CSULB CITT 2010 Point / Counterpoint Webcast


Uploaded by AMPCENTER on 24.10.2010

Transcript:
[ PAUSE ]
[ INAUDIBLE REMARK ]
>> I WANT TO WELCOME YOU ALL TO THE CALIFORNIA STATE UNIVERSITY
AND I WOULD LIKE TO WELCOME YOU
TO OUR INAUGURAL POINT/COUNTERPOINT FORUM.
MY NAME IS MARIANNE VENIERIS.
I'M THE EXECUTIVE DIRECTOR OF THE CENTER
FOR INTERNATIONAL TRADE AND TRANSPORTATION
AND I'M ALSO THE DEPUTY DIRECTOR
OF THE METRANS TRANSPORTATION CENTER.
I AM DELIGHTED TO SEE YOU ALL HERE AND I'M THRILLED TO SEE
SO MANY FAMILIAR FACES IN THE AUDIENCE.
AND AS I MET SOME EARLIER, I WONDERED HOW MANY
OF YOU HAVE BEEN HERE AT OUR LAST 10TH TOWN HALL MEETING.
COULD I SEE A SHOW OF HANDS?
QUITE A FEW.
THOSE OF YOU WHO WERE HERE, YOU PROBABLY RECALL
OR YOU MIGHT RECALL THE REMARKS THAT DOMENICK MIRETTI MADE,
THE CLOSING REMARKS FOR OUR 10TH ANNUAL TOWN HALL MEETING.
HE SAID, WE-- WE HAVE CELEBRATED A DECADE OF TOWN HALL MEETINGS
AND NOW CITT SIGNATURE EVENT COMES TO A CLOSE.
THE TOWN HALLS HAVE BEEN A MILESTONE FOR THE INDUSTRY
AND COMMUNITY OUTREACH AND COMMUNICATION.
BUT HE CONTINUED, THIS DOES NOT MEAN THE END
OF THE UNIVERSITY'S ROLE FOR PROVIDING A PLATFORM FOR TRADE,
STAKEHOLDERS TO COME TOGETHER TO DISCUSS CONTROVERSIAL ISSUES
AND FIND SOLUTIONS AND AGREEMENT.
WELL, HE WAS RIGHT.
THE CITT POLICY AND STEERING COMMITTEE
AND DOMENICK MIRETTI IS A MEMBER OF THE POLICY
AND STEERING COMMITTEE, DIDN'T WASTE MUCH TIME.
AND WE PROPOSED TO STAGE AN EDUCATIONAL FORUM
IN WHICH WE CAN EXPLORE PERSPECTIVES ON AN ISSUE
OF IMPORTANT-- OF IMPORTANCE TO THE TRADE
AND TRANSPORTATION COMMUNITY.
AND WE CALL THIS FORUM THE CITT POINT COUNTERPOINT.
IT IS IMPORTANT TO EMPHASIZE
THAT THE DIALOGUE BE INFORMATIVE, NONCOMPETITIVE,
EDUCATIONAL AND IN A NEUTRAL SETTING.
THE OBJECTIVE IS TO FULLY UNDERSTAND THE FACTS
ON THE VARIOUS PERSPECTIVES OF A TOPIC AND TO ALLOW THE AUDIENCE
TO FURTHER ASK QUESTIONS THROUGH THE Q-- DURING THE Q&A PERIOD.
OUR GOAL IS NOT TO END UP WITH THE WINNER OR WITH THE LOSER
AS ONE MIGHT EXPECT
FROM A TRADITIONAL POINT/COUNTERPOINT DIALOGUE,
RATHER THE GOAL IS TO MAKE THE AUDIENCE THE WINNER
BY BEING MUCH MORE INFORMED ABOUT THE TOPIC.
AT THIS TIME, LADIES AND GENTLEMEN, I WOULD LIKE--
I HAVE TO MAKE A FEW RECOGNITIONS
AND IN YOUR PROGRAM, I ASSUME ALL OF YOU RECEIVED THE PROGRAM,
YOU FIND A LIST OF THE NAMES OF OUR POLICY
AND STEERING COMMITTEE.
AT THIS TIME I WOULD LIKE YOU TO MEET THE COMMITTEE CHAIR,
MY BOSS, DR. JEET JOSHEE, ASSOCIATE VICE PRESIDENT
AND DEAN, INTERNATIONAL CONTINUING
AND PROFESSIONAL EDUCATION.
DEAN JOSHEE, PLEASE RAISE YOUR HAND.
[ APPLAUSE ]
>> AND NOW I WOULD LIKE TO--
THE POLICY AND STEERING COMMITTEE MEMBERS
TO STAND-- TO STAND UP.
WE WOULD LIKE TO THANK YOU
FOR ALL THE EFFORT YOU HAVE BEEN PUTTING IN.
WOULD YOU PLEASE STAND UP AND BE RECOGNIZED.
THANK YOU.
[ APPLAUSE ]
>> I ALSO WANT TO RECOGNIZE OUR GLOBAL LOGISTICS SPECIALIST,
OUR MASTERS IN GLOBAL LOGISTICS,
OUR MARINE TERMINAL OPERATIONS PROFESSIONALS
AND ALL CSULB AND USC STUDENTS.
THIS IS WHAT WE'RE ALL ABOUT, SO PLEASE STAND UP STUDENTS.
THANK YOU FOR BEING HERE.
[ APPLAUSE ]
>> A PARTICULAR WARM WELCOME GOES TO OUR FRIENDS
FROM SAN DIEGO, 44 INDUSTRY
OR 40 INDUSTRY LEADERS HAVE BEEN ORGANIZED
BY THE SAN DIEGO WORLD TRADERS ASSOCIATION AND THEY CAME
UP HERE AND I BELIEVE THIS IS THE THIRD
OR FOURTH TIME THEY HAVE BEEN COMING TO OUR EVENTS
AND I BELIEVE THEY RECEIVE A ROUND OF APPLAUSE.
WHERE ARE YOU?
[ APPLAUSE ]
>> THERE THEY ARE.
[ APPLAUSE ]
>> IT HAS BEEN A LONG WAY COMING UP HERE
AND IT'S A LONG WAY COMING BACK LATER TONIGHT, ISN'T IT?
THANK YOU FOR BEING HERE.
AN EVENT LIKE THIS IS NOT POSSIBLE
WITHOUT THE GENEROUS SUPPORT OF OUR SPONSORS.
ON THE BACK OF YOUR PROGRAM AND ON THE BANNER HERE,
PLEASE NOTE OUR SPONSORS.
WE'RE VERY GRATEFUL FOR THEM.
IT'S THEIR FINANCIAL CONTRIBUTION TOGETHER
WITH THE FUNDS FROM THE METRANS TRANSPORTATION CENTER
WHICH IS OUR MAIN FUNDING SOURCE THAT MAKES IT POSSIBLE FOR YOU
TO BE HERE WITHOUT PAYING ADMISSION
AND FREE PARKING ON TOP OF IT.
LADIES AND GENTLEMEN, IT DIDN'T TAKE THE POLICY
AND STEERING COMMITTEE LONG TO IDENTIFY A TOPIC
OR AN ISSUE FITTING FOR OUR INAUGURAL EVENT.
THE PANAMA CANAL EVENT EXPANSION IS ON THE MIND OF MANY
IN THE LOGISTICS INDUSTRY.
AND I GUESS ANYONE HERE TONIGHT WANTS TO KNOW THE ANSWER
TO THESE THREE QUESTIONS, WHO WINS, WHO LOSES AND WHO DECIDES.
TO HELP US UNDERSTAND AND PERHAPS CHALLENGE SOME
OF THE EXISTING ASSUMPTIONS ABOUT THE IMPACT
OF THE EXPANDED CANAL ON OUR WEST COAST PORTS,
WE HAVE INVITED THREE EXPERTS NOT NECESSARILY ONE
FOR EACH QUESTIONS.
WE HAVE PAUL BINGHAM WHO CALLS HIMSELF, WHO IS AN ECONOMIST
AND A CONSULTANT, MARY BROOKS, AN ACADEMIC AND BEHAVIORIST,
AND TODD THOMAS, A REALIST, AS HE CALLS HIMSELF.
WE KNOW THAT THE EXPANDED PANAMA CANAL WILL BE A GAME [INAUDIBLE]
AND TONIGHT, WE WILL LEARN WHO AND HOW AND WHEN AND WHERE.
BUT BEFORE WE GET STARTED WITH OUR PROGRAM,
I WANT TO POINT YOUR ATTENTION TO TWO ITEMS, TWO THINGS.
FIRST OF ALL, THE PROCEEDINGS WILL BE WEBCAST.
THE WEBCAST IS ARCHIVED AND IT IS AVAILABLE FOR YOU TO SEE
ON A LINK, I BELIEVE, THAT IS LISTED ON THE PROGRAM
IN ABOUT 1 WEEK OR 2 WEEKS.
I ALSO WOULD LIKE YOU TO PULL
OUT FROM YOUR PROGRAM A GREEN FEEDBACK FORM.
PLEASE FILL THAT OUT, TELL US WHAT YOU THINK ABOUT IT,
AND ALSO TELL US TOPICS THAT YOU WOULD LIKE TO SEE COVERED
IN OUR FUTURE POINT/COUNTERPOINT DISCUSSIONS.
AND AT THIS TIME, LADIES AND GENTLEMEN,
IT GIVES ME GREAT PLEASURE TO PRESENT TO YOU THE PROVOST
AND SENIOR VICE PRESIDENT
OF CALIFORNIA STATE UNIVERSITY LONG BEACH, DR. DONALD PARA.
[ APPLAUSE ]
>> THANK YOU, MARIANNE.
ON BEHALF OF PRESIDENT F. KING ALEXANDER, ALL THE FACULTY,
STAFF, AND STUDENTS OF CAL STATE LONG BEACH, WE WELCOME YOU
TO THE BEAUTIFUL RICHARD
AND KAREN CARPENTER PERFORMING ARTS CENTER.
WE ARE PLEASED TO HAVE ALL OF YOU WITH US TODAY
AS WE EXAMINE AN URGENT AND IMPORTANT ISSUE
THAT WILL HAVE GREAT IMPACT ON OUR REGION AND OUR WORLD,
THE IMPLICATIONS CLEARLY ARE GLOBAL.
FIRST, I WOULD LIKE TO RECOGNIZE SEVERAL ELECTED GOVERNMENT
OFFICIALS WITH THEIR REPRESENTATIVES,
PORT OF LONG BEACH COMMISSIONERS AND OFFICERS
OF THE INTERNATIONAL LONGSHORE AND WAREHOUSE UNION.
PLEASE HOLD YOUR APPLAUSE UNTIL EVERYONE HAS BEEN INTRODUCED.
CONGRESSWOMAN LAURA RICHARDSON 37TH DISTRICT,
ASSEMBLYMEMBER BONNIE LOWENTHAL,
ASSEMBLYMEMBER WARREN FURUTANI 55TH DISTRICT,
CHIEF JIM MCDONNELL LONG BEACH POLICE DEPARTMENT,
MAYOR BOB FOSTER CITY OF LONG BEACH.
FROM THE PORT OF LONG BEACH, COMMISSIONER MARIO CORDERO,
COMMISSIONER MIKE WALTER,
COMMISSIONER SUSAN WEISS [PHONETIC],
COMMISSIONER THOMAS FIELDS.
HELENE ANSEL OFFICE OF THE STATE--
OF STATE SENATOR ALAN LOWENTHAL, BRIAN MINEGHINO OFFICE
OF ASSEMBLY MEMBER WARREN FURUTANI.
CAPTAIN ROGER LAFERRIERE, CAPTAIN OF THE PORT,
CONNIE SZIEBL, OFFICE OF SUPERVISOR DON KNABE,
WILLIAM ORTON, OFFICE OF STATE SENATOR ROD WRIGHT.
THE FOLLOWING FROM THE ILWU.
PRESIDENT OF THE ILW INTERNATIONAL ROBERT MCELLRATH,
RAY FAMILATHE, VICE PRESIDENT OF THE ILW INTERNATIONAL,
RAY ORTIZ COAST COMMITTEEMAN, RICH DINES,
PRESIDENT OF THE SOUTHERN CALIFORNIA DISTRICT COUNCIL,
JOE CORTEZ, PRESIDENT OF LOCAL 13, PETER PEYTON,
PRESIDENT OF LOCAL 63, DANNY MIRANDA, PRESIDENT OF LOCAL 94,
LUISA GRATZ, PRESIDENT OF LOCAL 26, AND DAVE ARIAN,
THE HENRY BRIDGES INSTITUTE.
PLEASE JOIN ME IN WELCOMING OUR DIGNITARIES.
[ APPLAUSE ]
>> METRANS IS A PARTNERSHIP BETWEEN THE UNIVERSITY
OF SOUTHERN CALIFORNIA
AND CALIFORNIA STATE UNIVERSITY LONG BEACH.
THE CENTER IS FUNDED BY THE US DEPARTMENT
OF TRANSPORTATION AND CALTRANS.
THESE MEETINGS, THESE TOWN HALLS HAVE HAD THE GENEROUS
AND ONGOING SUPPORT OF THE PORT OF LONG BEACH,
THE PORT OF LONG--
OF LOS ANGELES AND THE INTERNATIONAL LONGSHORE
AND WAREHOUSE UNION.
THIS KIND OF PARTNERSHIP
IN THE LARGEST SENSE HAS MADE MELTRANS ONE--
METRANS ONE OF THE LEADING UNIVERSITY TRANSPORTATION
CENTERS IN THE NATION.
>> SINCE THE PORT OF LONG BEACH IS THE SECOND BUSIEST HARBOR
AND THE LARGEST EMPLOYER IN THE REGION, CLEARLY,
ANY IMPACT ON THE PORT OF LONG BEACH IS
OF THE UTMOST IMPORTANCE TO US ALL.
THE VALUE OF BRINGING TOGETHER THE MAJOR INDUSTRY STAKEHOLDERS
IN THESE FORUMS CANNOT BE OVERSTATED.
THE IMPORTANCE OF THESE EVENTS AND THE RESEARCH
THAT IS GENERATED AS PART
OF THESE PARTNERSHIPS ARE AN INVALUABLE TOOL
FOR CRUCIAL DECISION MAKING.
CONGRATULATIONS AND THANK YOU FOR ALL WHO HAVE ORGANIZED,
PLANNED, SPONSORED OR ATTENDED THIS EVENT.
HAVE A GOOD EVENING.
[ APPLAUSE ]
>> THANK YOU VERY MUCH DR. PARA.
LADIES AND GENTLEMEN, THE MINI DOCUMENTARY YOU'RE
ABOUT TO SEE COVERS THE HISTORY OF THE PANAMA CANAL
FROM ITS EARLIEST EFFORT TO BUILD--
TO BUILD THE CANAL TO THE CURRENT EFFORT TO EXPAND IT.
THE PURPOSE OF THIS BRIEF DOCUMENTARY IS
TO PROVIDE A FRAMEWORK FOR UNDERSTANDING
AND THE SIGNIFICANT DEVELOPMENTS OCCURRING TODAY
IN GLOBAL DISTRIBUTIONS.
WITHIN THIS CONTEXT, THE VIDEO PRESENTATION WILL REVEAL THE BIG
PICTURE REGARDING LOGISTICS AND GOODS MOVEMENT.
MOST SIGNIFICANTLY, THE VIDEO WILL ARTICULATE THE COMPETITIVE
CHALLENGE-- CHALLENGES THAT LIE AHEAD OF THE WEST COAST PORTS
WITH SPECIFIC EMPHASIS ON THE PORTS
OF LONG BEACH AND LOS ANGELES.
AFTER THE VIDEO, DR. THOMAS O'BRIEN, CITT'S DIRECTOR
OF RESEARCH WILL TAKE THE MICROPHONE AND SERVE
AS THE MODERATOR FOR DISCUSSIONS.
AND AT THIS POINT, LADIES AND GENTLEMEN,
PLEASE ENJOY THE VIDEO.
[ MUSIC ]
[ PAUSE ]
[ NOISE ]
[ BACKGROUND NOISE ]
>> THE YEAR THE WORLD CHANGED WAS 1914.
IT WAS THE BEGINNING OF WORLD WAR I.
BUT WHILE MOST OF EUROPE WAS CONCERNED AND CONSUMED
BY THE GREAT WAR, ANOTHER EARTH SHATTERING EVENT OCCURRED FAR
SOUTH AND WEST OF THE CONTINENT IN CONFLICT.
THE PANAMA CANAL OPENED ITS LOCKS IN AUGUST OF 1914.
FOR THE FIRST TIME, AN ALL WATER CHANNEL BISECTED THE WESTERN
HEMISPHERE, A DREAM OF MORE
THAN 400 YEARS FINALLY HAVE BEEN REALIZED.
[BACKGROUND MUSIC] IN 1502, ON HIS FOURTH VOYAGE
TO THE NEW WORLD, CHRISTOPHER COLUMBUS SAILED FURIOUSLY
AND OBSESSIVELY ALONG THE ATLANTIC COAST
OF THE PANAMANIAN ISTHMUS SEARCHING IN VANE
FOR A CENTRAL CONVENIENT WATERWAY
TO THE OTHER SIDE OF THE GLOBE.
FAILING THIS MISSION, COLUMBUS SETTLED
FOR BEING THE FIRST EUROPEAN TO CONDUCT WORLD TRADE IN PANAMA.
HE EXCHANGED A FEW TRINKETS
FOR SEVERAL SOLID GOLD CHEST PLATE SHIELDS WORN
BY THE NATIVE PEOPLE.
IN THE FOLLOWING DECADE,
CONQUISTADOR VASCO BALBOA WAS STANDING ON A SUMMIT
IN THE PANAMANIAN HILLS WHEN HE BECAME THE FIRST EUROPEAN
TO VIEW BOTH THE ATLANTIC AND PACIFIC OCEANS AT THE SAME TIME.
EMOTIONALLY OVERWHELMED, BALBOA FELL TO HIS KNEES WEEPING
AND PRAYING IN TRIUMPHANT JOY.
DURING THE GOLD RUSH OF 1849, THOUSANDS OF 49ERS JOURNEYED
BY BOAT FROM THE AMERICAN EAST COAST TO PANAMA
AND THEN CROSSED THE ISTHMUS
TO BOARD SHIPS BOUND FOR SAN FRANCISCO.
BECAUSE THE MIDDLE AND WESTERN PORTIONS
OF THE AMERICAN FRONTIER WERE STILL LARGELY UNSETTLED
AND OFTEN HAZARDOUS, THE RACE
TO THE CALIFORNIA GOLD FIELDS WENT FASTEST THROUGH PANAMA.
IN RESPONSE TO PROSPECTOR DEMAND, A RAILROAD WAS BUILT
TO CROSS THE TREACHEROUS ISTHMUS IN THE 1850S.
BY MID 1881, A FRENCH COMPANY BEGAN SUPERVISING A TRAGICALLY
ILL-FATED PANAMA CANAL ENGINEERING EFFORT.
THE PROJECT STALLED AFTER ENDURING 8 DEVASTATING YEARS
OF TROPICAL DISEASES AND VARIOUS OTHER DISASTERS.
ALL FUNDS WERE TOTALLY SPENT BY 1889.
DURING CONSTRUCTION, AT LEAST 20,000 WORKERS WERE KILLED
BY A COMBINATION OF MOSQUITO-BORNE MALARIA
AND YELLOW FEVER, INTENSE RAINSTORMS, MAJOR MUDSLIDES
AND INDUSTRIAL ACCIDENTS.
FOR MANY YEARS, AMERICAN POLITICIANS HAD SOUGHT US
AUTHORITY OVER ANY POTENTIAL CANAL
WHICH WOULD TRANSECT CENTRAL AMERICA.
THE MONROE DOCTRINE WAS OFTEN CITED WHENEVER AMERICAN
DOMINANCE IN THE REGION WAS DISCUSSED OR ASSERTED.
UNCLE SAM'S MACHINATIONS CULMINATED IN 1903
WHEN PRESIDENT THEODORE ROOSEVELT USE GUNBOAT DIPLOMACY
AGAINST COLOMBIA WHILE SUPPORTING A PANAMANIAN
SEPARATIST MOVEMENT.
ROOSEVELT'S SUCCESSFUL STRATEGY ULTIMATELY INVOLVED PURCHASING
AMERICAN CONTROL
OF THE ABANDONED FRENCH CONSTRUCTION VENTURE.
SADLY, ANOTHER 5600 LABORERS PERISHED
BY THE TIME THE CANAL WAS COMPLETED
UNDER AMERICAN SUPERVISION IN 1914.
>> THE CANAL BECOMES AN EXTENSION,
SO THINKING ABOUT THE CANAL BECOMES AN EXTENSION
OF THE MANIFEST DESTINY ARGUMENT,
THAT IF THE UNITED STATES WAS DESTINED TO REACH THE PACIFIC
AND THEN IT DID, IF THE UNITED STATES WAS BASED IN PART
ON A GROWING SENSE OF ITSELF AS A MARITIME POWER AND IT WAS,
THEN HOW WAS-- WERE THE ATLANTIC AND THE PACIFIC
AND THE CARIBBEAN AND THE GULF OF MEXICO
AND THESE OTHER AMERICAN RELATED WATERS
TO BE CONNECTED WITH EACH OTHER.
SO REALLY THE CANAL IS--
THE CANAL IS VERY DEEP IDEA IN AMERICAN CONSCIOUSNESS,
THIS LINKING OF THE WATERS, POWERFUL THE WAY
THAT THE LINKING OF THE CONTINENT IN OCTOBER 1869 WAS
BY THE RAILROAD WHEN THE RAILROADS WERE COMPLETED.
[ BACKGROUND MUSIC ]
>> TODAY, THE TRADE WINDS BILLOWING
THROUGH PANAMA ARE ONCE AGAIN BLOWING SIDE BY SIDE
WITH THE WINDS OF CHANGE.
THIS TIME, THE PANAMANIAN PEOPLE ARE
IN CHARGE OF THEIR OWN DESTINY.
THEY HAVE VOTED OVERWHELMINGLY TO EXPAND THE CANAL.
THIS PROJECT WILL COST AN ESTIMATED 5
AND A QUARTER BILLION DOLLARS IN THE PROCESS
OF CONSTRUCTING A MUCH LARGER THIRD SET OF LOCKS.
THE NEW LOCKS WILL SIGNIFICANTLY INCREASE THE SIZE OF SHIPS
THAT CAN TRAVERSE THE CANAL.
CURRENT PANAMAX SHIPS, MEANING THE MAXIMUM SIZE SHIPS
THAT CAN TRANSIT THROUGH PANAMA ARE LIMITED TO FEWER
THAN 4,500 TEUS OR ROUGHLY 2,250 40-FOOT LONG CONTAINERS.
