nevarex.

 6 I will speak for myself only, but I have a lot of

 7 my friends who are truck drivers for decades, and

 8 some who are organizing.

 9 I'm going to put most of my detailed

10 comments in writing. You will get it. First I'm

11 just going to blip out statements.

12 First, the trains. Very little has been

13 said about trains, except you did mention it in

14 your opening remarks. After 40 years, we're doing

15 oil export; one million barrels a day. The trains

16 are moving oil. They're no longer moving

17 containers, especially in the northwest.

18 You have all this grain that's starting

19 to rot, so it's going to start moving through the

20 harbor here. We might need elevators or they're

21 going to have to put in containers. Please do not

22 underestimate what is happening with oil. Oil is

Page 155

 1 moving by rail. Containers are going to pile up.

 2 As for trains also, I heard that one of

 3 the lawsuits got dropped in the federal court in

 4 Pasadena recently. It'd be nice if the port

 5 across the harbor dropped their lawsuits too so

 6 Skig could be built.

 7 Some things that have been happening is

 8 the talk about quartz. I stood here 26 years ago

 9 and talked before Ira Distenfield. These workers

10 are employees that are misclassified. People

11 laughed 26 years ago.

12 The Ninth Circuit Court of Appeals last

13 week decided in a published case that FedEx

14 drivers are employees making deliveries. That

15 applies to the L.A. Harbor. In fact, at the rails

16 you heard about HUB. About 400 truck so- called

17 owner-operators -- they're now employees. What's

18 going to happen in the harbor? Now drivers are

19 employees, and then you have preemption.

20 Interstate commerce doesn't have to

21 follow state law? Uh-uh. Pack Incur State

22 Supreme Court last month: No preemption on labor

Page 156

 1 code. Drivers are employees. The lawsuits.

 2 Gosh, the lawsuits. People here got sued by six

 3 drivers last week. Other people have their

 4 dispatchers dispatching trucks even though they

 5 have labor contracts. It's all going to stop.

 6 We need efficiency. It's going to be

 7 tough at first financially. It's going to be a

 8 hit. It's going to be chaos. When there's chaos,

 9 workers organize. You will go through economic

10 chaos unless you are ready. It's going to apply

11 to California. You, as a commissioner, have to

12 make sure it's all even across the nation.

13 It's going to hit California hard.

14 Workers are excited. In fact, even labor unions

15 have to recognize truck drivers have a right. My

16 colleague, Mr. Cleary, says that up to 6 hours in

17 the harbor there's no contract for the work. The

18 ILWU has to recognize port drivers doing staging

19 on port property need to be included in talks.

20 Finally, trucking companies have no

21 written contract with the terminals on how the

22 work is supposed to be done. The UIIA is only a

Page 157

 1 contract for leasing of equipment on a daily

 2 basis. There is no contract on how to do the work

 3 by the trucking companies. That's what's missing.

 4 There's no contract for the workers.

 5 Once they leave the control of the trucking

 6 companies, they're under the control of the

 7 terminals. They do 6 hours a day under the

 8 control and direction of terminal staff --

 9 CHAIRMAN CORDERO: Ernesto, your time is

10 up.

11 MR. NEVAREX: Okay.

12 CHAIRMAN CORDERO: I do apologize.

13 MR. NEVAREX: Drivers need to be

14 included in the contract talks between ILWU and

15 PMA. Thank you.

16 CHAIRMAN CORDERO: Thank you very much

17 for your comment. One of the things I referenced

18 this morning was the fact that this is a national

19 issue involving many stakeholders, which includes

20 the railroads. The issue of congestion in our

21 nation, our potential crisis with regard to that,

22 also, as I mentioned this morning, involves long-
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 1 haul trucking and what's going on in the

 2 intermodal yards throughout the country. It's not

 3 unique to this region, and it's not something that

 4 we're restricting in our analysis.

 5 Last, just to correct for the record,

 6 with regard to the Skig litigation, just for the

 7 record so we're clear, the court's not involved on

 8 that. I think you referenced the port; they're

 9 not a party to that. I know what you were

10 referring to, but again it's evermore important to

11 make sure that as the port PA move forward and we

12 recognize the urgency of infrastructure, including

13 intermodal and railroad projects.

14 Next speaker, please. Yes. Again,

15 state your name for the record and your

16 association that you represent.

17 MR. CORONA: Yes, sir. My name is Juan

18 Corona. I've been a truck driver for more than 20

19 years. I'm 53 years old, and I don't know where I

20 am going to end up with this kind of job.

21 I've been misclassified all this time

22 because I didn't know. I'm ignorant of the laws

Page 159

 1 of the U.S.A. I just want to let you know that I

 2 worked last week 3 days, and I got paid $16 for

 3 those 3 days because I'm fighting for this. I

 4 worked 3 days, and I end up with $16. Also, a lot

 5 of my coworkers got fired. I don't know if you

 6 remember. We were here in (inaudible), but he's

 7 not going to have retaliation against us, and 32

 8 of my coworkers got fired a week or 2 weeks ago.

 9 I just wanted to let you know that we need your

10 help. It is hard to make money as a truck driver.

11 One day I went to APO. I got there at

12 12 noon trying to get a load. At 5:00 p.m., the

13 class trainer came to me, and then he couldn't

14 land it because the container was damaged from the

15 bottom, so I got out with nothing. I didn't get

16 paid a single penny for that, and I spent 5 hours

17 there. You guys can help us. I don't know what

18 you can do, but there is something you have to do.

19 I'm 52 years old. My teeth are falling

20 off. I have no money to go to the dentist. I

21 have no health coverage. I have nothing. After

22 22 years, there's people that come into U.S.A.