AFTER THE CANAL'S EXPANSION, SUPER SHIPS CARRYING 12,000 TEUS
OR 6,000 40-FOOT CONTAINERS WILL BE ABLE TO TRANSIT THE CANAL.
THE REPERCUSSIONS OF A LARGER PANAMA CANAL ARE ENORMOUS,
NOT ONLY FOR PANAMA BUT FOR MOST PORTS IN THE WESTERN HEMISPHERE.
NEW POSSIBILITIES EXIST IN THIS LATEST METAPHORICAL GOLD RUSH.
WHEN THE CANAL EXPANSION OPENS FOR BUSINESS
IN THE CENTENNIAL ANNIVERSARY OF 2014,
MUCH ABOUT GLOBAL LOGISTICS WILL HAVE CHANGED.
>> IF YOU THINK ABOUT IT OVER A LONGER TERM, 40 YEARS AGO,
TRADE WAS REALLY CONCENTRATED DOWN THE EAST COAST PORTS.
AND SO WHAT HAPPENED IN A RELATIVELY SHORT PERIOD OF TIME,
THAT TRADE SHIFTED TO THE WEST COAST PORTS WITH THE OPENING
UP OF THE ASIAN COUNTRIES YOU GOT THE TREMENDOUS GROWTH.
NOW, PEOPLE ON THE GULF AND PEOPLE
ON EAST COAST PORTS WANT A LITTLE BIT OF THE ACTION
AND THE WAY THEY CAN GET THAT ACTION IS IN FACT
IF THE CANAL IS WIDENED.
[ BACKGROUND MUSIC ]
>> FOR MORE THAN 3 DECADES, SOUTHERN CALIFORNIA BENEFITED
FROM EXPONENTIAL GROWTH IN TRANSPACIFIC TRADE.
A MASSIVE LOCAL CONSUMER MARKET ENCOURAGED INCOMING CARGO
TRAFFIC, WHICH LED TO BOTH HARBOR
AND WAREHOUSE FACILITIES EXPANSION.
THESE DEVELOPMENTS RESULTED IN THE SAN PEDRO BAY EMERGING
AS A CARGO DESTINATION OF CHOICE.
LARGE VESSELS WITH HUGE LOADS COULD DOCK IN THE DEEP WATER
OF LOS ANGELES AND LONG BEACH PORTS,
WHILE GIGANTIC CRANES RAPIDLY MOVE THEIR CONTAINERS
ON TO INTERMODAL TRUCKS AND TRAINS.
WELL DEVELOPED RAIL ACCESS FROM THE HARBOR TO THE INTERIOR MEANT
THAT FREIGHT BOUND FOR THE MIDWEST WAS TRANSPORTED
ON DOUBLE STACK TRAINS FOR THE LONG JOURNEY ACROSS THE COUNTRY.
AFTER BECOMING THE BIGGEST
AND THE BEST-EQUIPPED HARBOR COMPLEX, WITH THE CAPACITY
AND THE INFRASTRUCTURE TO MOVE GOODS ON TO MAJOR RAIL SYSTEMS,
THE SAN PEDRO BAY SETTLED INTO A PERIOD OF HEGEMONY.
HOWEVER, EVEN WITHOUT THE EXPANSION OF THE PANAMA CANAL,
NEW TRENDS ARE EMERGING THAT THREATENED
TO SIPHON AWAY SIGNIFICANT CARGO TRAFFIC
FROM THE POWERHOUSE PORTS OF LOS ANGELES AND LONG BEACH.
IN THE CANADIAN NORTHWEST,
THE PORT OF PRINCE RUPERT HAS BEEN EXPANDING ITS HANDLING
CAPACITY AND ENJOYS AN ADVANTAGE
BY BEING 700 NAUTICAL MILES CLOSER TO ASIA.
THIS CLOSER PROXIMITY REDUCES OCEAN SHIPPING TIME
BY A COUPLE OF DAYS.
PRINCE RUPERT IS SERVED BY AN EXPRESS CANADIAN RAIL SYSTEM
WHICH CAN DELIVER GOODS TO A CENTRAL POINT NORTH
OF THE US BORDER WITH A DIRECT RAIL SHOT
TO CHICAGO AND MEMPHIS.
THE CANADIAN GOVERNMENT IS FULLY BACKING
AND PROMOTING PRINCE RUPERT AS PART OF AN ASIA PACIFIC GATEWAY
AND CORRIDOR INITIATIVE.
THIS EFFORT SEEKS TO ATTRACT AS MUCH CARGO AS POSSIBLE
FOR THE EXPANDING CANADIAN FACILITIES.
>> THE PORTS OF SEATTLE AND TACOMA ARE ALSO CLOSER TO ASIA
AND ALSO DESIRE TO TAKE A LARGER SHARE OF THE CARGO
FROM THE FAR EAST THAT'S DESTINED FOR DELIVERY
BY RAIL TO THE MIDWEST.
INVESTMENTS OF NEARLY A BILLION DOLLARS HAVE OCCURRED
OVER THE PAST 15 YEARS TO IMPROVE THE SEATTLE
AND TACOMA PORT INFRASTRUCTURES.
MEXICO HAS BEEN DISCUSSED
AS A PACIFIC COAST COMPETITOR IN THE FUTURE.
AMONG THE PLANS AND DEVELOPMENT IS ONE TO UTILIZE THE PORT
OF LAZARO CARDENAS IN CONNECTION WITH AN EXPRESS RAIL NETWORK
TO TRANSPORT CONTAINERS DIRECTLY FROM MEXICO TO KANSAS CITY.
>> WE KNOW THAT MOST BIG SHIPPERS WILL LOOK
AT ALTERNATIVES.
THEY WENT TO THE FOUR CORNERS APPROACH
IN THE MID 2000S LOOKING AT A PACIFIC NORTHWEST,
A PACIFIC SOUTHWEST, A GULF AND THE EAST COAST PORT TO TRY
TO BALANCE THEIR CARGO FLOWS AND NOT JUST BE IN ONE PORT.
>> THE EXPANSION OF THE PANAMA CANAL WILL ALLOW SHIPS
TO TAKE [BACKGROUND MUSIC] SIGNIFICANTLY LARGER LOADS
FROM EAST ASIA TO US GULF PORTS AND PORTS
ON THE EASTERN SEABOARD.
GULF PORTS IN HOUSTON, NEW ORLEANS, MOBILE,
AND TAMPA NOW MAY LOOK MORE ATTRACTIVE TO SHIPPERS
WHO DESIRE MULTIPLE REGIONAL CONCENTRATIONS
OF WAREHOUSING ARRANGEMENTS.
IN THE SOUTH ATLANTIC SECTOR,
HANJIN SHIPPING IS CONSTRUCTING A FACILITY IN JACKSONVILLE,
FLORIDA WHICH IS SCHEDULED TO OPEN IN 2013.
PORT COMPLEXES IN SAVANNAH, GEORGIA, CHARLESTON,
SOUTH CAROLINA AND NORFOLK, VIRGINIA PRESENT POSSIBILITIES
FOR EXPANDED OR ADDITIONAL ALL WATER ROUTES
FROM EAST ASIA TO THE EAST COAST.
OF THESE, VIRGINIA IS BEST EQUIPPED
TO SERVICE THE LARGER SHIPS.
OCEAN ROUTES THAT KEEP CONTAINERS ON VESSELS
FOR THE ENTIRE JOURNEY REQUIRE MORE TIME
BUT CAN SAVE HANDLING COST COMPARED TO SAIL
AND RAIL COMBINATION ROUTES.
COST REDUCTIONS CAN AMOUNT TO AS MUCH
AS 1000 DOLLARS PER CONTAINER IF PATIENT SHIPPERS CAN AFFORD
TO WAIT FOR LONGER DELIVERY TIMEFRAMES.
THE PORT AUTHORITY OF NEW YORK
AND NEW JERSEY IS ALSO ANTICIPATING RECEIVING MORE
CONTAINER SHIPS DIRECTLY FROM CHINA VIA THE PANAMA CANAL.
A PROBLEM IN NEW YORK IS THE BAYONNE BRIDGE
WHICH LIMITS THE HEIGHT OF VESSELS HEADING
FOR CONTAINER TERMINALS IN NEW JERSEY.
EFFORTS ARE UNDERWAY TO DEEPEN THE CHANNEL
AND TO RESOLVE THE BRIDGE DILEMMA.
>> SO, THE WHOLE IDEA OF PUTTING THE DISCUSSION
AROUND THE PANAMA CANAL
IN A GLOBAL CONTEXT CAN VERY EASILY BE APPLIED
TO A REGIONAL SCENARIO FOR THE EAST COAST IN THE UNITED STATES,
THE ABILITY TO TAKE ON LARGER VESSELS, LONGER BERTH,
STEEPER DRAFTS [PHONETIC], CAPACITY OF CRANES AND SUCH,
IT'S GOING TO RESONATE ACROSS THE ENTIRE SUPPLY CHAIN
AND HAVE A PARTICULAR IMPACT NOT ONLY ON THE EAST COAST
OF THE UNITED STATES BUT THE GULF AS WELL.
[ BACKGROUND MUSIC ]
>> LARGE SHIPPERS WHO SEEK REGIONAL DIVERSIFICATION
FOR WAREHOUSING MAY DECIDE TO INVEST
IN SEVERAL POINTS OF DISEMBARKATION.
THIS STRATEGY ENCOURAGES COMPETITION,
LOWERS COSTS OVERALL, SPREADS RISKS AND PROVIDES INSURANCE
AGAINST ANY MEGA-PORT ACQUIRING A CONTROLLING MONOPOLY
ON GOODS MOVEMENT.
RAIL DEVELOPMENT IS CRITICAL FOR ANY PORT TO GROW
AND TO DISTRIBUTE DISCRETIONARY CARGO MORE
THAN 400 MILES FROM THE WATERFRONT.
WARREN BUFFETT'S BERKSHIRE HATHAWAY GROUP OWNS THE
BURLINGTON NORTHERN SANTA FE RAILROAD KNOWN AS BNSF.
BOTH UNION PACIFIC AND BNSF HAVE A LARGE STAKE
IN THE WEST COAST INTERMODAL SYSTEM
FOR INLAND CARGO DELIVERY.
BNSF CLAIMS INTERMODAL TRAINS FROM THE WEST COAST CAN CUT
AS MANY AS 9 DAYS OFF DELIVERY TIME TO THE EAST COAST COMPARED
TO ALL WATER PANAMA CANAL ROUTES.
>> JUST BECAUSE THE CANAL GETS EXPANDED DOESN'T CHANGE THE FACT
THAT THE SHORTEST AND FASTEST SHIPPING ROUTES BETWEEN ASIA
AND THE UNITED STATES IS BY THE WEST COAST.
THAT'S AN UNDISPUTABLE FACT.
AND AS SUCH, THE VAST MAJORITY OF FREIGHT THAT MOVES
BETWEEN ASIA AND THE UNITED STATES HAS ALWAYS MOVED
TO THE WEST COAST AND IT WILL ALWAYS MOVE TO THE WEST COAST.
NOW, IT IS A FACT ALSO THAT THERE HAS BEEN A LITTLE BIT
OF A SHEER SHIFT FROM THE WEST COAST TO THE EAST COAST
OVER ROUGHLY THE LAST DECADE OR SO.
BUT THAT HASN'T REALLY OCCURRED
BECAUSE OF THE MARKET FUNDAMENTALS
WHICH POTENTIALLY COULD BE AFFECTED
BY THE EXPANSION OF THE CANAL.
THE SHORT-- AGAIN, THE SHORTEST ROUTE
AND THE FASTEST ROUTE WILL ALWAYS BE
BY THE WEST COAST DESPITE WHAT HAPPENS WITH THE CANAL.
[ BACKGROUND MUSIC ]
>> EASTERN RAIL NETWORKS LACK THE INFRASTRUCTURE
TO DELIVER FREIGHT ON A MASSIVE SCALE
TO POINTS WEST, NORTH AND SOUTH.
HOWEVER, SOME OF THE RECENT TRANSPORTATION INVESTMENT
GENERATING ECONOMIC RECOVERY GRANT KNOWN
AS STIMULUS TIGER GRANTS HAVE PLANTED THE SEEDS
FOR MORE INTERMODAL RAIL DEVELOPMENT IN THE EAST.
THE RECIPIENTS OF THESE GRANTS NOW SEEK TO INCREASE THE NUMBER
OF DOUBLE STACK TRAINS PASSING THROUGH AREAS
SUCH US GULF PORT MISSISSIPPI AND THE REGIONAL RAIL HUBS
OF MEMPHIS, TENNESSEE AND BIRMINGHAM, ALABAMA.
ONE OF THE LARGEST TIGER GRANTS WAS AWARDED
TO THE NATIONAL GATEWAY FREIGHT RAIL CORRIDOR AFFECTING THE
STATES OF OHIO, PENNSYLVANIA, WEST VIRGINIA AND MARYLAND.
A SEPARATE PUBLIC-PRIVATE PARTNERSHIP PROJECT KNOWN
AS THE HEARTLAND CORRIDOR HAS BEEN BURROWING
OUT THE EXISTING TUNNELS OF VIRGINIA, WEST VIRGINIA
AND KENTUCKY ALONG THE NORFOLK SOUTHERN RAILROAD LINE.
THE TUNNELS ARE NOW TALL ENOUGH
TO ENABLE DOUBLE STACK CONTAINERS TO TRAVEL ON RAIL
FROM THE INTERMODAL PORT OF VIRGINIA THROUGH THE HEART
OF THE CENTRAL APPALACHIAN MOUNTAINS
TO A DESTINATION POINT IN COLUMBUS, OHIO.
A NEW EXTENSION FOR THE LINE HAS BEEN APPROVED
TO CONTINUE THE DOUBLE STACK CLEARANCE
DOWN STATE TO CINCINNATI.
BEYOND NEW RAILROAD DEVELOPMENT, THERE ARE OTHER ISSUES
THAT THREATEN THE STATUS QUO IN GOODS MOVEMENT.
A GROWING TREND IS THE TRANSLOADING MARKET
WHICH COULD PUSH MORE DELIVERIES TO SPECIALIZED FACILITIES
THAT ARE NOT LIMITED TO THE USUAL ONE SIZE FITS ALL SCHEME.
TRANSLOADING INVOLVES SHIFTING GOODS
FROM JUST ARRIVED STANDARD 40-FOOT INTERNATIONAL CONTAINERS
TO MIXED CARGO 53-FOOT DOMESTIC CONTAINERS.
IN PANAMA, CANAL AUTHORITIES HAVE PLEDGED
TO STAY COMPETITIVE REGARDING CONTAINER FEES.
THE CONSTRUCTION BOND TO EXPAND THE CANAL WILL REQUIRE AN ANNUAL
THREE AND A HALF PERCENT INCREASE
IN CONTAINER FEES FOR 20 YEARS.
PANAMA IS BETTING THESE INCREASES WILL NOT DISCOURAGE
TRAFFIC NOR OUTPACE POTENTIAL FEE INCREASES
FROM WEST COAST COMPETITORS WHO MUST CONTEND
WITH ENVIRONMENTAL MITIGATION COSTS,
COMMUNITY CONGESTION CONSIDERATIONS
AND INFRASTRUCTURE IMPROVEMENT EXPENSES.
BECAUSE OF THESE AND OTHER ISSUES,
PANAMA AND THE EAST COAST PORTS WILL TRY TO CAPITALIZE
ON A PERCEPTION BY SOME SHIPPERS
THAT WEST COAST PORTS ARE NOT BUSINESS FRIENDLY.
TO THEIR CREDIT, THE PORTS OF LOS ANGELES
AND LONG BEACH HAVE ADAPTED
TO CALIFORNIA'S MOST STRINGENT EMISSIONS REGULATIONS
IN THE NATION.
THROUGH BOTH POLITICAL AND ECONOMIC NECESSITY,
THESE TWIN HARBOR GIANTS HAVE LED THE FIGHT
WITHIN THE INDUSTRY FOR CLEANER AIR AND GREENER PORTS.
IN THE FUTURE, IF POTENTIAL FEDERAL MANDATES
SUCH AS THE PROPOSED AMERICAN POWER ACT BEGIN
TO IMPOSE CARBON CAPS, FEES AND EMISSIONS CONTROLS,
THE CUTTING EDGE WORK DONE BY LA AND LONG BEACH WILL BE REQUIRED
OF OTHER US PORTS, ADDING COSTS AND COMPLICATIONS
FOR THOSE COMPETITORS.
YET ANOTHER CONCERN THAT COULD TILT THE BALANCE
OF GLOBAL LOGISTICS IS THE DRIFT OF LARGE-SCALE MANUFACTURING
TO LOCATIONS SUCH AS INDIA AND LATIN AMERICA.
ALTHOUGH CHINA AND OTHER NATIONS
IN EAST ASIA MAINTAIN A CLEAR ADVANTAGE IN TECHNOLOGY,
FACILITIES AND SUPPLIER NETWORKS,
OTHER REGIONS COULD EVENTUALLY START TO CATCH UP.
GOODS FROM INDIA AND SOUTH ASIA CAN TRAVEL VERY EFFICIENTLY
THROUGH THE SUEZ CANAL FOR DELIVERY
TO THE EASTERN SEABOARD.
PRODUCTS ORIGINATING FROM LATIN AMERICA CAN USE THE PANAMA CANAL
WHILE NAVIGATING ROUTES BOTH EAST AND WEST.
THE HARBOR COMPLEX AT HALIFAX,
NOVA SCOTIA IS THE CLOSEST NORTH AMERICAN PORT TO THE SUEZ CANAL.
FROM NOVA SCOTIA, THE EXPRESS RAIL NETWORK ACROSS CANADA
AND INTO THE MIDWEST IS BEING USED FOR DELIVERING GOODS
TO AMERICA'S HEARTLAND.
>> BUT AS THINGS GET A LITTLE BETTER,
SERVICE BECOMES PREDICTABLE AND RELIABLE,
MEANING THAT YOU CAN MEASURE THE TIME WITH A STOPWATCH
FROM SOUTH ASIA THROUGH THE PANAMA CANAL
UP TO JACKSONVILLE, LET'S SAY.
AS ALL OF THOSE THINGS IMPROVE AND BECOME MORE PREDICTABLE,
THE MORE COMPETITIVE THOSE EAST COAST PORTS ARE GOING TO BE
TO THE DETRIMENT OF THE WEST COAST.
[ BACKGROUND MUSIC ]
>> STAKEHOLDERS IN THE PORTS OF LOS ANGELES
AND LONG BEACH HAVE MUCH TO PONDER BETWEEN NOW AND 2014.
HOLDING ON TO DISCRETIONARY CARGO
AND THEREBY MAINTAINING THE ASSOCIATED JOBS
AND ECONOMIC BENEFITS WILL REQUIRE A CONCERTED EFFORT
IN VIEW OF THE NEW AND IMPROVED LOCKS IN PANAMA.
DECISIONS ARE BEING MADE RIGHT NOW BY SHIPPERS
AND THEY ARE CONSIDERING ALL OF THEIR OPTIONS.
ITEMS SUCH AS CAPACITY, EFFICIENCY, RELIABILITY,
FLEXIBILITY AND COST WILL ADD UP TO THE SUM TOTAL
OF WHERE THE EMPLOYMENT WILL RESIDE
AND WHERE THE GROWTH WILL OCCUR IN THE FUTURE.
THE QUESTION IS WHETHER THE SUN WILL START TO SET
ON THE SOUTHERN CALIFORNIA GOODS MOVEMENT INDUSTRY
OR WILL THE CHALLENGES
OF NEW COMPETITION CONCEIVE A NEW SUNRISE
FOR THE WESTERN WATERFRONT.
[ MUSIC ]
[ APPLAUSE ]
>> WHILE I'M DOING MY INTRODUCTORY COMMENTS,
I'D LIKE TO ASK THE SPEAKERS TO COME
TO THE STAGE AND GET SETTLED.
BEFORE I START, I DO WANNA REMIND EVERYONE TO PLEASE,
IF YOU HAVEN'T ALREADY DONE SO, TURN OFF YOUR CELL PHONE
OR PUT THEM ON VIBRATE.
AS MARIANNE MENTIONED, I'M TOM O'BRIEN.
I'M THE DIRECTOR OF RESEARCH FOR THE CENTER
FOR INTERNATIONAL TRADE AND TRANSPORTATION
AND THE ASSOCIATE DIRECTOR OF LONG BEACH PROGRAMS
FOR THE METRANS TRANSPORTATION CENTER.
I WANNA THANK-- WE ALL SHOULD THANK DAVE KELLY AND HIS TEAM
AT ADVANCED MEDIA PRODUCTION IN THE COLLEGE OF CONTINUING
AND PROFESSIONAL EDUCATION AT CAL STATE LONG BEACH
FOR I THINK A FANTASTIC, COMPREHENSIVE
AND INFORMATIVE VIDEO.
THANK YOU.
[ APPLAUSE ]
>> THEY DO A TREMENDOUS JOB EVERY YEAR
AND THEY'VE SURPASSED THEMSELVES THIS YEAR.
ONE OTHER THING I WANNA CALL TO YOUR ATTENTION IN THE CENTER
OF YOUR PROGRAM IS A TIMELINE OF ACTIVITIES AND EVENTS TIED
TO THE DEVELOPMENT OF THE PANAMA CANAL AND ALSO WEST COAST PORTS
WITH THE FOCUS ON LA AND LONG BEACH.
ON THE WEBSITE, AND THE URL IS LISTED IN YOUR PROGRAM,
WE HAVE A MORE EXTENSIVE TIMELINE.
WE ALSO HAVE SOME ADDITIONAL DATA
THAT I THINK WILL PROVIDE SOME MORE CONTEXT FOR THE VIDEO
THAT YOU SAW AND THE DISCUSSION THAT YOU'RE ABOUT TO HEAR.
AFTER THE SPEAKERS WHO I'LL PRESENT--
OR I'LL INTRODUCE IN A MOMENT,
WE'RE GOING TO HAVE AN OPPORTUNITY FOR QUESTIONS
AND I WANTED TO PREPARE YOU NOW BECAUSE YOU MAY WANNA THINK
ABOUT THE QUESTIONS YOU WANNA ASK DURING THE DISCUSSION.
THERE'RE TWO OPTIONS FOR SUBMITTING THE QUESTIONS.
YOU CAN USE THE TWO MICROPHONES SITUATED ON EITHER SIDE
OF THE ROOM, OR YOU CAN USE 3 BY 5 CARDS WHICH USHERS
IN THE AISLES WILL BE HANDING
OUT DURING THE COURSE OF THE DISCUSSION.
ON THE MIC, I'M GONNA ASK YOU TO HAVE--
TO LIMIT YOUR INTRODUCTION AND YOUR QUESTIONS TO 1 MINUTE.
PLEASE NO LONG-WINDED PRESENTATIONS.
WE WANNA GET AS MANY QUESTIONS IN AS POSSIBLE.