Page 160

 1 The lady got married with a veteran, and he gets a

 2 monthly check, he's got medical, he's got

 3 everything. He's been (inaudible) for 2 or 3

 4 months, and I've been working here for more than

 5 20 years, and I can't afford anything. That's all

 6 I can tell you. Thank you for --

 7 CHAIRMAN CORDERO: All right. Thank you

 8 so much for your comments. As you heard this

 9 morning, I think stakeholders are very much key to

10 the fact that turn times is an important issue.

11 Hopefully as we move forward, a collaboration of

12 some of these questions -- I think the truck turn

13 times are very important. This then translates to

14 the opportunity for truck drivers, be it an

15 employee or independent contractor, to be more of

16 a beneficiary on that.

17 MR. CORONA: Thank you.

18 CHAIRMAN CORDERO: Next speaker, please.

19 Here we go. Thank you. Then we have the

20 gentleman back there. You'll be right after the

21 young lady. Thank you so much. Your name and

22 your association?

Page 161

 1 MS. LANGFORD-COTY: Sandy Coty. I'm

 2 representing Los Angeles Customs Brokers & Freight

 3 Forwarders. Just wanted to point out we're seeing

 4 9, 10-day delays on VACIS exams at the ports. We

 5 think it's related to the chassis issue.

 6 One of the questions we had for the

 7 ports is if you know a container's targeted for an

 8 exam, it's targeted prior to the vessel arriving.

 9 Therefore, is it not important to put a container

10 that's targeted to be a potential risk directly

11 onto wheels because it can't go through the

12 radiation portal if it's not on wheels, right?

13 We had containers of fresh fruit that

14 have spoiled because we can't get them through the

15 VACIS, and most of them have agriculture holds,

16 etc.

17 The other issue we have is one of our

18 ports, part of their tariff does not charge

19 demurrage on exams for certain holds. The other

20 port does not have this as part of their tariff.

21 We do work with the other port to get the

22 demurrage waived, but that takes a lot of time, a
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 1 lot of effort, and delays.

 2 Just something to point out whether the

 3 FMC would consider not allowing ports or carriers

 4 to assess demurrage on containers that are

 5 targeted for exams across the whole country, not

 6 just here.

 7 We are also big proponents that the FMC

 8 should work with the carriers or the trade

 9 community with the supply and the quality of

10 chassis. That, as we've heard, is a huge issue.

11 The appointment for the port truckers

12 that are delayed 5 hours. They make their

13 appointment, they show up, and they get turned way

14 because they didn't get there in time because they

15 were in line. They can't get there if they're in

16 line. We have an experience of a trucker, three

17 turns it took him to get in and get a container

18 out. That's 15 hours to get one container out.

19 We have the misfortune of then having to make the

20 phone call to our customer to tell them the

21 container didn't come out. Obviously it affects

22 them. They didn't meet their delivery. They may

Page 163

 1 not make their cutoff for their deliveries, and

 2 they get deductions from their customers, etc.

 3 It's been a huge cost to us to

 4 facilitate, make the appointments, pay the

 5 demurrage, pay it again, pay it again, call our

 6 customer to tell them it didn't happen even though

 7 we were promised the container was going to be

 8 staged the next day. It reflects poorly on us as

 9 a brokerage or forwarding community that we can't

10 deliver for something that we have no control

11 over.

12 Just real quick, in addition to the cost

13 you were speaking of to us, being part of the

14 middle man between us and the trucking companies

15 was a source of revenue for us. We could get

16 involved with the drey and help the customers that

17 didn't have a drey company. Now it's become to

18 difficult, we get additional bills down the line

19 because of chassis pulls and -- that we weren't

20 expecting. It's become an administrative

21 difficulty for us, and it adds a lot of cost to

22 our transactions. I just wanted to point out that

Page 164

 1 all these things affect our bottom line as well.

 2 Thank you.

 3 CHAIRMAN CORDERO: Thank you so much.

 4 Sandy, you touched on the issue to merge, and not

 5 an issue that's restricted to the local area here.

 6 When we talk about congestion and factors that

 7 lead to congestion, one of the effects of that and

 8 impacts of that is costs like demurrage. The

 9 National Custom Brokers & Freight Forwarders

10 Association of America, as you are fully aware who

11 they are, they have raised that issue in terms of

12 demurrage. It's something that is a discussion on

13 the eczema and the West Coast.

14 Next speaker.

15 MR. WRIGHT: I'm Joe Wright from Mazda,

16 North American Operations. Just wanted to make a

17 quick comment. First, I appreciate this forum,

18 and I'm glad that all the stakeholders are

19 together to try and resolve this.

20 I just wanted to give a shipper's

21 perspective, and many of my peers in the car

22 industry or other industries, shippers as well,

Page 165

 1 I've seen here. The congestion is causing issues

 2 with us receiving freight. We understand the

 3 chassis problems, the storage cost, and things

 4 that many people have already expressed, but just

 5 to add to that, when we don't receive our freight

 6 -- we have distribution centers across the

 7 country, of which I have to creatively find those

 8 folks that come to work every day things to do

 9 because we have less work for them to do.

10 Additionally, we're giving much of our freight

11 that's coming from here from Asia, we're having

12 air that stuff so we don't lose sales. Very

13 costly to put anything in the air domestically or

14 internationally. Just wanted to share that that

15 we try not to idle our workforce and we keep them

16 in the fold, but we're getting creative with

17 things because that work is being held up because

18 of the many different reasons that we discussed,

19 and it's adding cost to us. I just wanted to

20 share that.

21 CHAIRMAN CORDERO: Joe, thank you so

22 much for being here, and thank you again for the
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 1 commentary on behalf of Mazda. The perspective of

 2 the shipper is very, very important, and I think

 3 clearly at the end of the day the concern is to

 4 get the product to the market and the whole chain

 5 and movements in terms of what's involved with

 6 that including cost. I appreciate your

 7 perspective on that. Like the railroads, it's an

 8 very important part of the dynamic and the

 9 dialogue that should occur.