AND YOU MAY EVEN WANNA WRITE DOWN YOUR QUESTION,
ORGANIZE YOUR THOUGHTS BEFORE YOU GET TO THE MICROPHONE.
I'LL ALSO ASK FOR NO MULTIPART QUESTIONS AGAIN IN THE INTEREST
OF GETTING THE GREATEST NUMBER OF PEOPLE
TO THE MIC AS POSSIBLE.
IF YOU PREFER, YOU CAN SUBMIT YOUR QUESTIONS
ON THE 3 BY 5 CARDS.
IF YOU'D LIKE, AND IT WOULD BE HELPFUL TO LIST YOUR NAME
AND AFFILIATION, THAT WOULD BE FINE,
OR JUST WRITE DOWN THE QUESTIONS.
IT WOULD ALSO BE HELPFUL IF YOU INDICATE WHO YOU'D
LIKE TO HAVE ANSWER THE QUESTION.
IF NOT, I'LL-- IT WILL BE MY DISCRETION I GUESS
TO DIRECT THE QUESTION TOO TO ONE OF THE PANELISTS.
WE'LL MAKE EVERY EFFORT TO ACCOMMODATE AS MANY QUESTIONS
AS POSSIBLE UP UNTIL 8:15.
I'M GONNA MAKE THE INTRODUCTION OF THE SPEAKERS THEMSELVES SHORT
BECAUSE THE FULL BIOS ARE IN THE PROGRAM.
WHAT WE'LL DO IS FIRST WE'LL BEGIN WITH PAUL BINGHAM,
WHO IS THE ECONOMIC SERVICE LINE LEADER
FOR THE TRANSPORTATION CONSULTING FIRM WILBUR
SMITH ASSOCIATES.
HE MANAGES THE FIRM'S ECONOMICS TEAM ANALYZING THE ECONOMIC
IMPACTS, FINANCIAL FEASIBILITY AND THE COSTS AND BENEFITS
OF TRANSPORTATION POLICY AND INFRASTRUCTURE DEVELOPMENT.
ONE OF THE REASONS WE WANTED TO HAVE PAUL HERE IS
THAT HE'S WORKED EXTENSIVELY IN PANAMA AND IN EGYPT
ON PANAMA CANAL AND SUEZ CANAL PROJECTS
FOR THE RESPECTIVE AUTHORITIES.
HE'S WORKED WITH OCEAN CARRIERS, PORT AUTHORITIES, FEDERAL
AND STATE METROPOLITAN AREA AGENCIES
ON FREIGHT-RELATED ISSUES.
PAUL IS GONNA BE TALKING ABOUT SOME OF THE BIG PICTURE ISSUES,
SORT OF THE HEMISPHERIC TRADE DEMAND AND DECISIONS
THAT ARE BEING MADE BY A HOST OF ACTORS INCLUDING RAIL--
RAILROADS AS YOU SAW IN THE VIDEO,
SORT OF GIVING US THE MACRO AS IT WERE.
FOLLOWING PAUL IS GOING TO BE DR. MARY BROOKS
WHO IS THE WILLIAM A. BLACK CHAIR OF COMMERCE
AT DALHOUSIE UNIVERSITY IN HALIFAX, CANADA.
SHE'S HAD EXTENSIVE EXPERIENCE AND ADVISED THE GOVERNMENTS
OF CANADA, THE US, AUSTRALIA, AS WELL AS THE EUROPEAN COUNCIL
OF MINISTERS OF TRANSPORT IN THE AREA OF LINER SHIPPING
AND HER AREA OF RESEARCH FOCUSES ON A NUMBER
OF INTERESTING AREAS INCLUDING THE RELATIONSHIP
BETWEEN THE BUYERS AND SELLERS OF TRANSPORTATION SERVICES.
AND MARY IS GOING TO TAKE A SLIGHTLY DIFFERENT PERSPECTIVE
THAN PAUL FOCUSING A BIT ON THE SHIPPERS AND THEIR AGENTS
AS BEING KEY TO THE DECISION MAKING PROCESS AND TO HELPING US
TO UNDERSTAND WHO WINS, WHO LOSES AND WHO DECIDES.
AND THEN WE'LL CONCLUDE WITH TODD THOMAS
WHO IS THE BRANCH MANAGER FOR THE LOS ANGELES OFFICE
OF EXPEDITORS INTERNATIONAL.
HE'S RESPONSIBLE FOR LA OPERATIONS RELATED
TO TRANSPORTATION WITH DIRECT RESPONSIBILITY FOR AIR
AND OCEAN EXPORT DEPARTMENTS, AS WELL AS DOMESTIC GROUND,
AIR AND SEA TRANSPORTATION DEPARTMENTS.
HE IS A-- AS MARIANNE SAID, THE REALIST.
HE'S GONNA KEEP US HONEST TALKING
ABOUT WHAT HAPPENS ON THE GROUND.
PERHAPS MOST IMPORTANT IS
THAT TODD IS A CAL STATE LONG BEACH GRADUATE.
GO BEACH. SO HE'S PARTICULARLY IMPORTANT TONIGHT.
SO, WITH THAT, WHAT I'D LIKE TO DO IS INVITE PAUL TO COME
TO THE PODIUM AND THEN WE'LL MOVE DIRECTLY TO MARY
AND THEN TODD AND THEN WE'LL OPEN IT UP FOR QUESTIONS.
[ APPLAUSE ]
>> THANK YOU SO MUCH TO TOM AND TO MARIANNE, ALL THE ORGANIZERS
AND SPONSORS OF THIS EVENT.
IT'S GREAT TO BE BACK IN LONG BEACH AFTER THE END
OF THE TOWN HALL SERIES.
AND I THINK THIS IS AN INCREDIBLY IMPORTANT TOPIC
AND I'M THRILLED TO BE ABLE TO PARTICIPATE
AND I HOPE I CAN PROVIDE SOME INSIGHT.
I'M ALSO VERY MUCH LOOKING FORWARD
TO THE DISCUSSION WE'RE GONNA HAVE OR THE QUESTIONS
FROM YOU IN THE AUDIENCE.
THE QUESTION OF WHO WINS, WHO LOSES
AND WHO DECIDES I THINK IS ONE THAT HAS A LOT OF ASPECTS TO IT,
AND I'M GONNA START WITH THE BIGGEST PICTURE TO TRY
TO PROVIDE SOME PERSPECTIVE.
THE REAL TOPIC TODAY IS TO TALK ABOUT SOUTHERN CALIFORNIA
AND THE JOBS IN THE COMMUNITY HERE, BUT I DON'T NEED
TO TELL YOU, ALL OF YOU HAVE HEARD FROM ME BEFORE
AND YOU KNOW PAINFULLY WELL THAT THIS IS A GLOBALIZED ECONOMY
AND THIS PART OF THE COUNTRY PLAYS AN INCREDIBLY IMPORTANT
ROLE IN THAT.
AND IT'S THAT CONTEXT WHICH PROVIDES SOME CONTEXT
TO THE EXPANSION OF THE CANAL.
YOU KNOW, WHY IS THE CANAL EXPANDING IN THE FIRST PLACE?
WELL, THEY HAD GOOD JUSTIFIED REASONS TO DO IT.
THE EXPANSION WAS A LOGICAL RESPONSE
BY THE PANAMANIANS THEMSELVES, SO MUCH SO THAT
AS THE VIDEO SAID, YOU KNOW, THEY HAD A NATIONAL REFERENDUM
ON THIS, A PART OF THEIR POPULATION SAYING,
SHOULD WE TAKE ON THIS DEPTH, SHOULD WE DO THIS?
AND THEY'RE RIGHT TO DO IT.
THIS IS AN EXPECTATION OF LONG-TERM WORLD TRADE GROWTH
THAT THEY CAN PARTICIPATE
IN AS A WINNER CAPTURING SOME BUSINESS ASSOCIATED WITH THAT
AS OPPOSED TO DEALING WITH THE REPERCUSSIONS
IF THEY DIDN'T EXPAND.
THEY HAVE LIMITED CAPACITY
WHICH BEFORE THE RECESSION THEY WERE CLOSE TO REACHING,
AND THEY SAW THEMSELVES IN A POSITION OF A DECLINING ROLE
IN WORLD TRADE IF THEY DIDN'T EXPAND.
SO, FROM THE PERSPECTIVE OF THE PANAMANIANS,
THIS EXPANSION IS ONE THAT'S NOT ONLY WARRANTED,
IT'S A BET ON THEIR OWN FUTURE AND ONE
THAT THEY HOPE TO GAIN FROM.
THE OPPORTUNITY FOR CANAL TRAFFIC GROWTH IS REAL.
THE RECESSION DID NOT END GLOBALIZATION NOR THE GROWTH
OF THE WORLD POPULATION AND THE ECONOMIES IN THE LONG RUN,
AND TRADE IS ASSOCIATED WITH THAT AS YOU WELL KNOW.
TRADE VOLUMES ARE ALREADY GROWING
AND THEY'RE GONNA CONTINUE TO GROW IN RECOVERY
AS THE WORLD CONTINUES TO EXPAND.
AS THOSE ECONOMIES INCREASE THROUGH GLOBALIZATION,
TRADE WILL ONCE COME BACK HOPEFULLY NOT QUITE
TO THE LEVELS OF THE CONGESTION WE SAW IN THE MIDDLE
OF THE LAST DECADE HERE BUT WILL PRESS THE MARITIME CARGO SYSTEM
AND INFRASTRUCTURE CAPACITY, A NEW CAPACITY WILL BE NEEDED
OF WHICH THIS CANAL EXPANSION IS ACTUALLY A PART.
IF WE LOOK AT-- SEE IF I CAN GET THIS TO ADVANCE HERE.
IF WE LOOK AT THE CONTEXT OF TRADE IN THE WORLD ECONOMY,
NOW HERE I'M MEASURING THE TOTAL OF WORLD IMPORT,
SO THIS IS ALL TRADE IN THE WORLD
AGAINST THE ENTIRE WORLD ECONOMY,
YOU CAN SEE THE LONG-TERM TREND GOING BACK 20 YEARS WAS A
SIGNIFICANT INCREASE IN THE SHARE
OF TRADE IN THE WORLD ECONOMY.
THIS IS A DIRECT REPRESENTATION OF GLOBALIZATION
AT WORK IN THE WORLD ECONOMY.
AND YOU CAN SEE THAT IT ROSE FROM LESS THAN 20 PERCENT
TO OVER 33 PERCENT RIGHT BEFORE THE RECESSION.
THEN WE SAW THIS DRAMATIC UNPRECEDENTED,
AT LEAST IN THE LAST CENTURY, DROP IN TRADE
IN A VERY SHORT PERIOD OF TIME ALMOST 5 PERCENT IN TERMS
OF HOW MUCH TRADE MEANT IN THE WORLD ECONOMY IN THE RECESSION,
LARGELY IN PART TO HOW MUCH MORE IMPORTANT THE GOVERNMENT
SPENDING NOT DIRECTLY ENGAGED IN TRADE BECAME IN THE RECESSION.
BUT THE FORECAST OF THE FUNDAMENTALS ARE ALL THERE
THAT IT WILL CONTINUE ON SO THAT WE RETURN TO THAT PATH
THAT WE'VE SEEN FOR DECADES AND WE WILL CONTINUE TO SEE
THAT SUCH THAT BY 2030,
WE'LL SEE WORLD TRADE APPROACHING ALMOST 40 PERCENT
OF THE WORLD ECONOMY.
SO, THIS EXPECTATION ON THE PART OF THE PANAMANIANS
OR THE SOUTHERN CALIFORNIA PORT COMMUNITY
THAT OPPORTUNITIES ARE GONNA CONTINUE TO GROW IS SOUND.
IT IS FUNDAMENTAL TO THE PERSPECTIVE IN TERMS
OF HOW WE SHOULD ACCEPT THE CHANGE THAT'S COMING
IN THE WORLD AND WHERE WE'RE GOING.
NOW, WHAT DOES THIS MEAN FOR THE CANAL IN TERMS
OF ITS ROLE IN WORLD TRADE?
THE POTENTIAL THAT PROVIDES THE OPPORTUNITY FOR THE CANAL
TO EARN MONEY FOR JOBS TO BE THERE
AND TO ASSOCIATED TRADE BENEFITS TO ACCRUE COMES
FROM LOWER SHIPPING COSTS.
>> AS THE VIDEO MENTIONED, THESE LARGER LOCKS ALLOW LARGER SHIPS
WITH LOWER UNIT COST IN TERMS OF TRANSFER OF CARGO.
MARY IS GONNA GO INTO THIS IN MORE DETAIL, I'M SURE.
BUT IMPORTANTLY, THIS EXPANSION
OF THE CANAL FUNDAMENTALLY DOES THREATEN SOUTHERN CALIFORNIA
MARKET SHARE IN TERMS OF THE MARKETS
WHERE THEY COMPETE COST BASIS QUALIFIED
BY MANY QUALIFIERS INCLUDING SERVICE QUALITY
AND TIME TO MARKET.
IF WE LOOK AT WHAT HAS HAPPENED IN TERMS OF THE MARKET
THAT CAN BE COMPETED OVER, IT HAS CHANGED
AS A RESULT OF THE RECESSION.
ECONOMIES IN TRADE PATTERNS HAVE BEEN AFFECTED BY THE RECESSION
AND THE RECOVERY PATH IS NOT EVEN.
IT'S NOT EVEN GEOGRAPHICALLY, IT'S NOT EVEN BY INDUSTRY.
IF YOU'RE IN THE FURNITURE BUSINESS,
YOU'RE STILL SUFFERING COMPARED IF YOU WERE
IN CONSUMER ELECTRONICS FOR EXAMPLE.
ULTIMATELY, THE PERSPECTIVE
THAT I THINK INFORMS THIS PERHAPS MOST IMPORTANTLY IS
THAT WE ARE STILL IN THE MIDST OF AN EVOLUTION AND A SHIFT
IN GEOGRAPHY OF SOURCING AND LOGISTICS PRACTICES.
THAT'S A BROAD STATEMENT IN THAT COVERS THE ENTIRETY
OF ECONOMIC ACTIVITY, NOT SPECIFICALLY MARITIME TRADE
OR THE MOVEMENTS OF GOODS IN AND OUT OF THE UNITED STATES,
BUT IMPORTANTLY ALL OF THAT IS DIRECTLY AFFECTED
BY THESE BIGGER PICTURE TRENDS AND THEY'RE GONNA CONTINUE
TO REFLECT THE EXPORT COMPETITIVENESS
AND THE DEVELOPMENT OF COUNTRIES WITH WHOM THE US TRADES
AND ALSO THE GLOBAL CONTEXT OF THAT COMPETITION.
SO, THE COMPETITORS TO THE UNITED STATES IN TRADE AS WELL,
BOTH AS CONSUMERS COMPETING TO BID FOR GOODS
AND AS EXPORTERS TRYING TO SELL INTO END MARKETS.
AND IMPORTANTLY, INDEPENDENT OF THE CANAL EXPANSION, SO WHETHER
OR NOT THE CANAL EVEN EXISTED OR WERE TO EXPAND, THESE SHIFTS
IN SOURCING POTENTIALLY THREATEN THE SOUTHERN CALIFORNIA MARKET
SHARE JUST BECAUSE OF THE POTENTIAL CHANGES IN SHIFTS
AND TRADE AWAY FROM THE TRADITIONAL TRANSPACIFIC MARKET
THAT HAS SERVED SOUTHERN CALIFORNIA SO WELL IN TERMS
OF BEING A GATEWAY TO THE ENTIRE CONTINENT
FOR THE LAST FEW DECADES.
I'D LIKE TO ILLUSTRATE THAT WITH JUST TWO GRAPHS,
THE FIRST OF WHICH SHOWS A LONG-TERM PERSPECTIVE,
AGAIN OUT ALMOST 30 YEARS LOOKING AT--
SPECIFICALLY NOW I'VE GROUPED THE UNITED STATES TOGETHER
WITH CANADA HERE.
I MEAN YOU CAN SEE THAT IN THE BLUE BAR AT THE TOP STARTING
IN THE MIDDLE, BUT ALSO THE DECLINE OF WESTERN EUROPE
IN THE ORANGE AND THEN THIS SHARP RISE IN ASIA.
THIS IS NO MORE THAN CONFIRMING WHAT YOU KNOW IS THIS TREMENDOUS
GROWTH IN THE IMPORTANCE OF ASIA IN THE WORLD ECONOMY OVER TIME
AND THE DECLINE IN THE RELATIVE IMPORTANCE
OF THE NORTH AMERICAN HEMISPHERE IN THE MATURE MARKETS IN EUROPE
AND YOU CAN TRANSLATE THAT FROM A TRADE PERSPECTIVE
INTO TRANSATLANTIC TRADE COMPARED
WITH THE GROWTH OF ASIA.
I'VE ALSO INCLUDED ON THE BOTTOM HERE LATIN AMERICA
AND THE CARIBBEAN WHICH ALSO IS INCREASING THEIR SHARE
OF THE GLOBAL ECONOMY AS THEY GROW RELATIVELY FASTER
THAN THE UNITED STATES AND CANADA.
IN 10 YEARS, ASIA OVERTAKES EUROPE AND US AND CANADA
IN 15 YEARS, YOU KNOW, IN A FEW DECADES THE US WILL NO LONGER BE
THE BIGGEST ECONOMY IN THE WORLD.
IF WE BREAK THE WORLD INTO 8 REGIONS HERE,
GROUPING TOGETHER LOGICAL SETS OF TRADING PARTNERS
INTO REGIONS, I'VE GOT NAFTA HERE, THE US, CANADA AND MEXICO
ON THE LEFT, THEN THE OTHER AMERICAS WHICH IS THE ENTIRETY
OF THE REST OF THE HEMISPHERE.
THEN WESTERN EUROPE SPLIT AWAY FROM CENTRAL
AND EASTERN EUROPE CALLED EMERGING EUROPE HERE.
THE OLD TRADITIONAL TRANSPACIFIC TRADE PARTNER ARE STILL VERY
IMPORTANT TRADE PARTNER OF JAPAN,
AND THEN OTHER ASIA PACIFIC, THE MID-EAST AFRICA
AND SUB-SAHARAN AFRICA.
OBVIOUSLY, YOU CAN SEE THE DIVERGENCE HERE
BETWEEN THE EMERGING WORLD, THE DEVELOPING COUNTRIES
THAT ARE GROWING MUCH FASTER AND THEY HAVE GROWN MUCH FASTER
OVER THE LAST 20 YEARS AND ARE FORECAST
TO CONTINUE TO GROW FASTER.
AND CONTRAST THAT WITH THE MUCH SLOWER TRADE
IN THE MATURE DEVELOPED ECONOMIES,
AND IMPORTANTLY THE ROLE OF THE US AS PART
OF NAFTA IN THE MIDDLE.
IN FACT, FROM A DEVELOPED COUNTRY WORLD,
THE US ACTUALLY IS GOING TO BENEFIT FROM FASTER GROWTH
THAN CERTAINLY THAN JAPAN
AND EVEN FASTER GROWTH IN WESTERN EUROPE.
THAT WILL BE REFLECTED IN THE TRADE PATTERNS
AND THE TRADE PARTNERS THAT THE US ENGAGES IN TRADE WITH.
IT ALSO PROVIDES OPPORTUNITY FOR US TRADE WHICH WILL BE GREATER
IN GROWTH IN TERMS OF TOTAL VOLUMES OF TRADE
THAN EUROPE OR JAPAN WILL ENJOY.
BUT REALLY THE TAKEAWAY FROM THIS IS THE APPROPRIATE ONE
THAT YOU ALREADY KNOW IS IT'S AN ASIAN CENTURY AND THAT
IF WE LOOK AT WHAT'S REALLY IMPORTANT IN TERMS
OF THE ECONOMY OF THE WORLD, IT'S ASIA IS BECOMING THE CENTER
OF WORLD ECONOMIC ACTIVITY, THE BIGGEST AREA OF GROWTH,
AND MOST IMPORTANT THEN TO US TRADE.
IF WE LOOK AT THIS PAST RECESSION,
UNLIKE PREVIOUS GLOBAL RECESSION SUCH AS THE ONE THAT WE--
PRECEDED AT MOST IMMEDIATELY IN 2001,
FOR THE FIRST TIME CHINA LED THE WORLD OUT OF RECESSION,
NOT THE UNITED STATE'S ECONOMY.
IT WASN'T THE US CONSUMER GOING BACK TO THE STORES
THAT BROUGHT THE WORLD BACK
INTO RECOVERY LAST YEAR, IT WAS CHINA.
AND IN FACT, THAT'S LIKELY TO CONTINUE ON IN THE FUTURE.
YOU KNOW, ASIA AS A WHOLE SURVIVED THE RECESSION BETTER
THAN MOST COUNTRIES.
IN FACT, IT COULD BE ARGUED THAT CHINA NEVER REALLY FELL
INTO RECESSION, RATHER INSTEAD
THAT THEIR GROWTH SIGNIFICANTLY RATCHETED BACK.
AN IMPORTANT ASPECT OF THE RECOVERY IN ASIA IS THE GROWTH
OF THE DOMESTIC DEMAND.
THAT'S THE GROWTH OF THE MIDDLE CLASS AND THE CONSUMERS
IN THE HOUSEHOLDS IN ASIA CONSUMING GOODS
THAT ARE PRODUCED IN THOSE COUNTRIES OR IMPORTED
FROM OVERSEAS INSTEAD OF THOSE ECONOMIES SOLELY FOCUSING
ON GROWTH THROUGH EXPORTS TRYING TO SELL INTO THE US
AND THE OTHER DEVELOPED PARTS OF THE WORLD.
BUT NOT WITHSTANDING THAT, EXPORTS REMAINED STRONG.
THE US STILL BECOMES LESS IMPORTANT OVER TIME
AS A TRADE PARTNER TO CHINA, BUT TRADE WITH CHINA
AND THE UNITED STATES STILL CONTINUES TO GROW,
ESPECIALLY AS THE US IS ABLE TO SUCCESSFULLY SELL IN TO CHINA
AND THE REST OF ASIA AS THEIR COMPETITIVENESS CONTINUES
TO INCREASE WITH A BIG EXCEPTION, AND THAT'S JAPAN.
JAPAN IS REALLY PAST ITS PEAK AS A TRADING COUNTRY.
THEY'RE IN A POINT WHERE THEIR POPULATION IS ACTUALLY
SHRINKING, THEIR WORKFORCE IS SHRINKING,
THEREFORE IN A VERY DIFFICULT PERIOD OF GROWTH GOING FORWARD
AND ITS RELEVANCE TO US IN TERMS
OF BEING A TRADE PARTNER IS EVER DIMINISHED.
EVEN THE JAPANESE BRANDED GOODS THAT WE BUY
IN THE STORES OFTENTIMES ARE ACTUALLY COMING FROM CHINA
OR SOMEWHERE ELSE IN SOUTHEAST ASIA.
BUT THE RIGHT PERSPECTIVE TO HAVE ON THE REGION
AND FOR TRANSPACIFIC TRADE IS THAT FUNDAMENTALS ARE STRONG
FOR CONTINUED LONG-TERM REGIONAL GROWTH FROM ASIA
WITH THE UNITED STATES.
ONE QUALIFIER TO THAT IS THAT WE SAW IN THE VIDEO IS
THAT IF WE LOOK AT ASIA AS ONE UNIFORM GROUP, IT DOESN'T MEAN
THAT THE SOUTHERN CALIFORNIA PORT SERVED ASIA
IN ITS ENTIRETY UNIFORMLY.
TRADE FROM REALLY SINGAPORE
AND POINTS FURTHER WEST IS MORE EFFICIENT
TO BE REACHED THE UNITED STATES MARKET
THROUGH THE SUEZ CANAL QUALIFIED BY SUEZ CANALS
AND THE FUNCTIONING AND THE SECURITY RISK FOR THINGS
LIKE PIRACY ON THAT TRADE ROUTE, BUT THERE'S POTENTIAL GROWTH
IN THAT PORTION OF ASIA WHICH WILL NOT NECESSARILY LOOK
TO THE TRANSPACIFIC AND SOUTHERN CALIFORNIA FIRST
AS ITS PRIMARY TRADE PARTNER.
NOW I HAVE-- I HAVE AN ADDITIONAL SLIDE TO DESCRIBE
WHERE THIS CARGO GOES IN THE UNITED STATES.
AND I THINK MARY IS GONNA ECHO THIS AND TAKE YOU
IN A LITTLE MORE DETAIL.
IMPORTANTLY, THE DECISION MAKERS AT THE END
OF ANY TRANSPORTATION IS THE DERIVED DEMAND
FOR THE GOODS THEMSELVES SO IT'S WHERE THEY ORIGINATE
OR WHERE THEY'RE DESTINED TO GO, WHERE IS THAT BUYER
OR THAT SELLER ENGAGED IN THAT ECONOMIC TRANSACTION.
AND FOR BETTER OR WORSE IN THE UNITED STATES,
MOST OF THE POPULATION
AND ECONOMIC ACTIVITY IS STILL IN THE EAST.
IT'S-- HERE I'VE JUST VERY BROADLY CIRCLED ABOUT TWO-THIRDS
OF THE POPULATION AND THE SCOPE IN THE EASTERN PART
OF THE UNITED STATES AND UNDERSTANDING THAT THAT
IN THE END MAKES A BIG-- A BIG IMPORTANT FACTOR IN TERMS
OF WHERE THE DECISIONS OF ROUTING GO AND THE DECISIONS
OF THE INTERMEDIARIES THAT DECIDE HOW
TO SERVE THIS END MARKET AND THE POTENTIAL
FOR GROWTH GOING FORWARD FOR GROWTH FASTER
IN THE SOUTHERN PARTS OF THE UNITED STATES THAN IN THE NORTH.
BUT THAT ACTUALLY ALSO STILL FAVORS A MAINTENANCE
OF THIS TWO-THIRDS/ONE-THIRD SHARE ROUGHLY,
I THINK THERE'S OTHER WAYS TO LOOK AT THIS.
BUT THIS INCLUDES ULTIMATELY INFLUENCING
WHERE THE DECISIONS ARE MADE ABOUT WHERE CARGO GOES.
BUT THE GOOD NEWS FOR SOUTHERN CALIFORNIA IS MOST ALL
OF THESE CONSUMERS, WHETHER THEY'RE IN THE EAST OR THE WEST,
THEY DON'T CARE HOW THE CARGO GETS TO THEM,
THEY REALLY DON'T CARE.
IF YOU GO INTO THE STORE SHELF, YOU'RE NOT THINKING, GEE,
I'M GONNA BUY THIS PRODUCT WHETHER OR NOT IT WAS HANDLED
BY THE PANAMA CANAL OR SOUTHERN CALIFORNIA PORTS.
WELL THE EXCEPTION IS IN THIS AUDIENCE WE MIGHT CARE,
BUT OUTSIDE OF THIS-- FOR MOST OF THE US POPULATION,
THEY WOULDN'T GIVE IT A SECOND THOUGHT
AND THEY REALLY DON'T CARE.
SO ULTIMATELY IT COMES DOWN TO SERVICE QUALITY AND PRICE.
IS THE GOOD ON THAT STORE SHELF AT ALL IN THE FIRST PLACE,
IS IT THERE AT THE LOWEST PRICE,
IS IT THERE IN A PERFECT CONDITION,
THAT'S WHAT'S GONNA MATTER TO THEM AND ALL
THROUGH THE SUPPLY CHAIN THAT FEEDS
THAT ULTIMATE DEMAND AND THOSE DECISIONS.
SIMILARLY ON THE EXPORTER SIDE, WHEN EXPORTERS ARE LOOKING
TO GET GOODS OVERSEAS, THEY WANNA GET IT THERE ON TIME
AND IN PERFECT CONDITION AND NOT DAMAGED ANYWAY,
THEN THAT ROUTING DECISION COMES
DOWN TO THE COMPETITIVENESS WITHIN THE INDUSTRY.
IT'S THE INDUSTRY TALKING TO ITSELF IN TERMS
OF HOW THOSE DECISIONS ARE MADE
TO SERVE THESE ULTIMATE CONSUMERS,
THESE ULTIMATE CLIENTS THAT ULTIMATELY MAKE THOSE DECISIONS.
FINAL SLIDE HERE IS THAT THE DECISION MAKING THAT GOES
ON AS THE VIDEO MENTIONED,
THEY'RE ALREADY DECISIONS BEING MADE TODAY.
IN FACT, THEY ARE ALREADY THE DECISIONS
THAT HAVE BEEN MADE IN THE PAST.
THEY ARE GONNA DECIDE THE WINNERS
AND LOSERS IN THE FUTURE.
WE CAN IDENTIFY SOME WINNERS VERY CLEARLY.
I THINK WE CAN ARGUE QUITE STRONGLY
THAT THE PANAMANIANS ARE GONNA BE WINNERS FROM THIS IN THE END.
NO MATTER HOW FAST THE PAYBACK IS,
THAT'S SOMEWHAT OPEN TO QUESTION.
BUT ULTIMATELY, THEY WILL BE WINNERS
FROM CAPTURING SOME ADDITIONAL WORLD TRADE.
THAT'S NOT NECESSARILY US TRADE, IT MAY BE TRADE OF SOUTH AMERICA
WITH ASIA FOR EXAMPLE.
THEY SERVE A BROADER MARKET THAN JUST UNITED STATES.
POTENTIAL LOSERS, I THINK THE BIGGEST GROUP
OF LOSERS ARE THOSE THAT DON'T PREPARE,
DON'T UNDERSTAND THE CHANGES THAT ARE AT WORK
AND THEREFORE ARE GOING TO BE REACTIVE
AFTER THE EXPANSION HAS HAPPENED.
THOSE I AM SURE WILL BE THE LOSERS
BECAUSE OTHER COMPETITORS WILL GET AN ADVANTAGE ON THEM
AND TAKE AWAY SOME OF THEIR BUSINESS.
AND THAT EXTENDS TO THIS PORT COMMUNITY
IF THEY'RE NOT PAYING ATTENTION TO THE ISSUES.
BUT YOU BY BEING HERE TONIGHT PROVE THAT YOU'RE HERE
IN ADVANCE OF THE OPENING OF THE EXPANSION AND SHOW YOUR INTEREST
TO NOT GET CAUGHT FLATFOOTED
AFTER THE CHANGES FOLLOW ONCE THE CANAL LOCKS HAVE EXPANDED.
>> ALL OF THE REPRESENTATIVES AND PARTICIPANTS
IN THE SUPPLY CHAIN, THE SHIPPERS, THE CARRIERS,
THE INFRASTRUCTURE PROVIDERS, THEY ARE ALL DECISION MAKERS.
THEY, WITHIN THEIR SPHERE OF INFLUENCE AND THEIR CONTROL,
ARE GOING TO MAKE DECISIONS
THAT ARE GONNA AFFECT THE COMPETITIVENESS
OF THE CANAL ROUTE VERSUS THE INTERMODAL ROUTE SERVED
THROUGH THE GATEWAYS ON THE WEST COAST AND THE SAN PEDRO BAY.
WHAT THESE DECISION MAKERS IN THE INDUSTRY DON'T KNOW
YET ULTIMATELY IS WHAT WILL BE THE COMPETITIVE COST
IN THE SERVICE PERFORMANCE OF THE ENTIRE SUPPLY CHAIN
THROUGH THE NEW EXPANDED LOCKS IN THE CANAL
VERSUS A FUTURE SYSTEM OF INTERMODAL
AND PORT PERFORMANCE MADE POSSIBLE BY INVESTMENTS
ON THE PART OF THE PORT COMMUNITY,
BY GOVERNMENT AGENCIES AND BY THE RAILROADS IN TRYING
TO SERVE THOSE SAME COMPETITIVE END MARKETS.
THERE'RE A LOT OF FACTORS THAT WILL AFFECT THIS,
THIS DECISION MAKING AND THOSE INCLUDE
AS I'VE MENTIONED THE TOTAL DELIVERY COST FOR THE GOODS
BUT ALSO PORT AND RAIL COMPETITION.
THEY'RE NOT NECESSARILY ATTEMPTING
TO MAXIMIZE THE CARGO VOLUMES, THEY'RE ATTEMPTING
TO MAXIMIZE PROFITS FOR THEIR SHAREHOLDERS,
WHETHER IT'S SOMEBODY THAT OWN STOCK IN THE UP
OR WARREN BUFFETT OR SOMEBODY THAT'S EXISTING
IN A PORT COMMUNITY.
THERE ALSO, AS MENTIONED IN THE VIDEO, REMAINING IMPEDIMENTS
TO USE OF EASTERN GULF COAST PORTS.
THE REMOVAL OR THE EXPANSION
OF THE CANAL LOCKS REMOVES A BOTTLENECK THAT EXIST
IN THAT SUPPLY CHAIN
BUT IT DOESN'T INSTANTLY TURN THE CHANNEL DEPTHS
INTO ALL THE EAST COAST PORTS
AND TO MATCH WHAT YOU HAVE HERE IN SAN PEDRO.
NOR DOES IT DEAL WITH A BRIDGE CLEARANCE AT THE BAYONNE BRIDGE
OR MANY OF THE LAND SIDE INFRASTRUCTURE CONSTRAINTS
THAT STILL EXIST IN ATLANTIC COAST PORTS IN TRYING
TO SERVE SOME OF THOSE SAME COMPETITIVE END MARKETS.
SO, I DON'T WANT PEOPLE TO OVER ATTRIBUTE THE EXPANSION
OF THE CANAL IN TERMS OF IMPROVING THOSE SUPPLY CHAINS.
THERE'RE A LOT OF OTHER INVESTMENTS THAT ARE REQUIRED
IN THAT EASTERN PART OF THE COUNTRY IN THE GULF
AND THE ATLANTIC COAST TO REALLY FACILITATE
AND TAKE FULL ADVANTAGE OF THAT.
AND THAT'S WHY THE PANAMANIANS HAVE BEEN TRYING VERY HARD
TO ENCOURAGE ALL OF THAT IN THAT PART OF THE COUNTRY
FOR A LONG TIME BECAUSE THEY REALIZE THEIR MARKET POTENTIAL
IS LIMITED IF ALL THESE ADD-ON, FOLLOW-ON INFRASTRUCTURE
AND OPERATING IMPROVEMENTS DON'T COME FOLLOWING THE EXPANSION
OF THE LOCKS.
NOW LASTLY, ALL OF THESE SHOULD BE PUT IN THE CONTEXT
OF OTHER FACTORS AT WORK.
SOME OF THOSE WERE TOUCHED ON IN THE VIDEO
AND I'M SURE WE'LL TALK ABOUT SOME OF THEM MORE
BUT THOSE INCLUDE OTHER FACTORS THAT WILL AFFECT TRADE DEMAND
AND THE CHOICES OF TRADE ROUTES
AND SOURCING IN THE WORLD ECONOMY.
THOSE INCLUDE ENVIRONMENTAL ISSUES, ENERGY SUPPLY
AND FUEL PRICES, SECURITY ISSUES, SAFETY ISSUES,
LABOR ISSUES AND INFRASTRUCTURE FACTORS,
ALL OF IT FROM THE CONTEXT OF THIS ROUTE COMPETITION
AND THE WINNERS AND LOSERS AND THE DECISIONS
TO BE MADE REALLY TRANSLATE INTO COST AND SERVICE QUALITY
THAT AFFECTS THOSE ULTIMATE DECISION MAKERS THAT ARE GOING
TO THE STORES OR THAT THEY'RE TRYING TO EXPORT THEIR GOODS.
SOME OF THESE MAY BENEFIT SOUTHERN CALIFORNIA PORTS.
YOU'VE BEEN WELL AWARE OF A LOT OF THESE ISSUES FOR A LONG TIME.
YOU'RE ON THE LEADING EDGE OF TRYING TO COME
UP WITH INNOVATIVE SOLUTIONS TO ADDRESS A LOT OF THEM.
AND ULTIMATELY, THAT MAY GIVE AN ADVANTAGE TO THIS REGION
AS OTHER PORTS TRY TO CATCH UP.
AND I THINK THAT WE'VE SEEN SOME MOVEMENTS
IN THE INDUSTRY ALREADY, AND THEN SOME OF THOSE CUSTOMERS
LIKE WAL-MART AND OTHERS
THAT ARE ADOPTING SUSTAINABILITY FACTORS
AS A PROCUREMENT DECISION IN THEIR PURCHASE
OF TRANSPORTATION SERVICES THAT MAY GIVE SOME ADVANTAGE BACK
TO SOUTHERN CALIFORNIA IN THE FUTURE.
SO, THAT CONCLUDES MY PREPARED REMARKS.
I WANNA THANK YOU AND I LOOK FORWARD TO PARTICIPATING
IN THE PANEL IN YOUR QUESTIONS AND ANSWERS.
THANK YOU VERY MUCH.
[ APPLAUSE ]
>> AS MARY COMES TO THE TABLE, I WANNA MAKE SURE OUR--
THE VOLUNTEERS ALONG THE AISLES ARE STARTING
TO PASS OUT THE 3 BY 5 CARDS.
IT'S ALSO OCCURRED TO MY ATTENTION
THAT SINCE WE STARTED WE'VE BEEN JOINED
BY CONGRESSWOMAN LAURA RICHARDSON
FROM THE 37TH CONGRESSIONAL DISTRICT.
CONGRESSWOMAN, ARE YOU HERE?
[ APPLAUSE ]
>> THANK-- THANK YOU FOR JOINING US.
I'D LIKE TO TURN OVER TO DR. MARY BROOKS NOW.
[ PAUSE ]
>> THANK YOU VERY MUCH FOR INVITING ME HERE.
I'M ABSOLUTELY DELIGHTED TO COME BACK TO LONG BEACH AGAIN
AND I'M ABSOLUTELY THRILLED TO BE HERE, SO THANK YOU.
AND I'M ALSO GOING TO ADVISE MARIANNE THAT I WENT
AND LEFT THE TIMER I PROMISED YOU I WAS GOING
TO HAVE UNDERNEATH MY SEAT.
SO, I'M COUNTING ON YOU TO WIND ME UP IF I RUN OVER TIME.
AND OF COURSE, THERE WE GO.
I WANTED TO START BY SHARING WITH YOU MY POINT OF VIEW
SO THAT YOU CAN SEE WHERE I'M COMING
FROM BEFORE I TALK ABOUT HOW I GOT HERE.
I BELIEVE VERY PASSIONATELY THAT THIS DECISION WILL BE MADE
BY THE PORTS' CUSTOMERS' CUSTOMER.
IT'S WELL RECOGNIZED THAT THE BATTLE FOR GLOBAL CARGO MOVES.
A LARGE CARGO INTEREST, THEIR AGENTS
AND SHIPPING LINES HAVE MORE POWER AND PORTS HAVE LESS.
I'M HAVING A LITTLE TROUBLE WITH REMOTE HERE.
THERE WE GO.
THE MARKET TODAY IS NOT THE SAME AS THE MARKET
WHEN PANAMA MADE ITS INVESTMENT TO-- ITS INVESTMENT DECISION
AND I BELIEVE THAT IT'S VERY LIKELY
THAT THE MARKET WILL HAVE CHANGED AGAIN
BY THE TIME THE CANAL EXPANDED.
EXPAND THE CANAL [INAUDIBLE].
ALRIGHT, GETTING ABOUT ONE OUT OF EVERY THREE OUT OF THIS.
NO. THERE WE GO.
THE CONTEXT HAS CHANGED.
I BELIEVE THAT THE WORLD HAS SWITCHED
FROM PORT COMPETITION TO ROUTE COMPETITION.
TRADITIONALLY PORTS COMPETED FOR A LIM-- IN A LIMITED HINTERLAND
AND TODAY, PORTS ARE PART OF A COMPLEX SUPPLY CHAIN
THAT PITS ALTERNATIVE ORIGIN
AND DESTINATION ROUTES AGAINST EACH OTHER.
THIS HAS HAPPENED OVER THE LAST 20 YEARS
AND WE'VE SEEN COMPLEX NETWORKS DEVELOP
WITH FEWER MORE POWERFUL PLAYERS LIKE THE SHIPPING LINES,
BUT WE'VE ALSO SEEN STAKEHOLDERS WITH INTEREST IN SUCH THINGS
AS ENVIRONMENTAL ISSUES EXERT GREATER CONTROL.
WE'VE HAD INTEGRATION ALONG THE SUPPLY CHAINS
FROM WITHIN THE CARGO MOVEMENT INDUSTRY.
WE'VE HAD THE RISE OF CIVIL SOCIETY AND THEIR ABILITY
TO ORGANIZE VIA THE INTERNET,
AND THEN OF COURSE WE'VE HAD AN ENHANCED INTEREST
IN SECURITY AND SUSTAINABILITY.
THESE HAVE CHANGED THE WORLD TO SOME EXTENT
AND THE WORLD IS NOT CHANGING.
AND I DON'T EVEN KNOW WHY IT'S GOING BACK NOW.
NOW, THERE WE GO.
THE CARGO INTEREST HAS BECOME MORE POWERFUL.
WE'VE HAD TELECOM DEREGULATION AND A CHEAP INTERNET
AND THAT HAS MEANT THAT BUYER SUPPLIERS--
BUYER AND SUPPLIER COMMUNICATION IS MUCH EASIER.
THEY KNOW HOW TO FIND EACH OTHER
AND THAT HAS MEANT THERE'S BEEN MORE GLOBAL TRADE.
WE'VE ALSO HAD SECURITY MANAGEMENT GO GLOBAL
AND THE END RESULT THOUGH IS
THAT SHIPPING LINES HAVE MADE MASSIVE INVESTMENTS AND SOME
OF THOSE MASSIVE INVESTMENTS HAVE BEEN MADE
BECAUSE THEY BELIEVE THAT THE LARGER SHIPS WILL GIVE THEM A
LOWER COST PER SLOT.
THE PROBLEM IS THEY AREN'T NECESSARILY FEELING THOSE SLOTS
AND SO THEY'RE CHASING LESS CARGO THAN THEY REALLY NEED
TO HAVE TO BE TRULY SUCCESSFUL AND AS A RESULT,
THERE'S BEEN QUITE A DECLINE IN TRANSPORT COST
AND CARGO HAS HAD THE BENEFIT OF THAT.
THE VELOCITY OF CARGO HAS BECOME A HUGE ISSUE.
WHAT WE'VE HAD IS ESSENTIALLY HIGH VALUE PRODUCT CHAINS ARE
NOW ENGAGED IN TIME-BASED COMPETITION.
AND I'M GONNA COME BACK TO THIS CONCEPT
OF TIME-BASED COMPETITION THROUGHOUT MY REMARKS
BECAUSE I BELIEVE THAT THIS IS THE AREA
THAT EVERYBODY IS LOOKING FOR BENEFITS.
AND NOT JUST IN TERMS OF DOOR TO DOOR TIME BUT IN TERMS
OF THE FINAL COST OF THAT TIME.
ALL WATER ROUTES, LIKE GOING THROUGH THE PANAMA CANAL
TO THE EAST COAST DO REDUCE TRANSPORT COST
FOR COST-SENSITIVE CUSTOMERS.
THE OTHER ADVANTAGE OF AN ALL WATER ROUTE IS
THAT IT HAS A LOWER ENVIRONMENTAL IMPACT,
AND I'M GONNA COME BACK TO THAT LATER.
SO YOU'RE COMPETING AGAINST THE ROUTE WHICH HAS COST
AND ENVIRONMENTAL BENEFITS BUT NOT TIME BENEFITS.
AND-- SO WHAT WE HAVE NOW IS SUPPLY CHAIN DECISIONS ARE
INCREASINGLY MADE ON SERVICE VOLATILITY AND I'M GONNA CALL
THAT THE STANDARD DEVIATION OF TIME AROUND PRICE TRANSIT TIME
AND FREQUENCY AND I WANT TO COME BACK
TO THE CONCEPT OF RELIABILITY.
SO WHAT DOES ALL OF THESE MEAN?
I REALLY WANNA TALK ABOUT THE SPECIFICS OF TODAY
AND THE SPECIFICS OF NOW.
AND I'M GONNA PUT BACK UP A CHART
THAT REFLECTS WHAT PAUL WAS TALKING ABOUT A LITTLE EARLIER.
YOU WILL NOTICE THAT THE POPULATION
OF THE UNITED STATES HAS KIND OF GOT THIS 25/75 SPLIT,
AND IMPORTS GO TO WHERE THE POPULATION IS.
ON THE EXPORT SIDE, IF WE CAN GET EXPORTS UP.
ON THE EXPORT SIDE, WE HAVE FIVE DIFFERENT LARGE MARKETS
GENERATING THE MAJORITY OF EXPORTS.
AND AS YOU SEE, THE WEST COAST PORTS, SEATTLE-TACOMA AREA,
THE OAKLAND SAN FRANCISCO AREA
AND THE SAN PEDRO BAY AREA ALL ATTRACT THEIR OWN CAPTURED
EXPORTS WE COULD SAY.
THE EAST COAST, NUMBER 4, HAS 4 MAJOR FACILI--
SOURCES OF CARGO AND THAT WOULD NATURALLY GO THERE.
>> THE ONE THAT IS BEING FOUGHT OVER ARE THE FIVE IN THE MIDDLE.
THAT'S WHAT EVERYBODY WANTS TO HAVE AS A PIECE
OF THE PIE THAT THEY HAVE.
WHO GETS THIS BUSINESS NOW?
WELL, IN 2008, YOU CAN SEE THAT THE SAN PEDRO BAY PORTS GOT MORE
THAN ONE-THIRD OF THE TOTAL US TRAFFIC.