10 Next speaker.

11 MR. CAMACHO: Good afternoon. My name

12 is Pablo Camacho. I'm with the Teamsters union.

13 You guys are talking about turn times. That's

14 great, but in no way is that going to help the

15 driver. When the companies are misclassifying

16 their employees and paying them by the load, the

17 company determines how much money they're going to

18 make whether they do 20 turns a day to 5 turns a

19 day.

20 You have companies like Toll. Toll is a

21 company that's legally classifying their

22 employees. They're paying them an hourly rate,

Page 167

 1 which is what it should be, and you've got

 2 companies that are not. How is it a company like

 3 Toll can be profitable when you have other

 4 companies violating the laws and the port is

 5 allowing them to do that? Because they have to

 6 abide by all federal and state laws, which they're

 7 not. The mayor called for cooling-off period for

 8 the recent strike. The cooling off period was

 9 violated.

10 You, sir, were in charge of

11 investigating it. As of now, the company's

12 getting more aggressive. They fired 33 workers.

13 Why? Because they're standing up for their

14 rights. Yet, they're still allowed to come in and

15 out of the port. I just don't understand. You

16 guys have to really look at that.

17 We want good companies like Toll to

18 survive. They all need to be on the same level

19 because these companies are not paying 8 to 10

20 hours a day to these drivers except for Toll.

21 Toll's doing the right thing. Toll's profitable.

22 Toll's surviving. Why aren't the other companies?

Page 168

 1 Why aren't they doing the right thing? (inaudible)

 2 just got hit with -- they owe $900,000 to 14 other

 3 drivers. They've got another 30 pending. Where

 4 is this going? You guys need to look into this.

 5 CHAIRMAN CORDERO: Thank you very much,

 6 Pablo, for your input. Let me say again, so that

 7 we don't lose perspective of the reasons why we're

 8 here and what the FMC can or cannot do, the FMC

 9 does not investigate labor-related issues. Just

10 to correct that for the record, that's not what we

11 do at the FMC. We're concerned about congestion

12 inefficiency at port authorities.

13 Part of that discussion, as we've heard

14 this morning, does include the sensitivity with

15 regard to the ultimate result of a driver, whether

16 you're an employee or an independent contractor.

17 Much specific to the discussion has been PierPASS.

18 We have not been lost sight of the fact

19 that we have driver issues. A large part of that,

20 whether it's long-haul or short-haul, is the fact

21 of addressing the issue. But that's not what the

22 FMC does, and certainly the purpose of this forum

Page 169

 1 is not to address that issue in specificity. I

 2 just want to make sure we keep our eye in terms of

 3 what the objective is.

 4 Next speaker, please.

 5 MS. AGUIRRE: Good afternoon. My name

 6 is Jacqueline Aguirre. I am 46 years old.

 7 CHAIRMAN CORDERO: Who are you

 8 representing? Who are you with?

 9 MS. AGUIRRE: I'm a driver from TTSI,

10 and I'm here to let you know what's going on right

11 now with this company. This company is making a

12 lot of bad things to everybody. In this case, I

13 feel very sad today and very angry, and I have a

14 lot of things in my heart I don't know how to

15 explain. But the company took the truck on Friday

16 from the parking, and we made a deal with them.

17 I'm going to bring the truck on Monday, I told

18 them, but they took it from Friday. They took out

19 from the parking. Then 2, 3 hours ago, I went

20 there, and I said to them, please, can I have my

21 checks, and I get the keys from the truck? The

22 owner, Victor Larosa, say, I'm not going to give
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 1 you nothing.

 2 CHAIRMAN CORDERO: Jacqueline, let me

 3 interrupt, if I may. Let me first of all say,

 4 thank you for your concerning issue and your

 5 input, but again I just want to make clear, and

 6 what I don't want this to turn into an issue of a

 7 labor discussion in terms of what you just said.

 8 I don't want to get into a discussion talking

 9 about any particular company or individuals on the

10 negativity side. Bear with me, it's not that I'm

11 dismissing the importance of the issue that you're

12 presenting, but this is not the forum to do it.

13 You heard this morning that we're here

14 to collaborate within the industry. This port

15 complex is known to exercise their leadership.

16 We're here on the issue of congestion and as it

17 effects the nation. I want to keep our focus on

18 that. Again, I don't mean to be dismissive or

19 rude on this issue, but if we start going

20 off-track, then my job is to keep us focused.

21 Then we're not doing a service in terms of the

22 issue, in terms of why we're here. Having said

Page 171

 1 all that, thank you so much for being here.

 2 Next speaker, and hopefully we can chime

 3 in more with what the subject matter was this

 4 morning, and that is how you as a stakeholder see

 5 your view and solutions to the issue at hand,

 6 which is efficiency, congestion, and improving

 7 connectivity. That's what the FMC's concerned

 8 about, ensuring that we have an efficient,

 9 reliable transportation system whether bottlenecks

10 within the port or outside the port. That's the

11 issue, and that's the focus here.

12 Next speaker, yes.

13 MR. VALENTINA: My name is Hector

14 Valentina from Tom Green. I heard your main

15 concern, and we all have the same concern. Moving

16 to a 24/7 operation, I'm not sure that's going to

17 100 percent fix the problem. Becoming like us, we

18 had to put more people onboard, hire more trucks,

19 more fuel, then it becomes an expense to us.

20 This problem went back starting from

21 June. From June to today, we've been spending

22 almost 300,000 in initial labor costs that we're

Page 172

 1 going to never recover. We will never recover the

 2 loss. Unless at the end of this meeting decides

 3 what are we going to do, tomorrow we'll be back in

 4 the same problem, waiting in line, paying more

 5 overtime. There's only so many hours a driver can

 6 work, and going 24/7 might not fix the problem.

 7 As Edward said, there are only working 8

 8 hours and a quarter. Where are the other 6 hours

 9 going? (inaudible) lunch time they (inaudible)

10 6:00 a.m. to 4:00 a.m. in the morning. It's

11 nonstop. Then there might be additional hours and

12 us drivers -- I don't mean the drivers --

13 (inaudible) and do no work. But I don't think

14 24/7 is going to be the key because I don't know

15 (inaudible) that (inaudible) shortage of drivers.

16 I mean, years ago, (inaudible) hire a driver. He

17 goes to another driver, and he learns how to go

18 into the terminals. Today terminals don't allow

19 that anymore. You have to be educated and know

20 how to get in and out of the terminal.

21 (inaudible) 15 drivers that we've been trying to

22 get for a year. Because the terminal will not let

Page 173

 1 us take a driver and be trained. Now, when you

 2 talk about mechanics and training.

 3 We need to have someone to do these

 4 things. (inaudible) to get more drivers trained.

 5 We can hire 10 drivers, but they had no experience

 6 in a port. (inaudible) going nowhere. (inaudible)

 7 extend the day longer. I mean, just had 10:00

 8 p.m. or went on lunch at one time, I can

 9 (inaudible) I told you, for 3 hours waiting for

10 them to finish their lunch. They can't leave

11 because when they leave the terminal they have to

12 start their cycle all over again. (inaudible)

13 we're not looking at how many hours (inaudible)

14 terminal's operating.

15 CHAIRMAN CORDERO: Thank you for your

16 comments. We appreciate it. Next speaker.

17 MR. SMITH: My name is Burke Smith from

18 Dependable Highway Express. I wanted to react a

19 little bit to the comments from the gentleman from

20 SSA. I apologize; I forget his name. But I think

21 what we see here very often is finger pointing,

22 and we all know that. Terminal operators are
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 1 pointing their fingers at the truckers. Truckers

 2 are pointing them back at the terminal operators,

 3 the steamship lines, everybody.

 4 I think if you look back to what

 5 happened with the Clean Truck Program, you see the

 6 power of a standard and setting a benchmark and

 7 putting it in the future and letting folks work

 8 towards that in the marketplace. I would suggest

 9 that's what we need here. We need someone,

10 whether it's the ports or the federal government,

11 to provide that standard.

12 Everybody who comes up here shares one

13 thing: We're all claiming poverty. The

14 companies, the terminal operators, the steamship

15 lines; no one's making money -- maybe only the

16 ports. Nobody has a giant pot of money, but over

17 time, if we all know what the standard is -- and I

18 would suggest that standard needs to be a turn

19 time standard from queue to out gate -- if we

20 could set that standard, perhaps 4 or 5 years down

21 the line.

22 Contracts can be adjusted. I hear SSA

Page 175

 1 say, we don't know who's going to pay for it.

 2 Those contracts aren't set in stone with the

 3 steamship lines. If they know that they have to

 4 service the freight at a certain level, the

 5 contracts can be adjusted over a period of years.

 6 The steamship lines should bear some of that cost.

 7 Obviously they're going to pass it through to

 8 their customers. Perhaps the terminal operators

 9 should bear some of that cost. The truckers maybe

10 bear some of that cost.

11 All I can tell you for sure is truckers

12 were mandated to buy new trucks, and I don't

13 really know anybody in our industry who's making

14 money. The drivers, the companies, nobody.

15 They're going out of business. They're losing

16 companies every day, every week, every year

17 because we can't survive in this environment.

18 The port's still here. Terminal

19 operators are still making money. Steamship lines

20 are doing much better. The truckers are going out

21 of business. Our drivers can't make a living.

22 That's very clear, very real, and it happens every

Page 176

 1 day. I know a lot of folks around the harbor

 2 who've gone out of business, who are going out of

 3 business. Something needs to be done. We can't

 4 talk and talk and talk. Something needs to be

 5 done or freight won't move.

 6 I get 400 emails a day. Probably 50 of

 7 them are folks looking for a trucker to move their

 8 freight who can't find one because there aren't

 9 enough trucks. There aren't enough truckers

10 willing to do it. They're all too busy.

11 Back to the commentary from the

12 terminal's side, one of things the terminals tend

13 to say is everybody shows up all at once. Why

14 have 60 trucks in my fleet? We do have two shifts

15 on our trucks, so they're operating 23 hours a

16 day.

17 What would you have me do with my truck

18 between 5:00 p.m. and 9:00 p.m. or 5:00 p.m. and

19 11:00 p.m. when the terminal is too busy to serve

20 those trucks? Am I supposed to have that truck

21 sit? That seems to be the implication from the

22 terminal operators is that you all should have

Page 177

 1 your trucks sit when we're too busy to serve you.

 2 We go and spend $150,000 a truck, we put a body in

 3 that truck, we pay someone who needs to work a

 4 full shift to make a living, and we're being told,

 5 you can't come during these hours because we can't

 6 service you.

 7 Not to blame. There need to be a

 8 solution. Everybody needs to be part of the

 9 solution, but without a standard, nobody's going

10 to find that solution. We're going to be talking

11 here again a year from now, 5 years from now.

12 We're not going to be working towards that

13 solution unless there's a mandate, and it needs to

14 come from either the ports or the government.

15 That's very clear.

16 CHAIRMAN CORDERO: Thank you so much for

17 your perspective, and I think one of the things

18 that you referenced, that we could take by

19 implication, time's ticking. There's no more time

20 to be debating these issues. I can tell you one

21 thing -- I'm sure both of these gentlemen to my

22 right and to my left, given their experience,
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 1 could absolutely confirm this -- the more you

 2 debate and point fingers, other people are getting

 3 ahead of you. International communities

 4 specifically. That's why I recommended this book,

 5 Sea and Civilization, and other books that point

 6 to the fact that this is about the globalized

 7 world as we know it today.