THIS MEANS THAT THE PORTS OF SOUTHERN CALIFORNIA
BY ALL MEASURES HAVE BEEN PUNCHING ABOVE THEIR WEIGHT.
IN OTHER WORDS, YOU'VE GOTTEN THE BUSINESS.
THE QUESTION IS, IS ARE YOU GOING TO LOSE IT.
IT'S NOT ARE YOU GOING TO GET MORE,
IT'S ARE YOU GONNA MAINTAIN YOUR SHARE.
THE BURLINGTON NORTHERN SANTA FE IN THE VIDEO INDICATED
THAT WHAT YOU'VE GOT GOING
FOR YOU IS A FANTASTIC OCEAN RAIL CONNECTION,
AND THAT COMBINATION IS FASTER TO MARKET.
SO YOU'RE CLOSE TO ASIA, IT'S FAST TO MARKET
BUT IT IS YOURS TO LOSE.
SO MY ASSESSMENT AT THIS POINT IN TIME IS WHO HAS WON.
WELL, THE US CONSUMER RETAIL HAS WON.
WEST COAST PORTS AND ITS EMPLOYEES HAVE WON.
THE RAILWAYS LIKE BURLINGTON NORTHERN AND THE UNION PACIFIC,
AND THE WEST COAST ECONOMY WITH JOBS.
WHO HAS LOST?
EAST COAST PORTS AND DRIVERS OF CARS ON CALIFORNIA HIGHWAYS.
[ LAUGHTER ]
>> OKAY. AND YOU'RE NOT GETTING ANYTHING OUT OF THIS NOW.
WHO DECIDED?
THOSE WHO PAY THE FREIGHT, THAT'S LIKE TODD, RIGHT?
TODD DECIDES, YOUR CUSTOMERS DECIDE.
WE'RE BACK TO THE PORTS' CUSTOMERS' CUSTOMERS' CUSTOMERS
NOW, ARE WE?
OKAY. I'D LIKE TO EXPLAIN WHAT THE FUTURE MIGHT HOLD.
WELL, HERE WE GO.
SLOWER OCEAN SCHEDULES.
EVERYBODY HAS HEARD SHIPPING LINES ARE SLOWING DOWN.
AND WHY ARE THEY SLOWING DOWN?
WELL, IF YOU'RE INVESTING IN A 12,000 TEU SHIP,
TAKE A LOOK AT YOUR FUEL COST,
AS FUEL COST HAS BEEN RATCHETING UP.
AND AS YOU GO FASTER AND FASTER,
THE COST FOR THE LARGEST SHIPS GROWS EXPONENTIALLY COMPARED
WITH THE COST OF THE SMALLER ONES.
SO OF COURSE YOU MADE THE INVESTMENT AS A SHIP OWNER.
AND IN A SHIP SO THAT YOU COULD HAVE SLOT COST SAVINGS PER TEU
AND NOW THE FUEL COSTS ARE ERODING THEM.
SO YOU SLOW DOWN.
WELL, IF YOU SLOW DOWN WITHOUT THINKING ABOUT THE IMPACT
ON YOUR CUSTOMER, THE IMPACT IS YOUR CUSTOMERS ARE UNHAPPY,
AND THEY'RE READY TO SKEWER YOU.
WHY? BECAUSE THEY DON'T SEE THAT YOU SHOULD BE SLOWING
DOWN IF THEY ARE HAVING THE EXPECTATION OF TIME TO MARKET.
THIS MAY NOT BE THE ROUTE I SHOULD HAVE PICKED
BUT THIS WAS THE EASY TABLE
BECAUSE THE DUTCH HAVE TAKEN A LOOK AT THE IMPACT
BETWEEN SAILING TIME SPEED AND DAYS IN SERVICE AND YOU CAN SEE
THAT THE DIFFERENCE BETWEEN THE NUMBERS IN THE BOTTOM ROW,
IF WE CAN GET MY LITTLE ASSESSMENT UP THERE,
IS A 25 PERCENT INCREASE IN THE TIME
TO MARKET ON THE SHIPPING SIDE.
SO, IF YOU'RE A CUSTOMER WHO'S WORRIED
ABOUT INVENTORY CARRYING COST AND TIME TO MARKET,
THE SHIPPING LINE DECISION TO UNILATERALLY SLOW
DOWN TO SAVE FUEL COST HAS HAD AN IMPACT YOU WEREN'T EXPECTING.
SO, JUST BECAUSE THE SHIPPING LINE THINKS THAT IT'S GOING
TO SAVE MONEY, WHAT IS IT CONCERNED ABOUT?
WELL, I'VE GOT ANOTHER EXAMPLE HERE, AND THAT IS THE COST
OF MOVING A BOX FROM CHINA TO GERMANY.
IN THE TOP ONE, WHICH IS THE SHIP OWNER'S VIEW OF HIS COST,
YOU'LL SEE THAT THE BUNKER IS MORE THAN 56 PERCENT
OF HIS TOTAL COST, WHICH IS WHY HE IS CONCERNED
ABOUT SLOWING DOWN.
IN THE BOTTOM ONE, WHICH IS THE CARGO OWNER'S POINT OF VIEW,
YOU CAN SEE THAT THE CARRYING COST IS ADDED TO THAT,
AND ALL OF A SUDDEN THAT BUNKER COST THE SHIP OWNER FACES IS
CONSIDERABLY SMALLER.
SO THE DIAGRAM ON THE BOTTOM OR THE PIE CHART
ON THE BOTTOM INCLUDES THE COST TO THE CARGO OWNER IN ADDITION
TO THE COST TO THE SHIP OWNER.
THIS HELPS US UNDERSTAND WHY INVENTORY CARRYING COST HAS
BECOME SO IMPORTANT TO THE CARGO OWNER AND WHY HE'S
SO CONCERNED ABOUT TIME.
IF I TAKE A LOOK AT THE TRANSIT TIMES,
AND THIS IS TRANSIT TIMES ALONE
AND DOES NOT INCLUDE THE LAND TIME TO MARKET BUT JUST THE PORT
TO PORT TIME, YOU CAN SEE THE TRANSIT TIME AND SEE
WHERE THAT BREAKPOINT IS.
AND PAUL HAD MENTIONED IT WAS SOMEWHERE AROUND SINGAPORE.
MOST OF THE STUDIES SAY
THAT IT'S ACTUALLY CLOSER TO THAILAND.
THE PROBLEM WE HAVE IS THAT THE SHIPPING LINE DOESN'T ALWAYS
START IN THAILAND.
IF HE STARTED IN THAILAND, NATURALLY HE'D GO THROUGH SUEZ.
BUT IF HE STARTS IN CHINA-- YEAH, SO--
SO IF WE TAKE A LOOK AT WHERE COMPANIES COMPETE--
I'M GONNA BRING UP MY BOXES UP HERE.
SO MUCH FOR ANIMATED TO POWERPOINTS, RIGHT?
IF WE TAKE A LOOK AT THE FIRST ONE, THE CARGO THAT STARTS
IN INDIA IS NEVER GONNA COME TO LOS ANGELES OR LONG BEACH.
DOWN AT THE BOTTOM HERE, YOU CAN SEE
THAT IT'S JUST NOT COMPETITIVE FROM A TIME SENSE OF VIEW--
A SENSE OF TIME POINT OF VIEW.
HOWEVER FOR THE OTHERS,
THE VANCOUVER-LOS ANGELES-LONG BEACH TYPE
OF COMBINATION IS ALL MUCH BETTER.
AND SO WHAT WE CAN SEE IS THAT YOU SHOULDN'T REALLY BE WORRIED
IF YOU'RE THINKING TO ATTRACT THE TIME BASED--
THE TIME BASED MARKET.
THE OTHER POINT THAT'S IMPORTANT HERE IS CARRIER RELIABILITY.
I CAN'T IMAGINE MOST CARGO OWNERS WORK IN INDUSTRIES
WHERE THEY TALK 6 SIGMA AN, YOU KNOW, ONE DEFAULT IN A MILLION
AND THE BEST CARRIER SCHEDULE OUT THERE AND THEY'RE PROUD
OF IT IS 69 PERCENT RELIABILITY.
I MEAN, YOU KNOW, THIS-- THIS JUST DOESN'T CUT IT.
I'M REALLY SORRY.
SO WE HAVE SCHEDULED RELIABILITY UP HERE AND YOU CAN SEE
THAT THE MAJORITY OF SHIPPING LINES CAN'T EVEN CALL
ON A PORT HALF THE TIME THEY'RE SCHEDULED.
I MEAN, SO WE REALLY HAVE A REAL PROBLEM HERE
WITH CARRIER RELIABILITY.
AND WHAT DOES THAT MEAN?
I HAVE TO TELL YOU, I'M A CARGO OWNER.
I WANT RELIABILITY STATISTICS PUBLISHED AND I WANT THE PORT
TO DO IT BECAUSE I WANT TO KNOW WHO'S--
WHO'S GOING TO SERVE MY CARGO WELL.
AND THE CARRIER WHO FIXES THE RELIABILITY PROBLEM IS GONNA
ATTRACT THE CARGO BECAUSE THEY WILL REDUCE THE CARGO'S
INVESTMENT AND SAFETY STOCK.
NOW, EVERYBODY HAS BEEN TALKING ABOUT THE ENVIRONMENT.
WHAT DOES THE ENVIRONMENT--
WILL CARBON PLAY A ROLE IN THESE DECISIONS.
WELL, WE CAN SEE THAT SHIPPING IS PROBABLY--
THE CONTAINER SHIP IS THE LOWEST IMPACT CARBON IN TERMS
OF CARBON EMISSIONS PER TON KILOMETER OF CARGO CARRIED.
AND IF WE TAKE A LOOK AT THE OTHER COMPONENT OF THIS,
WHICH IS SENSE PER TON MILE AND TRY AND PUT A VALUE
ON THOSE EXTERNAL COST IN THE BOTTOM, ROAD SAFETY, CONGESTION,
NOISE, GHG, PARTICULATE MATTER, ADD IT ALL UP,
IT RUNS TO ABOUT 25 PERCENT OF--
AT THE MAXIMUM OF THE COST WE COULD ADD ON.
SO LET'S JUST ASSUME FOR A MINUTE.
IF WE TOOK THE COST OF GETTING A PRODUCT TO MARKET, A TELEVISION,
LESS THAN 2 PERCENT-- WHISKY, THIS IS MY FAVORITE.
I'M A WHISKY DRINKER.
WHISKY, LESS THAN 1 PERCENT OF THE COST IS TRANSPORT.
BEER 1 PERCENT, I'LL SWITCH TO WHISKY, COFFEE 1 PERCENT.
IF I WERE TO TAKE A LOOK AT THOSE
AND ADD AN ENVIRONMENTAL SURCHARGE OF 25 PERCENT,
I STILL HAVEN'T MADE A SIGNIFICANT IMPACT
ON A CUSTOMER MAKING A DECISION TO SWITCH
TO AN ALTERNATE PRODUCT.
I DON'T BELIEVE THAT WE'RE GONNA FIND
THAT WE CAN PULL CLIMATE CHANGE AGENDA
THROUGH SURCHARGES 'CAUSE IT DOESN'T HAVE A BIG ENOUGH IMPACT
AT RETAIL.
IT'S JUST SOMETHING WE HAVE TO DO
BECAUSE IT'S THE RIGHT THING TO DO.
SO WE-- IF WE GET DOWN TO THE REAL IMPACT ISSUE,
THE CARGO OWNER FACES THREE COSTS, IN-HOUSE COST,
OUTSOURE COST AND INVENTORY CARRYING COST.
>> AND THE TRANSPORT COST THAT I HAVE
UP ABOVE DOESN'T INCLUDE THOSE TIME COSTS
SO YOU WANNA KNOW WHAT THE IMPACT IS GONNA BE.
THE IMPACT IS FROM A POINT OF VIEW OF WHICH PORT IS BEST.
LET'S TAKE AN EXAMPLE.
I'VE GOT THE EXAMPLE HERE FROM [INAUDIBLE] OUT OF UBC.
HE ANALYZED SEVERAL TRADE ROUTES.
I'VE JUST PICKED SHANGHAI TO CHICAGO
OR TORONTO 'CAUSE HE INVESTIGATED BOTH.
FOR THE APPAREL INDUSTRY,
HE FOUND THAT NON-TRANSPORTATION COST,
I.E. INVENTORY CARRYING COST AND THE LIKE,
ACCOUNTED FROM 52 PERCENT TO 67 PERCENT
OF THE TOTAL DELIVERED COST.
THEY ARISE WITH THE VALUE OF THE COMMODITY, RELIABILITY AS A KEY.
AND IF I TAKE A LOOK AT THE EXACT NUMBERS,
IF I CAN GET THE TABLE UP.
HE DID IT IN-- AT VANCOUVER.
THE BEST CASE SCENARIO,
VANCOUVER IS A LITTLE MORE PRICEY THAN LONG BEACH OR LA
AND HALIFAX IS THE MOST EXPENSIVE.
WORST CASE SCENARIO, LONG BEACH COMES UP, LA-LONG BEACH COMES
UP LOOKING THE WORST ON THE INVENTORY CARING COST.
WHAT DOES THIS TELL ME?
THIS TELLS ME THERE'S A HUGE SPREAD HERE.
IT TELLS ME THAT WHEN LA IS GOOD, IT'S LONG BEACH IS GOOD,
IT'S VERY, VERY GOOD, AND WHEN IT'S BAD, IT'S HORRID.
SORRY, A LITTLE NURSERY RHYME THERE.
SO THE GAP IS SMALL BETWEEN VANCOUVER AND LONG BEACH.
IT'S FRAGILE.
IT WON'T TAKE MUCH TO TIP THE BALANCE,
SO VANCOUVER COULD BE A SERIOUS COMPETITOR.
APPAREL IS VERY LOW VALUE, SO FOR HIGHER VALUE GOODS,
THAT UNRELIABILITY PROBLEM, THAT GAP BETWEEN LARGE AND SMALL,
THAT'S THE THING THAT'S NEED TO BE FOCUSED ON.
SO CONCLUDING, CONCLUDING THOUGHTS, PORT TREND IS POWERFUL
AS THEY SHOULD-- AS THEY HAD BEEN ONCE.
YOU NEED TO BE AN ATTRACTIVE ROUTING OPTION.
YOU NEED TO FOCUS ON RESPONSIVENESS,
EFFICIENT GOODS TRANSFER.
YOU NEED TO ALIGN YOUR INTERESTS WITHIN THE COMMUNITY,
THAT MEANS EVERYONE IN THE COMMUNITY NEEDS TO BE PULLING
IN THE SAME DIRECTION.
THE GLOBAL CRISIS HAS FORCED EVERYBODY
TO REEXAMINE THEIR PRACTICES.
THEY HAVEN'T FINISHED DOING THE RESTRUCTURING THEY'RE GONNA DO.
YOU HAVE TIME TO KEEP THE BUSINESS.
SO, MY ASSESSMENT FOR THE FUTURE IN TERMS OF WHO WINS,
WHO LOSES, AND WHO DECIDES.
WHO WILL WIN?
AGAIN, THE US CONSUMER AT RETAIL,
PORTS AND THEIR EMPLOYEES THAT FOCUS ON ATTRACTING,
SERVING THE COSTUMER WELL, THE RAILWAYS
AND THE DISTRIBUTION COMPANIES
THAT ARE CONNECTED WELL TO PORTS.
WHO WILL LOSE?
[ PAUSE ]
>> WHO WILL LOSE?
WHO WILL LOSE?
THE US CONSUMER, I'M SORRY-- WHO WILL LOSE?
COMPLACENT PORTS.
I THINK PAUL ALREADY MENTIONED THIS.
THOSE WHO ARE COMPLACENT DON'T SERVE THEIR COSTUMER WELL.
AND OF COURSE, AGAIN,
THE DRIVERS OF CARS NEAR SUCCESSFUL PORTS.
[ LAUGHTER ]
>> AND FINALLY, I'M JUST GOING TO GIVE UP ON THIS, WHO DECIDES?
WHO DECIDES?
THOSE WHO PAY FOR THEIR FREIGHT AND THEIR AGENTS.
HE OR SHE WHO WANTS THE BUSINESS
TO ALIGN THE COMMUNITY, YOU DECIDE.
IT'S YOUR BUSINESS TO LOSE, YOU WORK TOGETHER,
YOU MAKE IT HAPPEN, YOU WILL WIN.
THANK YOU.
[ APPLAUSE ]
>> I SPENT A LOT OF TIME HERE AS AN UNDERGRADUATE,
AND IT'S JUST MAY BE THE FIRST TIME ANYONE ACTUALLY CARES WHAT
I MIGHT SAY.
[ LAUGHTER ]
>> SO, AS I LISTEN TO THE TWO DISTINGUISHED SPEAKERS HERE
EARLIER, I THOUGHT TO MYSELF, I WISH I WAS GOING FIRST.
SO I COMMEND YOU BOTH ON THE RESEARCH
AND YOUR PERSPECTIVES AND THE POINTS MADE.
I MYSELF, I'M A LOGISTICS PROFESSIONAL,
AND AS MARY ANN SAID, WAS BROUGHT HERE
TO HOPEFULLY GIVE THE REALISTIC OR THE REALIST POINT OF VIEW.
AND I WORK IN THE INDUSTRY DAY IN AND DAY OUT HERE IN LA.
I'M A LITTLE BIASED TOWARDS LA AND THAT MAY COME
OUT IN MY PRESENTATION,
BUT I THINK WE ALL MIGHT BE IN A ROOM HERE.
SO, TO START HERE, A PRETTY COMMON QUESTION
THAT WE'VE ALL HEARD BEFORE, BUT THE SHORTEST DISTANCE
BETWEEN TWO POINTS IS A STRAIGHT LINE, OKAY.
I THINK IT WAS SAID WELL
BY THE INDIVIDUAL REPRESENTING THE RAIL LINES IN THE VIDEO.
BUT THIS ISN'T GONNA CHANGE.
MOVING FROM ASIA TO THE US,
LA-LONG BEACH IS ALWAYS GONNA BE A VIABLE RELEVANT PORT, OKAY.
BUT WE'RE HERE TO DISCUSS MORE THAN THAT.
SO, THE IMPORTER'S CHALLENGE.
THE IMPORTER'S CHALLENGE NEVER CHANGES.
THEY HAVE TO CONSIDER HOW TO DELIVER THEIR GOODS
TO THE STORES OR THEIR DISTRIBUTION CENTERS
AND BALANCE THE TOTAL COST, AS MARY SAID, THE TOTAL COST
AND THE TIME VALUE OF MONEY, THE TRANSIT TIME, ALL OF THE ASPECTS
THAT THEY DEAL WITH DAY IN AND DAY OUT.
SOME OF THE ASPECTS THAT--
THAT BECOME PARTICULARLY IMPORTANT ARE THE CAPABILITIES
OF THEIR TRADING PARTNERS.
I THINK IT'S IMPORTANT FOR US TO REALIZE AS GLOBAL TRADE MOVES,
YOU KNOW, INTO OTHER AREAS NOT JUST CHINA, WE ALL FOCUS
AND WE TEND TO FOCUS ON CHINA BEING A VERY LARGE
TRADING PARTNER.
PAUL MADE A GOOD COMMENT ON JAPAN BEING LESS
AND LESS RELEVANT TODAY.
THE REALITY IS THE STEAMSHIP LINES, THE IMPORTERS,
THEY FOLLOW THE BEST COST STRUCTURE THAT'S OUT THERE.
SO AS CHINA OR ANY OTHER MANUFACTURING POINT BECOMES
LESS, LESS EFFECTIVE, LESS COST EFFECTIVE
FOR THE IMPORTING COMMUNITY, THEY WILL MOVE.
SO WHEN YOU LOOK AT IT FROM THE PERSPECTIVE
OF THE IMPORTING COMMUNITY, THEY HAVE TO BALANCE
WHERE THE CARGO IS, WHERE THEY'RE GONNA MANUFACTURE IT,
THE SUPPLY CHAIN RELATIVE
TO WHERE THEY'RE GONNA LOCATE THEIR MANUFACTURING,
AND ALL OF THE SERVICES AND INFRASTRUCTURE THAT'S RELATED
TO BRINGING THAT CARGO
FROM WHETHER IT'S CHINA, CAMBODIA, VIETNAM.
I CAN TELL YOU FROM MY PERSPECTIVE WE SEE A HUGE SURGE
OF CARGO COMING OUT OF VIETNAM.
WHAT I HAVEN'T HEARD IS
THAT THERE'S GONNA BE A DIRECT SERVICE CALL
FROM VIETNAM TRANSITING THE PANAMA CANAL POST-2014.
OKAY. WHEN YOU'RE THE IMPORTER, DO YOU HAVE THE TIME?
I THINK EACH OF US-- EACH OF US HAVE TALKED
ABOUT IT AS WELL AS THE VIDEO.
BUT THE TIME VALUE OF MONEY IS VERY IMPORTANT WHEN CONCERTING
WHERE TO ROUTE THE CARGO, THE DISCRETIONARY CARGO.
JUST LOOKING-- LOOKING AT A SAILING SCHEDULE
FROM HANJIN SHIPPING LINE, AND THIS DOES NOT TAKE SLOW STEAMING
INTO ACCOUNT BECAUSE THE TRANSIT TIMES HAVE BEEN EXTENDED
FROM WHAT THEY ONCE WERE A YEAR AND A HALF AGO.
BUT IF YOU LOOK AT THE TRANSIT TIME FROM BUSAN TO SAVANNAH,
YOU'RE LOOKING AT 21 DAYS.
AT BEST, THAT'S SEVEN DAYS LONGER THAN GETTING YOUR CARGO
IN AND THROUGH LONG BEACH LOS ANGELES HARBORS, ALRIGHT.
DO THE IMPORT-- DOES THE IMPORTING COMMUNITY HAVE ENOUGH
TIME TO SPEND THAT SEVEN DAYS?
RIGHT NOW, MONEY IS CHEAP, BUT ULTIMATELY IT MAY NOT BE,
AND THE TIME VALUE OF MONEY IS GOING TO COME INTO PLAY
WHEN DECIDING HOW TO ROUTE THEIR CARGO.
ANOTHER THING FROM MY PERSPECTIVE IS
WHEN THE PANAMA CANAL OPENS, IT'S EASY FOR IMPORTERS TO SAY,
WHEN THEY PLAN TO UTILIZE THIS NEW AVENUE,
WE'RE GONNA PLAN EARLIER, WE'RE GONNA ISSUE OUR POS EARLIER,
WE'RE GONNA HAVE OUR MANUFACTURERS SHIP EARLIER.
MY EXPERIENCE IS THAT'S MUCH EASIER SAID THAN DONE.