 8 Hopefully we get to the point -- as

 9 Congressman Lowenthal referenced, we need to raise

10 the bar. I think with that, all these issues of

11 congestion deal with all the stakeholders. The

12 more we get involved and collaborate, I believe

13 that we're going to get things done in the nation

14 here in the interest of everybody. But it's not

15 utopic. That's the goal. Not the pointing

16 fingers and getting into these debates that aren't

17 going to go anywhere. Thank you very much for

18 your perspective.

19 Next speaker.

20 MR. GOLDSHIED: My name is Emannuel from

21 Amazon Trucking Distribution. I'm the owner of

22 the company. If I had half an hour I would

Page 179

 1 explain what is the problem, what is the

 2 consequence, and what is the solution. But I

 3 don't have half an hour, so I'll try and briefly

 4 explain what is going on.

 5 Because of the long line, we cannot

 6 return empty containers. I myself, I wrote

 7 checks, over $80,000 per diem, and that's not

 8 including the chassis fee. I estimate that out of

 9 my pocket, I wrote checks for over $110,000 or

10 more only for paying the chassis fee.

11 Because there are so many containers

12 outside the port and not enough inside the port,

13 it's affecting the real estate. The load for

14 weight 1 or 2 years ago, you can find parking for

15 -- I'm sorry -- (the square feet. Now it's 18

16 cents.

17 Warehouses 2, 3 years ago, their

18 warehouse's rates was 50 cents per square feet.

19 Right now I give Enofil 75 cents per square foot,

20 and they came back to me 85 cents per square foot.

21 They can see rates around the port right now.

22 It's less than 2 percent basically because the big

Page 180

 1 line because we cannot return empties.

 2 I don't understand how many countries in

 3 the world got automated terminal. In Germany, the

 4 terminal is automated. There's no people. You go

 5 to the speaker. You punch your container. The

 6 time you go under the crane, the container is

 7 loaded. You're often in and out. In this regard,

 8 we are a third world country.

 9 CHAIRMAN CORDERO: Sir, thank you so

10 much for inputting your comments. Next speaker.

11 Joe's back.

12 MR. WRIGHT: Just one comment I wanted

13 to make. We all know if we have a bucket and

14 we're pouring water in it, eventually that

15 bucket's going to fill up, and we're going to need

16 a bigger bucket. I apologize if I offend anyone,

17 but everyone has different points of views.

18 We've talked about widening freeways.

19 We've talked about different things to help us

20 deal with the congestion. I understand volumes

21 increasing, and I'll assume with the two of you

22 gentlemen here you're not telling anyone to take

Page 181

 1 their freight to other ports. I'm sure you want

 2 to retain the business.

 3 I just wanted to make the comment people

 4 have had different views of having the ports open

 5 24 hours. With the volume and the structure we

 6 have and all the folks we have that live in the

 7 Los Angeles area, how can we not look at that? I

 8 think that's one that we have to consider because

 9 we're busting at the seams right now. The only

10 thing that could possibly open up is to open up

11 that window. I'm not the expert. You guys know

12 more about this than I do, but I think the path of

13 least resistance -- I think we have to consider

14 the 24 hour, 7 days a week.

15 CHAIRMAN CORDERO: Thank you again, Joe,

16 for your comments. Yes, the gentleman here in the

17 front.

18 MR. CURRY: Thank you, Chairman. My

19 name is Rick Curry. I'm with Gateways

20 International in Seattle, Washington. We're owned

21 by the Paisa Group who is a steamship vessel

22 operator, port operations, and have offices
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 1 throughout the world. But I'm representing the

 2 International Association of Movers today;

 3 household good business based in Alexandria,

 4 Virginia. We have 2000 members in probably 170

 5 countries throughout the world.

 6 The issue that's been brought to our

 7 attention is that the Port of Los Angeles and Long

 8 Beach, its examinations -- I've been in the

 9 business 42 years -- having inbound examinations

10 has always been there and not an issue. But we're

11 having export examinations now, and several of our

12 members contacted me last week, being on the Board

13 of Directors of the Association, and they asked me

14 to bring it up to you that these examinations are

15 costing up to $30,000 for each one of these

16 members.

17 Obviously that's a concern, and that

18 cost is that the shipment has to be examined, it

19 has to be taken out. If it's household goods,

20 it's professionally packed when it goes into

21 wooden crates or into a steamship container. When

22 it's brought out, then it's put back by

Page 183

 1 nonprofessional people. Damages occur, delays,

 2 and the cost of all that is not -- the freight

 3 forwarder has to bear that cost. They try to pass

 4 it on to the shipper and they say, why? There's

 5 no reason.

 6 I can understand if it was going to some

 7 third world countries like the Department of State

 8 handles, but several of them have been Costa Rica

 9 and some other areas that certainly aren't a

10 concern. So, I would like to involved. I live

11 locally even though my operation's in Seattle.

12 I'd be very happy to work with the ports to look

13 into it. Thank you for your time.

14 CHAIRMAN CORDERO: Thank you, Rick, for

15 your comments. Next speaker. Gentleman in the

16 back.

17 MR. LAXMANA: Thank you, Mr. Chairman.

18 Good day. My name is Sri Laxmana. I'm with C.H.

19 Robinson. We are registered NBOCC.

20 There's a lot of good comments being

21 passed on today, so I'm not really going to pile

22 on that too much. Being an NBO, small to

Page 184

 1 mid-sized customers are who we primarily

 2 represent, and the one issue that has been raised,

 3 as my colleague, Sandy, mentioned earlier, is the

 4 issue on demurrage.

 5 I think it's worth saying as well what

 6 if our contracts with the steamship line, if they

 7 are CY to CY that's filed within the contracts, if

 8 a container is not made available for pickup, I

 9 fail to see how that demurrage charges are being

10 passed on down to us, ultimately down to their

11 customers. I think that's certainly something

12 that needs to be addressed, and we are definitely

13 passing on a lot of these charges, but that seems

14 to be the main complaint. If a container is not

15 made available, why are they getting charged?

16 I know for a fact that if it's a

17 steamship that (inaudible) a lot of these charges

18 are not being passed on. That's the main thing I

19 just wanted to highlight and perhaps something

20 worth looking at.

21 CHAIRMAN CORDERO: Thank you. I know

22 your company is a big player in the industry, so

Page 185

 1 what you say really comes from not only valuable

 2 experience, but on-the-ground experience with

 3 regard to the movement of these issues.

 4 I will say that when you talk about

 5 congestion the results are costs like surcharges,

 6 and I think again, ultimately the goal is to find

 7 a way of getting there. Demurrage is not an issue

 8 isolated to the West Coast. It's an issue that is

 9 impacting our gateways.

10 You may have to subdivide that with two

11 types of demurrage, so to speak: The customs

12 hold, which is another issue altogether, and then

13 demurrage that comes from other factors. Either

14 way, it's an issue that needs to be addressed as

15 part of this congestion question and the

16 ramifications and consequences of bottlenecks.

17 Next speaker. There's a lot of people

18 in this room and -- there you go.

19 MR. WALLACE: My name is Howard Wallace.

20 I'm with Los Angeles Harbor Grain Terminal. We

21 started our company here in 1959. I've been

22 working in the port since 1970. I've been in a
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 1 number of meetings like this. I've been in some

 2 working groups that came out of meetings like

 3 this, and basically afterwards nothing has

 4 happened. There has been no progress, been no

 5 change.

 6 My request is that the two executive

 7 directors get together with the Federal Maritime

 8 Commission, come up with some type of working

 9 group that has your sanction that has a mandate,

10 some juice, and accountability. Put that together

11 and get us started on the path we need to go.

12 Thank you.

13 CHAIRMAN CORDERO: To the point. Let me

14 add to the fact that ultimately -- for example New

15 York, New Jersey. The issues that we're

16 discussing now are very much issues that they have

17 discussed. To Howard's point, they recently put

18 forward a Port Task Force Performance study

19 addressing these issues and the

20 roll-up-our-sleeves approach, now here's what we

21 need to do. This port has done that largely in

22 some of the cases that you heard this morning in

Page 187

 1 other areas.

 2 Now, to put this in perspective, let us

 3 not forget what has been stated this morning:

 4 These ports are seen as the leaders. As you know,

 5 the Journal of Commerce the last couple years kept

 6 track of port productivity and with their studies

 7 have found that the Port of Long Beach is the

 8 number one productive port in the Americas; Port

 9 of Los Angeles, right up there. I want to make

10 sure we don't lose the perspective here that you

11 have ports, you have the wherewithal, as you've

12 mentioned, to get things done.

13 Let us not forget, without being

14 redundant, the Clean Truck Plan. You remember

15 back 2003 and '04 and how problematic that was,

16 and the rest is history. I think in much the same

17 view and a parallel view, hopefully we get this

18 group energized enough that I am sure that all our

19 efforts will bring these issues to light in the

20 best interest of the nation. Next speaker.

21 MR. BROWER: That's me. Ryan Brower

22 with Weber Logistics. Let me first say that I'll

Page 188

 1 agree with all the cooks in the kitchen it's

 2 amazing that there aren't more grease fires in our

 3 industry. It's a testament to everybody that's

 4 involved. It's a very good operation; I have to

 5 say that. But we're here to address certain

 6 issues, so here goes. I have three for your.

 7 One, and I don't know if you could

 8 answer it, but how we can be charged demurrage

 9 when the ports aren't open. I'd like to know how

10 that's justifiable.

11 Number two, it's the 21st century. On

12 Friday I had seven containers at SSA Port that

13 were Maersk containers, and I was told that in

14 order to get them cleared I'd have to either issue

15 a wire or a hard check or money order, cashier's

16 check, but not to the port in Long Beach -- to SSA

17 in Salt Lake City. I had to actually guarantee

18 today's demurrage as well because of the one-day

19 transit in the U.S. Postal. That one blows my

20 mind away in the 21st century.

21 A little bit more general, what we'd

22 like to see from the steamship lines. We have to

Page 189

 1 stop granting the big box guys 30 days of

 2 detention-free time off-dock. They're holding

 3 onto chassis for weeks and weeks. These guys have

 4 500 to 1,000 containers a week, and they're

 5 holding chassis for multiple weeks. You want to

 6 address a major issue right away? That's one

 7 place to start. Thank you very much.

 8 CHAIRMAN CORDERO: Thank you, Ryan, for

 9 your comments. Next speaker. There's a lot of

10 people in this room.

11 As we move forward, I think you all have

12 heard a very interesting discussion and

13 commentary. Being part of the government in my

14 position, I recognize the commentary by some who

15 feel that -- are we just talking or is there going

16 to be any action? I will tell you this: There's

17 a lot of people like the Congressional

18 representatives you had this morning in Congress

19 who do care about this. But in a Congressional

20 arena, the federal agencies I reference my

21 discussions with MARAD and the DOT. We have some

22 of our staff here, key people from the Federal
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 1 Maritime Commission. There are people who

 2 earnestly want to be part of the solution, and

 3 that's why we're here; to hear potential

 4 solutions.

 5 More importantly, many of you know that

 6 I do have a port authority background having been

 7 a commissioner for 8 years. I know that you know

 8 how important the port authority needs to be a

 9 part of this discussion. Whether it's the West

10 Coast, the Gulf, the Southeast, or the Northeast,

11 which is why we're doing the forums at major

12 gateways.