CARGO-- YOU KNOW, WHEN CARGO GETS TO THE PORT IN ASIA
AND IT'S READY TO GO, IT'S TYPICALLY READY TO SHIP
AS QUICKLY AS POSSIBLE AND GET TO THE IMPORTER AS FAST
AS THEY POSSIBLY CAN GET IT THERE.
SO ONE OF THE THINGS I WORK WITH OUR CORPORATE OFFICE
TO GATHER SOME DATA, AND THIS WAS AN INTERESTING ASPECT,
WHEN-- AS WE LOOK TOWARDS 2014 AND WHAT'S GONNA HAPPEN,
WE LOOKED AT HOW MUCH CARGO IS ACTUALLY GOING
TO THE EAST COAST.
AND-- OH, I ONLY HAVE FIVE MINUTES LEFT
SO I GOT TO BE QUICK.
SO THE EAST COAST RIGHT NOW,
7,000 TEUS A WEEK ARE TRANSITING VIA RAIL TO THE EAST COAST.
IMPORTANT TO SEPARATE MIDWEST FROM THE EAST COAST.
IF YOU TAKE 7,000, THAT'S ONLY TWO SAILINGS A WEEK.
AND I WOULD GATHER THAT THOSE 7,000 CONTAINERS IN A WEEK,
THEY'RE NOT GOING VIA RAIL BECAUSE THEY HAVE A LOT
OF EXTRA TIME TO GET TO THE EAST COAST, ALRIGHT.
WHEN YOU LOOK AT THE MIDWEST, YOU HAVE FOUR DISTINCT AREAS -
ILLINOIS, CHICAGO AREA, TEXAS, OHIO VALLEY, TENNESSEE, MEMPHIS.
ALL OF THIS IS EFFICIENTLY SERVICED
BY LA LONG BEACH VIA RAIL, RIGHT.
AND WHEN WE LOOK AT THE PRICING STRUCTURE BASED
ON TODAY'S PRICING, EVEN IF YOU TOOK IT
THROUGH A VIABLE HOUSTON PORT, MOVING IT UP TO CHICAGO AREA,
YOU WOULDN'T NECESSARILY SEE A COST SAVINGS.
SO WE HAVE ALREADY SEEN THE SHIFT, OKAY.
AS MENTIONED EARLIER IN THE VIDEO, BACK TO 2002,
WE'VE STEADILY SEEN THE CARGO THAT'S BEEN DESTINED
TO THE EAST COAST SHIFT THAT WAY.
STARTING BACK IN 2000, IT WAS 15-16 PERCENT,
AND ENDING IN 2009, GETTING CLOSE TO 30 PERCENT.
>> SO THERE HAS BEEN A SIGNIFICANT SHIFT
THAT WAY ALREADY.
WILL IT CONTINUE?
AS PAUL MENTIONED, BEFORE THE RECESSION,
THE PANAMA CANAL WAS NEARING CAPACITY.
WHAT YOU SAW IF YOU LOOK AT THE VESSEL STRINGS
THROUGH THE PANAMA CANAL, FROM 2000-2008,
IT ACTUALLY REDUCED THE STRING.
SO, IF THIS DISCRETIONARY CARGO WAS CAPABLE OF GOING
TO THE EAST COAST, COULDN'T YOU ARGUE
THAT THE STRINGS WOULD INCREASE?
ALRIGHT, SO WHO'S COMING TO THE PARTY?
AS I RESEARCHED THIS TOPIC,
EVERY PORT ON THE EAST COAST HAS A MEMORANDUM
OF UNDERSTANDING WITH PANAMA.
THEY ALL WANNA COME TO THE PARTY.
AND TO VARYING DEGREES, THEY'RE READY TO.
THE ONE YOU'RE GONNA HEAR FIRST OR WE ALREADY HEARD
ABOUT A NUMBER OF TIMES IS THE PORT OF JACKSONVILLE.
HANJIN STEAMSHIP LINE IS CURRENTLY BUILDING A NEW
TERMINAL THERE CAPABLE OF SERVICING THE LARGEST VESSELS.
WELL, I FIND AN INTERESTING FACT SHEET HERE ON THEIR WEBSITE
WHEN I WAS RESEARCHING.
IF YOU LOOK BACK FROM 2002 WHEN WALMART PUT
IN A MILLION SQUARE FEET OF DISTRIBUTION FACILITIES,
ALL THE WAY UP UNTIL 2009,
IT'S A LOT OF IMPORTERS HAVE MOVED THERE,
PICTURE OF THE PORT, YOU KNOW.
THEY DO HAVE A NUMBER OF VESSELS ALONGSIDE.
IT LOOKS LIKE A VIABLE PORT.
THE TOTAL IN THAT 10-YEAR PERIOD WAS 10 MILLION SQUARE FEET
OF DISTRIBUTION SPACE.
IT SEEMS LIKE A LARGE NUMBER.
NOW IF YOU LOOK AT HOUSTON, HOUSTON ARGUABLY TO ME STANDS--
HAVE THE BIGGEST GAIN, FOURTH LARGEST CITY IN THE US.
LARGE PORT COMPLEX TODAY HANDLING LARGE BREAK BULK ITEMS,
DEEP WATER SHIPS, LOT OF LAND, ALRIGHT.
IF YOU LOOK, LET ME BACK UP ONE, ON THE LEFT THERE,
THE PICTURE IS ONE OF THEIR MARKETING MATERIALS
FROM THEIR WEBSITE.
TOWERING THE INDUSTRIAL, THE INDUSTRIAL ZONE
WHICH HAS AN ABUNDANCE OF GREEN LAND THERE.
SO, MY COMMENT HERE IS IF YOU BUILD IT, THEY MIGHT COME,
BUT TODAY VERSUS WHAT WE SEE OUT THERE IN LA-LONG BEACH,
IT'S NOT YET DEVELOPED.
SOME HAVE TAKEN THE INITIATIVE
AND PUT DISTRIBUTION FACILITIES THERE, WALMART
AND HOME DEPOT BEING TWO OF THE LARGEST.
THERE'S NOT VERY MANY WALMARTS AND HOME DEPOTS
WHO CAN HAVE MULTIPLE LARGE DCS
IN FOUR CORNERS OF THE US, RIGHT?
THERE'S VERY FEW OF THOSE, OKAY?
SO, WE ALSO HEARD ABOUT PRINCE RUPERT.
FROM MY PERSPECTIVE, PRINCE RUPERT IS A VERY NICE PORT.
IT HAS A LOT OF INTERESTING OPTIONS ESPECIALLY
IF YOU'RE ON THE MIDWEST.
THE ABILITY TO SERVICE ANYTHING ON THE EAST COAST IS LIMITED.
SERVICE ANYTHING ON THE WEST COAST IS-- DOESN'T MAKE SENSE.
AND THE FIRST TIME I'VE HAD A CUSTOMER
OR THE FIRST TIME ANYONE HAS A CUSTOMER EXPERIENCE REVENUE
CANADA OPEN AND DO EXTENSIVE EXAM ON THEIR CARGO,
THEY PRETTY MUCH WANT TO AVOID THAT OPTION GOING FORWARD.
SO, WHERE DOES THAT LEAVE US?
SOMETIMES SIZE DOES MATTER.
[ LAUGHTER ]
[ APPLAUSE ]
>> I CAN'T HELP BUT POINT OUT THE LA-LONG BEACH PORT COMPLEX
AT SAN PEDRO BAY HAS MADE THE MOST INVESTMENTS,
HAS THE MOST INFRASTRUCTURE,
HAS THE MOST DEDICATED WORKFORCE TO THE INDUSTRY.
JUST BECAUSE THE PANAMA CANAL IS GONNA BE WIDENED DOES NOT MAKE
THIS IRRELEVANT, OKAY.
TO BE FAIR, THE PICTURE WAS FROM LONG BEACH,
BUT I TOOK THE MARKETING MATERIAL OFF OF LA SITE
BECAUSE THEY HAD SOME NICE FACTOIDS.
THEY GOT TO SHARE THE LOVE, RIGHT?
THEY HAD SOME NICE FACTOIDS THERE.
AND THE ONE I WANNA POINT OUT IS THEY DEFINITELY,
AS WELL AS LONG BEACH ARE MARKETING TO THEIR ABILITY
TO SERVICE ANTERIOR OF THE US AT A VERY FAST
AND EFFICIENT PACE, RIGHT?
BUT THE ONE THAT REALLY JUMPED OUT AT ME WHEN YOU THINK BACK
TO THE JACKSONVILLE, THE 10-MILLION SQUARE FEET
OF WAREHOUSING SPACE, WELL, LET ME TELL YOU,
WE HAVE 660-MILLION SQUARE FEET OF WAREHOUSING SPACE CURRENTLY
IN THE LA BASE AND READY
TO BE SERVICING THE IMPORTING COMMUNITY.
IT'S A BIG DIFFERENCE.
SO, I'LL CLOSE IT UP HERE.
AND WHEN ASKED TO LOOK AT WHO WINS, WHO LOSES,
AND WHO DECIDES, I HAD TO PUT IT IN TWO BUCKETS.
SHORT TERM, I THINK THE STEAMSHIP LINES WIN.
AND IT'S A-- AS I RESEARCHED THE TOPIC, WHAT I FOUND IS
THAT VERY QUICKLY, THE STEAMSHIP LINES WILL TAKE THE OPPORTUNITY
TO CHANGE SOME OF THEIR SMALLER VESSELS
AND OPERATE LARGER VESSELS AT A MORE COST-EFFICIENT BASIS,
STILL SERVICING THE SAME NUMBER OF CONTAINERS
YET LOWERING THEIR PER CONTAINER EXPENSE, RIGHT.
THEY MAY EVEN REDUCE THEIR STRINGS.
THEY DON'T NEED AS MANY SHIPS TO GO
THROUGH TO SERVICE THE SAME NUMBER OF CONTAINERS.
SO THEY WIN IMMEDIATELY.
WHO LOSES?
PANAMA. THE BUDGET FOR THE WIDENING STARTED
AT JUST OVER 3 BILLION.
AS OF RIGHT NOW, THEY'RE TOUTING AT JUST OVER 5 BILLION,
AND WE'RE NOT DONE, WE HAVE 3 MORE YEARS.
THE AMOUNT OF MONEY IT'S GONNA TAKE TO SERVICE THE DEBT
IN THE SHORT TERM MAKES PANAMA AND THEIR--
AND ITS CITIZENS THE LOSERS.
WHO DECIDES?
ON THE SHORT TERM THE STEAMSHIP LINE SOCIETY.
IT'S GONNA BE EASY FOR THEM TO TAKE ADVANTAGE
OF THE ECONOMIC OPPORTUNITY.
LONG TERM, 2020 AND BEYOND, I THINK PANAMA DOES WIN.
ULTIMATELY, THEY HAD NO CHOICE REALLY.
THEY COULDN'T ALLOW THEIR CANAL TO CONTINUE TO DECAY
AND SERVICE VESSELS THAT WERE NO LONGER BEING MANUFACTURED.
NO ONE IS GOING MAKE A SMALLER SHIP IN THE FUTURE, RIGHT?
WHO LOSES?
POSSIBLY, I SHOULD HAVE PUT POSSIBLY
UP HERE, THE WEST COAST PORTS.
THERE IS A THREAT AND WE ALL HAVE--
WE'RE ALL HERE BECAUSE OF IT.
AND WHO DECIDES?
AT THE END OF THE DAY, AS THEY ALWAYS DO,
ONCE THE INFRASTRUCTURE IS BUILT, ONCE THERE'S OPTIONS,
ONCE THERE'S VIABLE OPTIONS VIA RAIL AND ANTERIOR DELIVERY
FROM THE EAST COAST AND GULF COAST PORTS,
THE BENEFICIAL CARGO WILL ULTIMATELY DECIDE.
THANK YOU.
[ APPLAUSE ]
>> THANK YOU PAUL, MARY,
AND TODD FOR 3 REALLY INTERESTING PRESENTATIONS.
WE SEE SOME POINTS OF CONVERGENCE,
SOME AREAS OF POTENTIAL DISCUSSION THAT MIGHT FOLLOW.
AS PEOPLE ARE MOVING TO THE MICROPHONES, AND IF YOU HAVE 3
BY 5 CARDS TO SUBMIT WITH QUESTIONS,
WE HAVE VOLUNTEERS ALONG THE AISLES; LET ME ASK A COUPLE
OF PRELIMINARY QUESTIONS FROM THOSE
THAT WERE SUBMITTED ALREADY THIS EVENING.
AND THE FIRST ONE, THE FIRST QUESTION I HAVE IS FOR--
IS DIRECTED FOR TODD.
YOU MENTIONED WALMART AND HOME DEPOT CHOOSING HOUSTON-GALVESTON
AREA FOR OPERATIONS.
AND THE QUESTION IS WHAT-- IS THERE ANY--
IF THERE'S ANY RELATIONSHIP AT ALL
BETWEEN THE PROPOSED EXPANSION OF THE PANAMA CANAL
AND THE DECISION TO LOCATE OPERATIONS
IN THE HOUSTON-GALVESTON AREA.
CAN YOU CHECK ME TO THE LEVEL HERE, IS IT WORKING--
>> DO I NEED TO COME UP?
THERE WE GO.
I THINK THERE MAY BE ULTIMATELY A BENEFIT FOR WALMART,
HOME DEPOT, AND ANY OF THE LARGE RETAILER, LARGE IMPORTERS
THAT ARE GONNA UTILIZE THE HOUSTON OPTION.
I THINK, AS I STATED, HOUSTON PROBABLY STANDS THE BENEFIT THE
MOST CLOSE TO POPULATION, GOOD PORT, YOU KNOW,
LOTS OF SPACE, LOTS OF LAND.
BUT WHAT I THINK RELATES TO THIS QUESTION IS WHEN DID WALMART
AND HOME DEPOT MAKE THAT DECISION TO GO THERE.
AND MY IMPRESSION IS THAT THEY MADE THAT DECISION TO GO THERE
AS A RISK DIVERSIFICATION STRATEGY PRIOR
TO PANAMA DECIDING ON THE WIDENING OF THE CANAL.
SO THEY WANTED TO GO THERE IN ORDER TO, YOU KNOW,
SPREAD THEIR RISK OUT, THE FOUR CORNERS APPROACH BEFORE THE
PANAMA CANAL WIDENING WAS ACTUALLY A DISCUSSION POINT.
>> PAUL AND MARY, ANYTHING TO ADD TO THAT?
>> WELL, YOU KNOW, WHEN PEOPLE ALWAYS TALK
ABOUT COMPANIES MOVING HEAD OFFICES
OR MOVING MAJOR DISTRIBUTION CENTERS,
ONE OF THE QUESTIONS I ALWAYS WANTED AN ANSWER
TO IS DID THE NEW LOCALE BUY THE BUSINESS.
I MEAN WHY WOULD BOEING MOVE ITS HEADQUARTERS TO CHICAGO
FROM SEATTLE, FOR EXAMPLE.
WELL, THEY WERE INDUCED.
SO, SOMETIMES THE DECISION IS MADE ON BUSINESS GROUNDS
AND HAS REALLY VERY LITTLE TO DO WITH OTHER ASPECTS OF IT.
SO IT'S NOT JUST, YOU KNOW, THE DECISIONS THAT YOU MAKE
BECAUSE YOU WANNA HAVE A DISTRIBUTION CENTER IN AN AREA
OR YOU WANNA DIVERSIFY YOUR RISK.
IT MIGHT ALSO BE THAT YOU'VE BEEN INDUCED TO MAKE A MOVE.
>> I'M GONNA TAKE A QUESTION FROM THE CARD
BECAUSE IT'S A CLARIFICATION QUESTION
AND PROBABLY WOULD BENEFIT THE AUDIENCE.
AND MAYBE I'LL DIRECT IT TO PAUL.
WHO'S PAYING FOR THE CANAL, THE GOVERNMENT, PRIVATE INVESTORS?
>> WELL, IN THE SHORT RUN, THE CASH IS GOTTA BE FRONTED
BY SOMEBODY OTHER THAN THE USERS,
AND THAT'S THE COMBINATION OF RETAINED EARNINGS, IF YOU WILL,
FROM THE PANAMA CANAL AUTHORITY THEMSELVES.
>> AND THEN THE WONDERS WHO ARE PRIMARILY ASIAN BANKS
THAT HAVE PUT UP THE CAPITAL OF ENGAGED IN DEBT FINANCING
WITH THE PANAMANIANS UNDER TERMS WHICH REQUIRE REPAYMENT
ON THE CERTAIN SCHEDULE, AND PART OF THAT IS
THROUGH THE INCREASES IN THE TOLL REVENUES.
ULTIMATELY, THOSE THAT ARE GONNA PAY
FOR THIS WILL NOT BE THE US TAXPAYERS
LIKE THE ORIGINAL CANAL OR THE PANAMANIAN TAXPAYERS EXCEPT
THAT THEY'VE EXPLICITLY GUARANTEED THE DEBT;
IT'S GONNA BE THE USERS THROUGH THE PAYMENT OF TOLLS.
SO, IT'S THE STEAMSHIP LINES THAT WILL MAKE THE PAYMENTS.
BUT ULTIMATELY, IT'S THE SHIPPERS THEMSELVES
WHO ARE PAYING THROUGH THOSE, AS EXISTS TODAY, TOLL SURCHARGES
OR TOLLS THAT ARE EMBEDDED IN THE RATES THAT THEY'RE PAYING.
SO ULTIMATELY, IT'S ANY CARGO THAT MOVES
THROUGH THE CANAL WAS GONNA BE PAYING
FOR THAT EXPANDED CELL LOCKS [PHONETIC].
>> OKAY, THANK YOU.
LET'S START WITH THE QUESTION HERE
AND THEN I'LL MOVE OVER TO THE--
>> HELLO, MY NAME IS PAUL SANCHEZ.
I'M AN EXECUTIVE BOARD MEMBER OF 38192 INTERNATIONAL LONGSHORE
AND WAREHOUSE UNION, LONG BEACH-LOS ANGELES HARBORS.
THIS IS DIRECTED TO THE PANEL.
I DO BELIEVE YOU FOLKS HAVE DONE YOUR HOMEWORK
AND I'M HIGHLY IMPRESSED WITH YOUR PRESENTATION.
AND I'M KIND OF HOPING TO SEE BROTHER DOMENICK MIRETTI HERE
AS WELL, BUT FOR SOME REASON, YOU FOLKS CHOOSE NOT
TO HAVE HIM ON YOUR DESK.
BUT THIS MAN, I HAD DISCUSSED
WITH HIM A LONG TIME AGO THIS CERTAIN ASPECT OF THIS THING.
I THINK YOU'RE OVERSEEING A LITTLE BIT ABOUT INFRASTRUCTURE.
I UNDERSTAND THE CARGO COME TO THE DOCKS;
THE DOCKS GO ON THE RAILS.
BUT TRAINS DO NOT DO VERY WELL ON THE HIGHWAYS.
AREN'T YOU PEOPLE SURPASSING THE CONCEPT
OF INTERMODAL TRANSPORT [PHONETIC] AS WELL?
'CAUSE SOONER OR LATER, IT DOESN'T MATTER WHETHER
IF THE CARGO GOES TO EAST COAST OR WEST COAST,
IT'S GONNA HAVE TO GO ON THE STREETS.
AND IF WE DO NOT DO SOMETHING
ABOUT REBUILDING THE INFRASTRUCTURE WHICH IS FALLING
DOWN TO THE LAST PERIODS OF TIME, THEN WE'RE GOING--
LEAVING OURSELVES IN FOR A VERY, VERY WIDE OPEN MARGIN
OF OTHER WAYS THAT OTHER PEOPLE CAN VIABLY USE
OR CREATE NEW BUSINESSES FOR TRANSFERRING CARGO.
>> THANK YOU.
SOMEONE WANNA TAKE THAT QUESTION?
>> NO, I THINK I'LL JUMP IN.
I'LL ACKNOWLEDGE, I MEAN, YOU'RE EXACTLY RIGHT.
THERE IS SIGNIFICANT RISK TO THIS REGION
FROM POTENTIAL PROBLEMS IN TERMS OF USE OF THE ROAD NETWORK
TO ACCESS THE INTERMODAL RAIL YARDS.
THE OPPOSITION-- THE DIFFICULTY THAT WE'RE HAVING WITH ICTF
OR SCIG GETTING TO EXPAND OR TO BE BUILT IS AN EXAMPLE
OF THE CHALLENGE FACED
WITH TERMINAL DEVELOPMENT ON THE LAND SIDE.
AND THAT POTENTIALLY IS A CAPACITY LIMITATION
FOR THE PORTS.
YOU CAN BUILD THAT ALL THE SPACE YOU WANT ON THE TERMINALS
AND HAVE THE-- DREDGED AS FAR AS YOU NEED THEM
OR HAVE THEM EXTENDED OR ADD ACREAGE.
IF YOU CAN'T GET THAT CARGO OUT OF THE BASE INTO THOSE END MARK,
THAT'S ABSOLUTELY A REAL CHALLENGE
TO THE COMPETITIVENESS OF THE PORT.
AND FROM A SHIPPER PERSPECTIVE ON THAT DISCRETIONARY CARGO,
WE'VE SEEN PAST EXAMPLES WHERE THE CONGESTION YOU HAD IN 2004
AND 2005 IS AN EXAMPLE OF WHAT HAPPENS
WHEN YOU HAVE CONGESTION.
YOU CAN SEE CARGO DIVERSION AWAY FROM THE REGION.
BUT HAVING SAID THAT, THERE'S A LOT
OF PLANNING EFFORTS UNDERWAY.
I THINK THE PUBLIC OFFICIALS HERE KNOW AND YOU'RE ALL AWARE
OF IT, FOR A WHOLE SUITE OF PLANS TO TRY TO DO THINGS
SUCH AS IMPROVE THE 710 AND DEAL WITH THINGS
LIKE ALLOMETER QUARTER TOO AND FIND OTHER WAYS TO GET
THAT CARGO OUT OF THE BASIN AND ONTO THOSE END MARK.
SO IT'S BEING ADDRESSED THOUGH WITH AN ENORMOUS NUMBER
OF CHALLENGES, SOME OF WHICH ARE ENVIRONMENTAL,
AND SOME OF WHICH ARE PLANNING, SOME OF WHICH ARE LEGAL.
ALL OF WHICH PROVIDE, YOU KNOW, IMPETUS FOR THIS COMMUNITY
TO STAND UP AND SAY, "HEY, WE RECOGNIZE THIS IS ONE
OF THE CRITICAL PIECES OF THE PLANNING TO MAKE IT HAPPEN
SO THAT THE PORT CAN CONTINUE TO BE COMPETITIVE GETTING
THAT CARGO OUT OF THAT BASIN."
>> THANK YOU.
QUESTION ON THIS SIDE, PLEASE.
>> GOOD EVENING, HUGH CONSTANT, WORLD TRADE CENTER, SAN DIEGO.
I THINK THAT THE VISION SO FAR HAS BEEN TALKING
ABOUT THE PANAMA CANAL OVER THE NEXT 20 YEARS.
BUT WITH AN INVESTMENT LIKE THIS,
PERHAPS WE SHOULD BE LOOKING AT THE NEXT HUNDRED YEARS.
AFRICA HAS BEEN DESCRIBED AS PERHAPS THE LAST FRONTIER.
IT'S ALREADY A MAJOR SOURCE FOR COMMODITIES AND OTHER RESOURCES.
AND IN THE FUTURE, IT WILL BECOME THE LOW COST
PRODUCTION CENTER.
DO YOU THINK THAT THIS WILL BE A BENEFIT
FOR THE WEST COAST PORTS?
>> IS YOUR QUESTION DIRECTED TO ANYONE IN PARTICULAR?
>> NO.
>> I'LL TAKE IT.
>> TODD?
>> I THINK JUST BY THE NATURE OF THE GEOGRAPHY
IF CARGO WAS COMING FROM AFRICA, IT WOULD GO TO THE EAST COAST.
SIMILAR TO HOW THE ASIA CARGO WAS COMING TO THE WEST COAST,
SO IT WOULD BE A MUCH MORE COMPETITIVE SITUATION ON ALL
OF THE EAST COAST PORTS.
I DON'T FORESEE SHIPS TRANSITING THE PANAMA CANAL TO BRING CARGO
TO THE WEST COAST ESPECIALLY IN LIGHT
OF THE POPULATION BEING HEAVILY CONCENTRATED ON THE EAST.
>> OKAY. I HAVE A QUESTION FROM THE AUDIENCE ON THE CARD.
THIS ONE IS DIRECTED TO MARY BROOKS.
MARY, YOU MADE REFERENCE TO THE ENVIRONMENTAL QUESTIONS,
SOMETHING THAT WAS BROUGHT UP IN THE VIDEO.
AND THE QUESTION IS WHAT INTERESTS
OR WHAT STEPS ARE YOU SEEING BEING MADE
IN THE INTERNATIONAL COMMUNITY OUTSIDE THE US
THAT WOULD SUGGEST THAT OTHER COUNTRIES,
OTHER PORTS ARE BUYING INTO THE NOTION OF GOING GREEN.
>> ACTUALLY, THE MOVE TOWARDS GREENING
OF PORTS IS BEING FELT IN MANY PLACES.
MOST PORTS HAVE COME TO THE CONCLUSION
THAT FROM THEIR OWN INVESTIGATIONS,
THAT TO NOT BE ENVIRONMENTALLY FRIENDLY IS NOT AN OPTION.
THEY BELIEVE THAT ALTHOUGH GREENING DOES NOT CONFER A
COMPETITIVE ADVANTAGE, NOT BEING GREEN WILL BE A DISADVANTAGE.
SO THEY FEEL THAT IT'S SOMETHING THEY HAVE TO DO.
ONE OF THE THINGS THAT I'M DISHEARTENED BY IS THE FACT
THAT THE INTERNATIONAL SHIPPING INDUSTRY HAS NOT MOVED
AS QUICKLY AS IT MIGHT MOVE IN TERMS OF DEALING
WITH POLLUTION FROM SHIPS.
IT'S-- THIS IS A PROBLEM.
THE AIRLINE INDUSTRY CERTAINLY WAS MOVING VERY QUICKLY
IN ADVANCE, SO THE COPENHAGEN FRAMEWORK.
AND THE SHIPPING INDUSTRY COULD NOT SEEM TO GET AGREEMENT
ON ANYTHING MORE THAN WHAT THEY'VE ALREADY ACHIEVED
THROUGH THE IMO IN TERMS OF SULFUR CONTROL AREAS.
SO, BUT I THINK PORTS DEFINITELY HAVE TO GO
DOWN THE ENVIRONMENTAL MANAGEMENT ROAD,
AND QUITE A FEW PORTS IN NORTH AMERICA HAVE MADE I THINK FAIRLY
SIGNIFICANT CONTRIBUTIONS IN THIS AREA.
>> THANK YOU.
WE'LL TAKE A QUESTION OVER HERE FROM THIS GENTLEMAN.
>> MY NAME IS STEVE [INAUDIBLE] OF ILW.
AND MY QUESTION IS WHAT FACTORS DETERMINE
THAT WIDESPREAD YOU SPOKE OF IN CARGO HANDLING EFFICIENCY.
FOR LA-LONG BEACH, IT WAS 251 IN THE BOTTOM END AND 500
AND SAME ODD NUMBER IN THE TOP END.
THAT WIDESPREAD COMPARED
TO VANCOUVER WAS PRETTY LENGTHY I IMAGINE.
NOW, THE SECOND PART OF MY QUESTION IS
IF IT INVOLVES BOTTLE NECKS, WHERE ARE THE BOTTLENECKS?
DO THEY-- DO THEY SURFACE HERE AT THE PORT ITSELF
OR THERE ARE POINTS ALONG THE SUPPLY CHAIN?
>> BECAUSE THIS IS-- THOSE CALCULATIONS WERE A DOOR
TO DOOR CALCULATION, IN OTHER WORDS, THE TOTAL COST,
AND IT WAS NOT JUST THE COST OF TRANSPORTATION
BUT IT WAS ALSO THE INVENTORY CARRYING COST, THE VARIABILITY
BETWEEN THE LOWEST COST AND THE HIGHEST COST COULD BE RELATED--
WAS RELATED TO THE UNRELIABILITY OF THE SYSTEM AS A WHOLE.
IN OTHER WORDS, THERE WERE SOMETHING WRONG
IN THE WHOLE ROUTING.
SO WHEN YOU TOOK A LOOK AT THOSE NUMBERS,
YOU NOTICED THAT THE BEST CASE SCENARIOS FOR THAT MOVE SHANGHAI
TO CHICAGO WAS THE LA-LONG BEACH ROUTE.
BUT IT WAS ALSO THE WORST CASE,
WHICH MEANS IT HAS THE BROADEST SPREAD,
WHICH MEANS IT HAS THE MOST UNRELIABILITY.
SO, IF I WAS A CARGO OWNER AND I LOOKED AT THAT CHART,
I WOULD SAY, WELL, ON THE OTHER HAND,
HALIFAX HAS THE MOST EXPENSIVE AT THE BOTTOM END
BUT THE LEAST EXPENSIVE AT THE TOP.
MAYBE I SHOULD PUT SOME OF MY--
A SMALL BIT OF MY CARGO THROUGH THERE
BECAUSE IT'S MORE A RELIABLE ROUTE.
AND SO, IT WOULD EXPLAIN WHY SOME PORTS ARE--
GET THE VOLUME OF CARGO, THE BIGGEST VOLUME,
LA-LONG BEACH GETS THE BIGGEST VOLUME,
BUT WE KNOW THAT SOME COMPANIES SEND-- HALIFAX GETS A LOT OF--
I'LL GIVE 10 PERCENT OF MY CARGO TO YOU
BECAUSE YOU'RE MORE RELIABLE.
WELL, WHY IS HALIFAX SO RELIABLE?
BECAUSE IT'S GOT SO MUCH CAPACITY
AND IT'S NOT GOT A LOT OF VOLUME.
YOU KNOW, WHEN YOU'RE NOT CONGESTED AND YOU'RE NOT BUSY,
AS BUSY, YOU CAN BE MORE RELIABLE.
SO IT'S THE RELIABILITY THAT CAUSES THAT VARIABILITY.
AND THAT MEANS THAT YOU NEED TO TAKE A LOOK
AT WHERE ARE THE BOTTLENECKS.
AND THOSE ARE TO GO BACK
TO THE PREVIOUS QUESTION FROM THIS SIDE.
I MEAN THOSE BOTTLENECKS ARE ALMOST ALL LAND SIDE.
THE INTERNATIONAL TRANSPORT FORUM
OF THE OECD DID A VERY LARGE LOOK AT PORT COMPETITION
AND PORT PROBLEMS A FEW YEARS AGO,
AND THEIR MAJOR CONCLUSION WAS THIS
THAT PORT ISSUES ARE LAND SIDE.
IT IS ALL ABOUT INLAND CONGESTION.
IT IS ALL ABOUT HOW YOU MANAGE THE CARGO FLOW OUTSIDE THE PORT
BOUNDARIES AND INTO THE COMMUNITY.
AND IF YOU GO FURTHER TO THE INVESTMENT IN PRINCE RUPERT,
PRINCE RUPERT IS A 100 PERCENT TWO-RAIL DIRECT TO CHICAGO,
AND IT'S GOT A SOLE PURPOSE, AND WHY?
>> BECAUSE OTHER PORTS WERE SHOWING THEY COULDN'T HANDLE
CARGO AS QUICKLY, AND SO
THAT WAS THE IMPETUS FOR THAT INVESTMENT.
>> MARY, TO FOLLOW UP FROM THE AUDIENCE ON THE CARD.
I THINK IT'S RELATED.
WHAT ROLE DOES PRODUCTIVITY PLAY IN TERMS OF--
>> PRODUCTIVITY?
>> IN TERMS OF LAND SIDES, BOTTLENECKS.
>> WELL, YOU KNOW, YOU CAN--
YOU CAN HAVE GATE CONGESTION BEING A PARTICULARLY DIFFICULT
THING FOR PORTS.
PRODUCTIVITY, LOTS OF GREAT CARGO HANDLING TECHNOLOGY IS
OUT THERE.
THAT'S NOT THE ONE THAT I'M HEARING
AS BEING THE BIG ISSUE AT THE PORTS.
I'M HEARING THAT PORTS ARE WORKING ON THEIR PRODUCTIVITY
AND WORKING HARD TO MAINTAIN THAT.
SO I'M NOT SURE THAT THAT THE THING I WOULD BE MOST
CONCERNED ABOUT.
I'VE DONE A STUDY JUST RECENTLY ON PORT PERFORMANCE IN US PORTS,
AND I HAVE TO SAY THAT THE NUMBER ONE PROBLEM
FOR US PORTS IS GATE CONGESTION.
AND THAT'S A BOTTLENECK, SO, YEAH.
>> DR. MIRETTI ON THIS MIC.
>> THANK YOU, TOM.
I HAVE A QUESTION ON TRANSSHIPPING
IN THE PANAMA CANAL, AND THIS IS FOR MR. BINGHAM.
IT HAS BEEN SAID THAT PANAMA IS CONSIDERING THE CREATION
OF A MEGA PORT AT THE WESTERN ENTRANCE OF THE CANAL.
THIS PROPOSED MEGA PORT WOULD ALLOW POST-PANAMA SHIPS
TO OFFLOAD THERE, THUS INCREASING TRANSSHIPPED CARGO.
THE QUESTION, MR. BINGHAM,
IS WHAT ROLE DO YOU SEE TRANSSHIPPING PLAYING
IN PANAMA CANAL TRADE, AND HOW MIGHT TRANSSHIPPING AFFECT OUR
LOCAL PORTS?
>> OH, TRANSSHIPPING IS SOMETHING THAT'S NOT GONNA WAIT
FOR THE EXPANSION OF THE CANAL TO BE COMPLETE,
BUT IT'S CERTAINLY MAY BE ACCELERATED BY--
IF THE CARRIERS IN DOING THEIR ROUTE ANALYSIS
OF WHERE THEY OFFER THEIR SERVICES DETERMINE
THAT THAT'S ADVANTAGEOUS TO THEM, WHERE IT ALREADY EXISTS
FOR EXAMPLE ON THE OTHER SIDE OF THE CANAL FOR A DECADE.
THEY'VE HAD THE MANZANILLLO INTERNATIONAL TERMINAL
WHICH CAPTURES SOME NORTH-SOUTH TRADE INTERSECTING
WITH THE EAST-WEST TRADE AS A TRANSSHIPMENT POINT.
AND IT'S A WELL-ESTABLISHED OPERATIONAL PRACTICE
AROUND THE WORLD IN PLACES LIKE ALGECIRAS OR SOME PLACES
LIKE SEWALL [PHONETIC] ON THE MIDDLE EAST OR ON AND ON.
YOU CAN FIND THE ECONOMICS OF GLOBAL LINER SHIP AND THERE
SUCH THAT TRANSSHIPMENT MAKES SENSE IN SORT
OF AN EXTENDED HUB-SPOKE CONCEPT IN TERMS
OF BRINGING THE LARGER SHIPS INTO THOSE TRANSSHIPMENT PORTS
WITH THE EFFICIENCIES ON THE LONG HAUL,
THE TRANS-OCEANIC MOVES AND THEN THE SHORTER DISTANCE MOVES
OUT OF THOSE TRANSSHIPMENT PORTS INTO END MARKETS.
MOST SIGNIFICANTLY, THOSE SERVE TYPICALLY THE SMALLER MARKETS.
I DON'T THINK YOU WOULD TRANSSHIP LOGICALLY
INTO LA-LONG BEACH AS A SHIPPER, YOU'RE GOING TO COME
UP TO YOUR-- BUT AS FAR AS THE USE OF THE PANAMA CANAL,
PART OF THAT TRANSSHIPMENT ADVANTAGE ALREADY EXIST IN TERMS
OF USE OF THE RAILROAD IN PANAMA
WHICH WE HAVEN'T MENTIONED PREVIOUSLY,
BUT THEY REBUILD THE RAILROAD A FEW YEARS AGO,
AND THE KANSAS CITY SOUTHERN HAS BEEN RUNNING A RAILROAD BACK
AND FORTH ACROSS INCLUDING SHUTTLING SOME CONTAINERS,
THOUGH PERHAPS NOT THE VOLUMES THEY WOULD HAVE DESIRED TO HAVE.
BUT THAT TRANSSHIPMENT ALLOWS SERVICE INTO SOME PARTS
OF SOUTH AMERICA THAT ARE NOT AS WELL DIRECTLY SERVED TODAY
AS THEY COULD BE IN THE FUTURE ESPECIALLY AS A COMMUNIST
LIKE CHILE CONTINUE TO GROW IN THEIR SIZE
AND IMPORTANCE AND WITH WORLD TRADE.
AND WE'VE SEEN QUITE DRAMATIC GROWTH IN TRADE
BETWEEN ASIA ESPECIALLY CHINA WITH SOUTH AMERICA
IN THE LAST FEW YEARS WHICH GOES WELL FOR THE LINER COMPANIES
TO CAPTURE SOME OF THAT TROUGH A TRANSSHIPMENT OPERATION
COMPETING FOR IT.
AND PANAMA IS A LOGICAL PLACE TO PUT A TRANSSHIPMENT
IN THIS HEMISPHERE BECAUSE YOU MAY BE RUNNING OTHER VESSEL
SERVICES INTO PANAMA ANYWAY.
IT'S A LOGICAL CONNECTION POINT WHICH HAS WHAT HAS JUSTIFIED
AND LED TO THE SUCCESS OF THAT MIT TERMINAL
AT THE ATLANTIC SIDE ALREADY.
>> THANK YOU, SIR.
>> THANKS MUCH.
>> WE HAVE A QUESTION ON THIS SIDE.
>> GOOD EVENING.
MY NAME IS BRIDLEY LEE [PHONETIC].
I'M HERE WITH THE SAN DIEGO WORLD TRADE CENTER.
I FOUND THE ANALYSIS AND THE IN-DEPTH DATA THAT WAS PRESENTED
BY THE PANEL TO BE VERY INFORMATIVE.
BUT I'M CURIOUS ABOUT THE LACK OF INCLUSION IN ANY OF THE DATA
ABOUT THE ROLE OF THE EXPORT MARKETS IN ALL OF THIS.
AND I'D LIKE THE PANEL TO BE COMMENT AND SURELY,
THIS IS NOT JUST A ONE-WAY ROAD.
THERE HAS TO BE SOME IMPACT THAT THE US
AND NORTH AMERICAN EXPORTS ARE GONNA PLAY IN THIS DECISION.
>> MARY, DO YOU WANNA START WITH THAT?
>> WELL, IN THE US MARKET, EXPORTS ARE THE BACKHOE CARGO,
I GUESS YOU COULD SAY.
YOU'VE HAD THE WHOLE STRUCTURE
OF THE NETWORK HAS BEEN DRIVEN BY IMPORTS.
SO I THINK THAT'S WHY WE TEND TO TALK
ABOUT THE IMPORTS IN THIS MARKET.
BUT CERTAINLY, OVER THE LAST YEAR, YEAR AND A HALF,
EXPORTS HAVE REBOUNDED FOR THE US AND TAKEN UP A GREATER SHARE.
USUALLY, DECISIONS ARE MADE BASED
ON WHATEVER YOUR HEAVIEST CARGO IS, AND,
YOU KNOW, IN TERMS OF VOLUMES.
SO, I KNOW THAT FOR MY OWN HOME PORT OF HALIFAX, WE--
EVERYTHING IS DRIVEN BY THE EXPORTS.
EXPORTS IS THE BIG PART OF OUR TRADE.
>> TODD OR PAUL, ANYTHING TO ADD?
>> I THINK THE CURRENT EXPORT VOLUMES, ANY EXPORTS THE ONES
THAT TRANSIT THE PANAMA CANAL CURRENTLY CAN DO SO.
>> LET ME JUMP IN.
I THINK THERE'S SOME REAL POTENTIAL FOR THE PANAMANIANS
TO CAPTURE SOME ADDITIONAL EXPORT CARGO
OUT OF THE UNITED STATES.
AND IF YOU THINK ABOUT-- IF WE MOVE AWAY FROM THE LINER CARGOS
INTO THE BULK CARGOS, THAT'S A REAL CONSTRAINT TODAY IN TERMS
OF THE SIZE OF THE DRY BULK VESSEL AND THE SIZE
OF THE SHIPMENTS YOU CAN HAVE SAY OUT OF THE PORTS
OF SOUTH LOUISIANA, THE BIGGEST TONNAGE PORT
IN THE WHOLE HEMISPHERE.
AND THE ABILITY FOR YOU AS AGEXPORTERS [PHONETIC]
TO SHIP MORE CHEAPLY INTO ASIA
OUT THE MISSISSIPPI RIVER SYSTEM JUST THROUGH THE USE
OF LARGER VESSELS IS A REAL ATTRACTION TO THEM.
AS FAR AS THE REVENUES BACK TO THE CANAL AUTHORITY,
IT'S NOT SO SIGNIFICANT.
THEY'RE NOT GONNA GET AS MUCH MONEY AS THEY'RE GONNA GET
OUT OF THE LARGE CONTAINER SHIPS.
BUT AS FAR AS AN ELEMENT OF TRAFFIC AND IMPORTANCE
TO THE COUNTRY, IT'S NOT INSIGNIFICANT.
AND ONE OTHER UNRELATED OR SEPARATE FACTOR THAT IS RELATED
TO EXPORTS IS THAT A LONG TERM FORECAST IS
THAT THE US EXPORTS ACTUALLY BECOME MORE OR LESS
OUT OF BALANCE THAN THEY'VE BEEN IN THE LAST FEW DECADES.
THE US CAN'T SUSTAIN THE KIND
OF TRADE DEFICIT WE'VE BEEN RUNNING FOR DECADES.
AND ONE OF THE ADJUSTMENT FACTORS IS THE EXCHANGE RATE.
BUT ALSO IT'S BECAUSE THE MARKETS
ON WHICH WE'RE SELLING EXPORTS ARE GOING FASTER
THAN OUR OWN MARKET AS GROWING TO DRAW AN IMPORT.
SO IF WE GO ADD ENOUGH DECADES, AT LEAST IF WE'RE COMPETITIVE
AS AN EXPORT NATION AND WE ARE FOR SUCH THING
TO THE AGRICULTURAL PRODUCT, IT'S VERY LIKELY
THAT OUR EXPORTS, THE TONNAGES OF THOSE
AND THE VOLUMES ARE GONNA INCREASE FASTER
THAN SOME OF THE IMPORTS.
AND SOME OF THAT CARGO IS GONNA BE ABLE TO TAKE ADVANTAGE
OF THE LARGER OFFSHOOT OF THE CANAL.
>> THANK YOU.
QUESTION OVER HERE?
>> HELLO. MY NAME IS DR. JUAN ESPANA,
PROFESSOR OF INTERNATIONAL BUSINESS,
NATIONAL UNIVERSITY, SAN DIEGO.
AND MY QUESTION IS THE FOLLOWING.
IN YOUR PRESENTATIONS, IT SEEMS YOU ASSUMED AN INTERRUPTED TREND
OF CARGO FLOWS AS WE HAVE THEM TODAY.
JUST EXTRAPOLATE INTO THE FUTURE, I WOULD SUGGEST
THAT YOU'D TAKEN INTO ACCOUNT THE MAJOR CHANGES
IN SOURCING-OUTSOURCING THAT ARE TAKING PLACE,
SHAPING INTO THE FUTURE AS A MAJOR FORCE.
I THINK WE WILL SEE A MOVE AWAY FROM A FAR SHORING,
MEANING BUYING FROM CHINA ALL THESE, YOU KNOW,
THE WALMART TYPE OF STUFF
INTO AT LEAST A NEAR SHORING APPROACH SOURCING
FROM PLACES SIDES NEARBY MEXICO, CENTRAL AMERICA,
YOU HAVE NOT MENTIONED THAT.
AND THAT WILL DETERMINE, YOU KNOW, THE VOLUME OF CARGO
AND THE ORIGIN OF THAT CARGO.
I WOULD SUGGEST THAT YOU WOULD REALLY--
THAT YOU SHOULD REALLY INTEGRATE THAT INTO YOUR ANALYSIS
BECAUSE JUST ASSUMING-- WELL, CHINA WILL--
CHINA'S IMPORTANCE WILL DECLINE AS A SOURCE OF IMPORTS TO THE US
FOR THE REASONS THAT YOU JUST MENTIONED.
ONE OF THEM GETS EXCHANGE RATE APPRECIATING, THE US WANTS
TO SEE THAT HAPPENING.
THE LABOR COSTS IN CHINA ARE GROWING ALSO.
AND PRODUCTIVITY IS NOT INCREASING.
THE THREE FACTORS THAT INCREASE,
THE PRICE OF IMPORTS ARE CHANGING.
SO, I WOULD JUST SIMPLY SUGGEST THAT YOU INCLUDE
THAT IN YOUR PROJECTIONS.
THANK YOU.
>> THANK YOU.
ANYONE--
[ APPLAUSE ]
>> ANYONE WANNA COMMENT UPON THAT, TODD?
>> I'LL JUST THROW A COMMENT THAT'S BEEN CIRCULATING
WITHIN OUR COMPANY.
ONE OF THE THINGS WE'RE SEEING IS THE EXPANSION WEST IN CHINA.
SO, WHEN YOU LOOK AT THE FUTURE OF CHINA AND THINK
THAT IT'S GOING TO PRICE ITSELF OUT OF THE MARKET,
THEY ARE CURRENTLY OUTSOURCING THEIR OWN MANUFACTURING
THAT WAS FORMALLY ON THE EASTERN COAST
TO AREAS SUCH AS CHONGQING.