13 I just want to put it in the proper

14 context. As the last gentleman referenced and the

15 speaker before, let's not lose sight of the fact

16 that we've done, as an industry, a lot of great

17 things. I've had the opportunity to go to other

18 parts of the world to have discussions with regard

19 to port-related operations. Everybody looks to

20 this country in terms of a model in many areas and

21 more particularly in terms of ports. Sustainable

22 development now is a discussion that -- its

Page 191

 1 policies very much relates to this about what we

 2 can do.

 3 I'm just trying to put out a sense of

 4 optimism here that I really, passionately believe

 5 that this can be done. The FMC is not going to do

 6 it alone. You are a major part of it, but it's a

 7 Federal Maritime Commission -- emphasis on the

 8 word maritime -- we would be remiss not to go out

 9 and have this dialogue.

10 I am confident that we have two

11 executive directors who are here. As I referenced

12 before, they have set aside the whole day to

13 address this issue. I say that only because,

14 believe me, I think everybody, including the

15 people who took the time to testify this morning,

16 these panels, are very serious about addressing

17 this issue.

18 I'm going to give the opportunity to

19 whoever else wants to make comments. I know that

20 the nature of some of these public forums people

21 are rather hesitant. Frankly, as I mentioned, the

22 railroads and the shipping industry, I know what

Page 192

 1 their opinion is on this. I've received emails

 2 from entities who wish that they could be here and

 3 are very supportive of what we need to address. I

 4 know what their views are.

 5 The fact that I'm here in front of this

 6 podium should not represent that anybody in this

 7 industry is dismissive of what we're talking

 8 about. But it gives you the opportunity, the

 9 public, to chime in and put pressure either on the

10 FMC, on our Congressional representatives, on our

11 port authorities, and our stakeholders overall to

12 really realize how important this issue is. From

13 my perspective, it's a prime issue that I believe

14 there's a significant national interest to address

15 on behalf of international ocean transportation

16 system.

17 Any other people who wish to address the

18 topic? Yes. Technology, right? Very apropos.

19 Thank you for taking the time and coming up. I

20 hope I motivate you to come up.

21 MR. NORONHA: Good afternoon. My name

22 is Val Noronha with the Digital Geographic in

Page 193

 1 Santa Barbara. I have a very nice job. I have

 2 GPS on a couple hundred trucks in L.A., and I play

 3 video games all day. I see them moving on my

 4 screen, I see the congestion points, and I see the

 5 times. From time to time I get inspired to write

 6 about it, and I wrote about it recently, and,

 7 Chairman, I have sent an email to the Secretary of

 8 the FMC. I'm sure you'll get that with a link to

 9 my article, and it was covered in the Journal of

10 Commerce a couple of weeks ago as well.

11 The reason I'm here is I'm enjoying the

12 opportunity to speak to both of the executive

13 directors of the ports as well as you, Mr.

14 Chairman. Many speakers today have expressed the

15 joy that we are here talking together with all the

16 stakeholders in the room, and there have been

17 relatively few occasions, but many enough in the

18 past. Occasions on which this has occurred in the

19 past, and one of those was the Turn Time

20 Stakeholders Group that was constituted about 4

21 years ago consisting of both ports, the LMCs, the

22 MTOs, and the BCOs. They were all together.
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 1 They made a tremendous amount of

 2 progress. They came to agreement around the

 3 report that I wrote -- little plug -- but they

 4 came together. They saw the commonality in this.

 5 They saw the signs, and they said, all right, this

 6 makes sense. Let's go to the next step.

 7 For various political reasons, that

 8 effort got torpedoed. It never recovered from

 9 that torpedo hit, and Chris Lytle, Sean

10 Strawbridge got together and tried to make

11 something happen maybe 2 years ago. Again, the

12 ports did not come together to make that happen

13 again because of the big torpedo that hit.

14 I think we have learned from that

15 experience, and I think we can -- we must

16 reconstitute that group. I'm with Howard on this.

17 Howard had just suggested that there needs to be a

18 dual port for community organization of some sort.

19 I'm not sure what you call it, a stakeholders

20 group, that can see the ports working together on

21 common issues.

22 There are numerous issues to be

Page 195

 1 addressed: Turn time, understanding and what to

 2 do about it; the technology, integrating the

 3 technology, making sure that the technology has a

 4 strategic plan, and that we don't have one

 5 terminal doing this, another terminal doing that,

 6 all with very good intentions, but on their own

 7 corporate silos without any integration so that

 8 the truckers are following different rules

 9 depending on which terminal they're calling at.

10 I could go on for a long time. I'm

11 going to keep this short. We need a good, strong

12 leader. We need a czar. Jim and I would have

13 recommended you except that you have a day job,

14 but there are men like Gill Hicks, the father of

15 the Alameda Corridor, people who have had great

16 success, people who are respected in this

17 community, who, I think could lead us again. Gill

18 also has a day job with Cambridge Systematics now.

19 I think that's about it. That's all I

20 want to say for now. I completely agree with

21 Howard and I want to second that there needs to be

22 a coming together, a place of authority with a

Page 196

 1 strong leader and a set of ground rules. I think

 2 a lot could be accomplished that way, and I think

 3 that would be a model for other ports in the

 4 country as well. Thank you.

 5 CHAIRMAN CORDERO: Thank you so much,

 6 Val, for your comments. Now, we have allocated to

 7 be here until 4 o'clock. It is now 3:15. Unless

 8 there's any other people who desire to come to the

 9 podium as I see that we may have concluded now the

10 commentary, unless I see anybody raise their hand.

11 I'm going to move forward to my closing

12 comments, but before I do that -- I know this is

13 not part of the script and the agenda, but I will

14 say I'm going to allow both Gene and Jon to just

15 make some closing comments because, again, despite

16 what the challenges are, despite what the

17 obstacles are -- I'm preaching to the choir. You

18 know the history of this port complex and what

19 they've been able to achieve going back to the

20 early 20th century. There's nothing that cannot

21 be accomplished if the political will of the

22 stakeholders could collaborate and come together

Page 197

 1 and move in that direction.

 2 Simply said, all I could tell you from

 3 this position would be in Washington, others are.

 4 That's something you need to really think about,

 5 but I'm sure you are aware that I'm addressing

 6 this issue about, well, we're going to be debating

 7 this forever and ever here.

 8 With that, let me give, again, much

 9 appreciation and thanks to Gene Saroka for being

10 not only visionary in terms of what he thinks we

11 could do about this, but also hosting this at his

12 port, and then give it to Jon for a couple

13 comments to give him the ability of these

14 executive directors to give some closing

15 commentary in terms of what's been heard today.

16 With that, Gene?

17 MR. SAROKA: Chairman, thank you, and

18 thank for the organizing not only by yourself but

19 by your staff to make sure that as we put the

20 program together today it was also uniquely

21 visible that staff followed up with everyone who

22 stepped up to the podium for further content,
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 1 follow up, and dialogue. I know that folks here

 2 and those observing greatly appreciate that.

 3 Thank you.

 4 CHAIRMAN CORDERO: Thank you so much,

 5 Gene. Again, just for those of you who were not

 6 here this morning, the staff being Mary Hoang, the

 7 Chief of Staff of the FMC, Tyler Wood, Deputy City

 8 Counsel, Rebecca Fenneman, who is a director of

 9 CATERS, and Roy Pearson, one of our economists in

10 the Bureau of Trade.

11 I could tell you without a doubt or

12 hesitation those individuals have put a lot of

13 time and years into this maritime discussion. As

14 Chairman, the success of the FMC has been

15 dependent on people like these individuals who

16 come here and they do the work. These aren't

17 government employees who are just skating, and I'm

18 being facetious because of time's perceptions of

19 government. I will tell you without any

20 hesitation that nothing happens unless the staff

21 does it and puts in the work. You could say the

22 same about these two great ports. With that

Page 199

 1 little editorial now, let me give it to Jon.

 2 MR. SLANGERUP: Thank you, Mr. Chairman.

 3 Thank you to everyone here for your candid

 4 feedback. That's what I was hoping for; there was

 5 an abundance of that. I've taken a lot of notes.

 6 I don't know if you've noticed, but I have pages

 7 of notes. We do intend to follow up.

 8 I mentioned in the beginning that the

 9 ports collaborate very, very well. There's a

10 history of that collaboration. There's a history

11 of results. That only gets enhanced when you've

12 got two new guys with a mission to take our

13 organizations to the next level. Gene and I have

14 had very, very meaningful discussions about this,

15 and we do intend to find solutions to these

16 complex issues.

17 But when you really look at it, it may

18 be complex, but it really boils down to a core

19 issue, and the core issue is getting things moving

20 through the ports. We are doing, and we will

21 continue to do, everything we can to make that

22 happen. You've got our commitment. I certainly

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 1 think that Gene would agree with that. We are

 2 absolutely committed, and we have the resources

 3 and the ability to facilitate outcomes.

 4 There's no excuses for either port to

 5 view themselves as merely a landlord port.

 6 Because we are a landlord because we do have

 7 partners that we work very closely with, we are in

 8 an excellent position to help facilitate positive

 9 outcomes, and we will not rest until this is

10 solved. Thank you.

11 CHAIRMAN CORDERO: Thank you, Jon.

12 Again, as I mentioned, we're having four different

13 forums throughout the nation, this being the first

14 one. For those of you who want to keep track of

15 what's being said or what will be said at these

16 other forums by people like yourselves in other

17 regions, keep track of our website.

18 There's going to be one in Baltimore on

19 October 1st, Charleston, and New Orleans. That

20 way, if some of you are, I'm sure realize but see

21 what's being discussed in other parts of the

22 country. This is not unique to this region, and

Page 201

 1 there are people rolling up their sleeves and our

 2 important gateways to make sure that this nation

 3 remains competitive at all levels.

 4 With that, I'll read my closing remarks,

 5 and we'll conclude this meeting. Thank you again.

 6 I will now close the Federal Maritimes Public

 7 Forum. Thanks to all for your participation today

 8 and for your written comments submitted prior to

 9 the meeting.

10 Contributions for maritime intermodal

11 transportation stakeholders are important to this

12 commission and to our legislators as we

13 contemplate how to improve the efficiency of

14 international ocean commerce. The Commission

15 welcomes further feedback in the form of written

16 submissions to the office of the Secretary.

17 Additionally, please note that the Commission will

18 hold, as I've stated, similar public forums this

19 fall to discuss the ever-important issue of port

20 congestion both on the East and the West as we did

21 today and the Gulf Coast.

22 Thank you so much, and I look forward to
Public Forum on U.S. Port Congestion Page: 52

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Page 202

 1 working with you as we move forward in the

 2 interest of common interests to further the

 3 maritime needs of this country. Thank you again.

 4 (Whereupon, at 3:19 p.m., the

 5 PROCEEDINGS were adjourned.)

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Page 203

 1 CERTIFICATE OF NOTARY PUBLIC

 2 DISTRICT OF COLUMBIA

 3 I, Carleton J. Anderson, III, notary

 4 public in and for the District of Columbia, do

 5 hereby certify that the forgoing PROCEEDING was

 6 duly recorded and thereafter reduced to print under

 7 my direction; that the witnesses were sworn to tell

 8 the truth under penalty of perjury; that said

 9 transcript is a true record of the testimony given

10 by witnesses; that I am neither counsel for,

11 related to, nor employed by any of the parties to

12 the action in which this proceeding was called;

13 and, furthermore, that I am not a relative or

14 employee of any attorney or counsel employed by the

15 parties hereto, nor financially or otherwise

16 interested in the outcome of this action.

17

18

19 (Signature and Seal on File)

20 -----------------------------------

21 Notary Public, in and for the District of Columbia

22 My Commission Expires: March 31, 2017