AND IF YOU DON'T KNOW-- IF YOU'VE NEVER HEARD OF CHONGQING,
IT'S THIS TINY LITTLE CITY OF 30 MILLION IN THE MIDDLE
OF CHINA UP THE YANGTZE RIVER.
SO THAT WAS A PRIMARY FOCUS OF FINISHING THE--
I'M SORRY THE THREE GORGEOUS DAM SO THEY CAN MOVE
AND TRANSPORT GOODS UP AND DOWN THAT RIVER.
SO, CHINA HAS NOT DONE YET FROM OUR PERSPECTIVE.
THEY HAVE-- MOST OF THEIR POPULATION ON THE ANTERIOR,
AND THEY ARE LOOKING
TO OUTSOURCE THEIR OWN MANUFACTURING THAT IS BEING DONE
ON OUR BEHALF TO THE INTERIOR OF THEIR COUNTRY.
SO, CHINA IS GONNA BE WITH US FOR QUITE SOMETIME.
>> GOOD. WE HAVE QUESTION ON THIS SIDE.
>> YEAH, MY NAME IS GREG MITRE.
I'M WITH THE ILW ALSO.
MY QUESTION IS KIND OF DIRECTED FROM THE LAST SPEAKER.
TODD TOUCHED ON VIETNAM AND WE ALL KNOW 2016 IS
ABOUT 5-6 YEARS AWAY WHEN THE CANAL WILL BE DONE.
>> I'M WONDERING IF THERE'S ANY THOUGHTS FROM MARY
OR PAUL REGARDING WHAT THE MAJOR MARKETS WILL BE IN 2016
AND WHERE THE MAJOR IMPORTS WILL BE COMING FROM,
AND WHAT EMERGING MARKETS YOU SEE BEING THE MAJOR PLAYERS
THAT ARE GONNA BE IMPORTING GOODS TO THE WEST COAST
AND THE REST OF THE UNITED STATES.
>> THANK YOU.
MARY, DO YOU WANNA START?
>> WELL, WE-- THERE'S BEEN A FAIR INVESTIGATION
OF WHERE THE GROWTH POTENTIAL IS FROM THE CANADIAN PERSPECTIVE.
AND WE SEE THAT NORTH AMERICAN IMPORTS ARE GONNA GROW
FROM PLACES LIKE VIETNAM.
INDIA OVER NOT THE NEXT 10 YEARS,
BUT CERTAINLY THE NEXT 20.
WE SEE THE POSSIBILITY
AS WAS PREVIOUSLY NOTED GROWTH FROM AFRICA.
I-- AND WE CERTAINLY SUPPORT PAUL HAD TALKED ABOUT THE GROWTH
OF SOUTH AMERICA AS A NEW SOURCE.
SO, IT'S NOT JUST ABOUT CHINA.
AND SO, THERE IS A-- TRADE PATTERNS ARE VERY DYNAMIC.
AND I'M NOT SURE THAT THE PANAMA CANAL IS NECESSARILY GOING
TO CHANGE THE GAME OF WHERE THE POPULATION IS GROWING,
WHERE THE IMPORTS ARE COMING FROM,
WHERE THE EXPORTS ARE GOING TO.
THERE ARE MANY FACTORS THAT PLAY.
THE PANAMA CANAL IS ONLY ONE.
I THINK THERE IS ANOTHER GAME CHANGER HERE
AND THAT IS MARINE FUEL PRICES.
YOU KNOW, IF WE IMPOSE SULFUR EMISSION CONTROL AREAS
EVERYWHERE, WHERE DOES SULFUR REDUCED FUEL COME FROM.
NOBODY HAS FIGURED THAT OUT YET.
THE REFINERIES JUST WANNA SELL SLUDGE.
SO, YOU KNOW, WE'VE GOT A NUMBER OF OTHER GAME CHANGERS
IN ADDITION TO THE PANAMA CANAL.
AND MY CRYSTAL BALL IS A LITTLE CLOUDY.
SO, I'M NOT SURE I CAN ANSWER THAT QUESTION THAT WELL.
>> I THINK THE QUESTION OF 2016 OR 5 YEARS OR EVEN 10 YEARS
FROM NOW IN TERMS OF THE TRADE PARTNER SHARES,
IT'LL REFLECT MORE OF WHAT WE SEE TODAY IN TERMS
OF THE REGIONAL MIX, THOUGH.
THERE ARE GONNA CONTINUE TO BE THESE SHIFTS
THAT WE'VE BEEN TALKING ABOUT, YOU KNOW.
IF IT'S DOWN AT THE INDIVIDUAL DECISION MAKER LEVEL,
IF I'M AN APPAREL MAKER, I'M GONNA CHASE
THAT LOWEST LABOR COST MANUFACTURING WHETHER IT'S
VIETNAM OR WHETHER IT'S CAMBODIA
OR WHETHER IT'S SOME PLACE IN SOUTHERN AFRICA.
BUT THERE ARE ALSO SOME INFRASTRUCTURE DECISIONS
THAT HAVE BEEN MADE WHERE TRADE RELATIONSHIPS ARE A
LITTLE STICKIER.
IF YOU JUST PUT A PLANT IN SAY 3 YEARS AGO
IN CHINA DEPENDING UPON WHAT'S IN THAT PLAN
AND WHAT THE INVESTMENT IS, YOU KNOW,
THAT MAY TAKE YOU A FEW MORE YEARS TO TRY TO SHIFT.
JUST AS ON THIS SIDE OF THE TRADE, YOU KNOW,
DISTRIBUTION PATTERNS TAKE SOMETIME TO HAPPEN.
IF YOU'VE GOT A 10-YEAR LEASE ON A WAREHOUSE DISTRIBUTION CENTER,
YOU MAY NOT WANNA MOVE OUT OF THAT VERY QUICKLY.
BUT OVERTIME, THOSE SHIFTS HAPPEN
IN THE 100-YEAR PERSPECTIVE AS MAYBE THE ONE
THAT PANAMANIANS HAVE SINCE THEY'VE HAD THEIR CANAL COMING
UP ON 100 YEARS, WHERE IT REALLY IS A VESTMENT
OF THAT WATER INFRASTRUCTURE THAT LASTS
FOR DECADES AND DECADES.
BUT THAT TRADE WILL LIKELY TO CONTINUE TO SHIFT.
MY POINT, AND I DON'T KNOW HOW CLEARLY I MADE IT WAS
THAT THE SIZE AND THE ENORMITY AND WHAT IS STILL THERE
AS GROWTH POTENTIAL ON ASIA FOR THIS NEAR
TO MIDTERM IS STILL PROBABLY GONNA BE DOMINATE FOR US TRADE.
YOU KNOW, TODD'S POINT ABOUT INVESTMENTS TO REACH INLAND
IN CHINA, YOU KNOW, THEY HAVE MADE AN ENORMOUS INVESTMENT
IN INFRASTRUCTURE THAT DWARFS WHAT WE'VE BEEN MAKING
IN THE UNITED STATE IN THE LAST DECADE
AND HARD TRANSPORTATION INFRASTRUCTURE BUILDING
OUT THOUSANDS AND THOUSANDS OF MILES OF HIGHWAY SYSTEM
AND VERY ADVANCED STATE OF THE ART RAIL SYSTEMS TO REACH
INTO THEIR OWN INTER-LAND TO ENABLE
THAT TRADE RELATIONSHIP THAT'S EXISTED
IN THOSE COASTAL PROVINCES TO REACH SOME OF THOSE HUNDREDS
OF MILLIONS OF THEIR POPULATION THAT HAVE NOT BEEN ENGAGED
IN TRADE INDUSTRIES, TRADE MANUFACTURING JOBS BEFORE.
>> I HAVE AN EASY QUESTION ON THE CARD FOR TODD.
TODD, DO YOU THINK THAT THE EXPANSION OF THE PANAMA CANAL
IN CONJUNCTION WITH A PUSH
FOR TRUCKER EMPLOYEE MANDATE WILL CAUSE BENEFICIAL CARGO
OWNERS TO MOVE CARGO AWAY FROM SOUTHERN CALIFORNIA?
>> THAT'S A STICKY QUESTION THERE.
I GUESS I WOULD ANSWER IT
THAT THE BENEFICIAL CARGO OWNERS ARE ALWAYS CONCERNED
WITH EVERY FEE THEY HAVE TO PAY.
SO IF ANYTHING RESULTS ON THEM HAVING TO PAY MORE AS THEY COME
THROUGH LA-LONG BEACH, THEY'RE CONCERNED.
DOES IT MEAN THAT THEY WILL FIND IT BENEFICIAL
TO MOVE THEIR DISCRETIONARY CARGO TO ANOTHER FACILITY
WHERE THEY MAY HAVE TO INVEST IN A DISTRIBUTION BUILDING,
YOU KNOW, REESTABLISH THEMSELVES IN ANOTHER STATE, I DON'T KNOW.
BUT THEY ARE ALWAYS CONCERN.
AND THAT'S ALWAYS THE PUSHBACK.
THAT'S ALWAYS THE CHALLENGE FOR MY COMPANY IS
WHEN ADDITIONAL FEES COME UP WHETHER IT'S ON THE AIRLINE SIDE
OR THE OCEAN SIDE, IT'S A DIFFICULT CONVERSATION
AND NO ONE WANTS TO PAY MORE.
THAT'S FOR SURE.
>> ANYONE WANT TO ADD ANYTHING?
>> I THINK TODD SAID IT ALL.
COMPANIES DON'T WANT TO PAY AN EXTRA CHARGE.
AND EVERY TIME YOU ADD AN EXTRA CHARGE ON THAT GAP
BETWEEN LA-LONG BEACH AND VANCOUVER SHIFTS AGAIN.
AND SO, EVENTUALLY, THAT MIGHT BE JUST ENOUGH
TO TIP IT OVER THE BALANCE.
SO YOU HAVE TO BE VERY CAREFUL ABOUT PUTTING CHARGES
ON BECAUSE SOMEBODY WILL SAY, WELL, THIS ISN'T RIGHT NOW
BUT MAYBE I NEED TO RETHINK HOW MY SYSTEM WORKS
AND I'LL RESTRUCTURE IT FOR NEXT YEAR.
SO YOU KNOW, YOU MIGHT PUT THE ID IN PLACE BUT THEN A YEAR
FROM NOW, SOMEBODY HAS MADE A DECISION
TO CHANGE THE WAY THEY DO BUSINESS.
SO, IT'S BEEN TIPPED.
>> CAROL?
>> YOU'RE ACTUALLY TALKING
ABOUT WHAT MY CUSTOMERS HAVE THE HEX SITTING ME UP HERE TO ASK
ABOUT AND THAT'S THE GROWING COST
THAT THEY'RE EXPERIENCING COMING THROUGH THIS PORT.
THEIR TRANSPORTATION COST, JUST GETTING ACROSS THE DOCKS.
RELIABILITY WAS AN ISSUE A FEW YEARS AGO THAT'S IMPROVED.
WE'VE ALL PUT IN-- WE'VE ALL INVESTED HEAVILY
IN OUR TERMINALS TO IMPROVE OUR OWN EFFICIENCIES.
BUT THEY'RE VERY MUCH CONCERNED WITH THE RISING COST JUST
TO COME IN THIS PORT COMPLEX.
AND THEY DON'T SEE ANY END TO IT.
AND THEY WERE HOPING THAT YOU'D BE ABLE TO DO SOME COMPARISON
WITH WHAT IT WILL COST GOING THROUGH THE CANAL
VERSUS WHAT WE'RE PAYING TODAY.
AND ACTUALLY AS IT LOOKS LIKE, PEOPLE WANNA CONTINUE
TO TAX OUR CONTAINERS AS THEY COME ACROSS.
ALL THREE OF YOU COULD ANSWER IF YOU LIKE.
[ LAUGHTER ]
>> I'M GONNA DEFER THAT ONE.
>> PAUL, DO YOU WANNA--
>> YEAH, I'M NOT-- I'M NOT SURE ENTIRELY HOW TO RESPOND
TO THAT QUESTION EXCEPT THAT IT'S CLEARLY THE CASE
THAT IN THE PORT INDUSTRY OF THE UNITED STATES,
THERE IS SOME REASON FOR LEADERSHIP IN TERMS
OF THE COMMUNITY AND WE'VE SEEN OFTENTIMES OTHER PORTS
ESSENTIALLY LOOKING TO THE SAN PEDRO BAY PORTS FOR COVER.
YOU KNOW, WE'VE SEEN THAT IN PUGET SOUND
WHERE THEY'VE ESSENTIALLY THEY'VE BEEN WAITING
FOR SOMETHING TO HAPPEN DOWN HERE AND THEN THEY HAVE COVER
TO SAY, WELL, LA-LONG BEACH HAS ALREADY DONE IT SO WE CAN TOO.
I THINK THAT EXTENDS
TO ASSESSING FEES ASSOCIATED WITH PORT CARGO.
AND WE'VE SEEN SIGNS OF THAT OR EXPLORATORY, YOU KNOW,
SOMEBODY PUTTING UP A TRIAL BALLOON
TO SAY SHOULD WE DO IT TOO.
I'VE HEARD DISCUSSIONS ABOUT THAT WITHIN SOME
OF THE PORT MANAGEMENT AND OTHER PORTS IN THE EASTERN GULF COAST.
WELL, MAYBE IN THE FUTURE THEY CAN DO
THAT TO HELP SUPPORT THEIR NEEDS FOR INFRASTRUCTURE
OR ENVIRONMENTAL COMPLIANCE OR ON AND ON.
AND WE CAN-- WE CAN SEE IT AT THE FEDERAL LEVEL WHEN THEY TALK
ABOUT POLICIES AROUND HOW DO YOU COME
UP WITH SUPPORTING INFRASTRUCTURE THAT'S NEEDED
FOR PORTS.
THERE ARE A LOT OF PEOPLE THAT ARE LOOKING POTENTIALLY TO TRY
TO EXTRACT A LITTLE BIT MORE OUT OF PORTS OTHER
THAN THE SAN PEDRO BAY PORTS IN TERMS
OF GETTING SOME RENT OUT OF THAT CARGO.
BUT AS MARY SAYS, YOU KNOW, IT'S NOT JUST THE US PORTS HERE
THAT ARE COMPETING, IT'S ALSO THE CANADIAN PORTS
AND THERE'S ALTERNATIVES
AND UNDERSTANDING THE WHOLE HEMISPHERE IN TERMS
OF FEEDING THIS CONTINENT AS THE RIGHT CONTEXT
AS WHAT'S IMPORTANT
TO UNDERSTAND THE IMPACTS OF THOSE FEES.
AND AS MARY SAID, IT'S REALLY THE SUM TOTAL OF THOSE
AND THE FINAL PERCEPTION ON THE PART
OF THE SHIPPERS THAT'S GONNA MATTER.
>> THERE ARE A FAIR NUMBER-- THERE ARE FAIR NUMBER OF STUDIES
THAT HAVE BEEN DONE BY PHD STUDENTS
AND MASTERS STUDENTS TRYING
TO EVALUATE THE TOTAL LOGISTICS COST OF MOVING CARGO.
AND THEY PICK A ROUTE AND THEY ADD THE INVENTORY CARING COST
AND CYCLE, YOU KNOW, CYCLE COST AND ADD THEM ALL UP.
AND THEY ALSO END UP WITH, WELL,
MAYBE IF SOMEONE IMPOSE AN EXTRA 125 DOLLARS ON A BOX AT A PORT,
IS IT GONNA BE ENOUGH TO TIP IT OVER.
WELL, IT DEPENDS.
AND IT ALL GOES BACK TO THE VALUE OF THE CARGO
AND THE TIME VALUE OF MONEY.
AND SOME CARGOS CAN BEAR IT
AND IT DOESN'T MAKE A BIT OF DIFFERENCE.
AND OTHER CARGOS, IT'S ENOUGH TO DRIVE THEM AWAY.
SO, EVERY CARGO INTEREST HAS TO ASSESS THEIR OWN POSITION.
AND SO YOU KNOW, YOU CAN DO THESE STUDIES
AND YOU CAN MAKE THE RECOMMENDATION
ON HOW MUCH YOU'RE GONNA WIN
VERSUS HOW MUCH YOU'RE GONNA LOSE.
>> I ALSO THINK THAT THERE'S ENOUGH WEST COAST COMPETITION
TO PUT THAT TO THE TEST.
IF THE FEES AND THE COST COMING THROUGH LA LONG BEACH BECOME
SO EXCESSIVE, THERE ARE THE OAKLAND
AND SEATTLE TACOMA OPTIONS.
>> THERE'S THE PRINCE RUPERT OPTION.
[ LAUGHTER ]
>> WE'LL TAKE THAT OFFLINE.
[ LAUGHTER ]
>> WE JUST WANNA KEEP IT HERE.
THANK YOU.
>> QUESTION TO MY RIGHT.
>> MY NAME IS MICHAEL.
I'M A CASUAL LONGSHOREMAN AS WELL AS A WRITER,
JUST VERSIONING, BUT THIS HAS TO DO WITH A LOT
OF DIFFERENT AGENCIES AND THE 50-YEAR ARM I GUESS WOULD BE THE
BEST WAY TO EXPLAINING IT.
>> IT HAS TO DO WITH THE NATIONAL NUCLEAR SECURITY AGENCY
AND THE NEST ORGANIZATION,
NUCLEAR EMERGENCY STRIKE TEAMS THAT GUARD REPORTS.
IT'S AN EQUATION WHERE IF WE ADD MORE PORTS,
DOES IT ADD MORE JOBS THAT ARE NEEDED
BY CERTAIN INTELLIGENCE COMMUNITY PERSONNEL.
DOES THAT ADD TO THEIR WORKLOAD?
AND IS THAT SOMETHING THAT YOU GUYS ARE LOOKING
INTO IN THE EQUATION AS WELL AS WHEN OUR TRAIN LINES MOVE
FROM THEIR CURRENT STATE WHERE STEEL ON STEEL RATHER
THAN MOVING INTO A MAGNETIC LEVITATION WHICH OBAMA TALKED
ABOUT THAT'S GONNA BE PART OF THE STRUCTURE OF RECONSTRUCTION
OF THIS COUNTRY IN RELATIONSHIP TO, I GUESS, NOT INFRASTRUCTURE,
BUT I GUESS THAT WOULD BE HOSTING GOALS TO THESE TERRITORY
BUT IT HAS TO DO WITH WHEN WE'RE GONNA INSTITUTE MAGNETIC
LEVITATION INTO THE RAILWAYS WHICH IS POSSIBLE NOW
AS YOU GUYS KNOW, BUT ALSO FOR PREPARATION
FOR THE SUPER CONDUCTIVE PARADIGM SHIFT.
'CAUSE A FRIEND OF MINE ACTUALLY WENT TO SCHOOL HERE
AT CAL STATE LONG BEACH FOR HIS MASTERS AND GOT IT
IN COUPE REPAIRING WHICH HAS TO DO SUPERCONDUCTIVITY.
SO THERE ARE A LOT OF PEOPLE WORKING ON THAT EQUATION.
AND THAT PARADIGM SHIFT HOPEFULLY WILL HAPPEN
IN OUR LIFETIME SO THAT WE CAN FEED THE WORLD, SO TO SPEAK.
>> ANYONE FEEL QUALIFIED TO ADDRESS THAT?
>> YEAH, I'LL TAKE THAT ON.
I THINK THERE'S SOME REAL POTENTIAL FOR NEW TECHNOLOGIES
IN THE, YOU KNOW, THE MORE DISTANT FUTURE
TO MAKE PORTS MORE EFFICIENT ESPECIALLY AS SOME
OF THE TECHNOLOGY COST FALL OVERTIME.
I THINK WE'RE WAY AHEAD IN TERMS OF THE PHYSICAL
AND ENGINEERING POTENTIAL TO IMPLEMENT THINGS THAN WE ARE
IN TERMS OF COMING WITH THE FUNDING TO PAY FOR ANY OF IT.
I MEAN THAT'S REALLY THE OBSTACLE TODAY.
IT'S NOT THAT WE DON'T HAVE THE SCIENTISTS AND THE ENGINEERS
OR THE CONSTRUCTION CAPABILITIES TO BUILD THIS,
IS THAT WE DON'T HAVE THE ABILITY TO COME
UP WITH THE FUNDING EQUATION THAT WORKS
TO GET IT CONSTRUCTED AND OPERATING.
I THINK THAT'S REALLY GONNA REMAIN A CHALLENGE
AS WE SEE BOTH PRESSURES ON THE PUBLIC SECTOR
AND ON THE PRIVATE SECTOR TO COME UP WITH ADEQUATE CAPITAL
TO MAKE THE LEAP INTO NEW TECHNOLOGIES
TO IMPROVE PRODUCTIVITY.
ON YOUR FIRST QUESTION ON THE SECURITY DISPERSAL ISSUE,
I THINK THAT'S A RELEVANT ONE IN TERMS OF THE FEDERAL GOVERNMENT
THAT WANTS TO LOOK, FROM JUST A PURELY SECURITY PERSPECTIVE,
WOULD LIKE TO CONCENTRATE THE POINTS OF ENTRY INTO THE COUNTRY
BECAUSE THEN OBVIOUSLY THEY CAN FOCUS MORE CLEARLY
ON WHAT THOSE RISKS ARE THAT ARE CARRIED THROUGH THE CARGO
ON TRYING TO ENTER THE COUNTRY.
THERE'S A BALANCE, THOUGH OBVIOUSLY,
WHERE THEY'VE SAID VERY CLEARLY, I THINK,
BOTH THE OBAMA ADMINISTRATION
AND PRIOR ADMINISTRATION SAID THEY DON'T WANT
TO IMPEDE COMMERCE THROUGH THESE DECISIONS
ABOUT HOW TO MANAGE SECURITY.
AND THERE'S A BALANCING ACT OBVIOUSLY THAT'S WORKED
BUT THERE'S ALSO MONEY IN THE END,
IT'S HOW MUCH ARE WE WILLING TO SPEND AS A SOCIETY TO MAKE SURE
THAT THE RISKS ARE MINIMIZED NOT JUST TO THE DOCK WORKERS
BUT TO THE COUNTRY AS A WHOLE FROM SECURITY RISKS THAT COME
THROUGH WHEN GENERATING THE REPORTS.
>> JUST 'CAUSE I KNOW WE HAVE AN INTEREST OF TIME,
I WANNA GIVE THE LAST TWO GENTLEMEN UP HERE THE TIME
TO ASK THEIR QUESTIONS.
SO LET ME GO HERE.
>> HI, I'M DICK MCKENNA WITH THE MARINE EXCHANGE
OF SOUTHERN CALIFORNIA.
AND GIVEN YOUR PROJECTIONS OF INTERNATIONAL TRADE GROWTH,
DOESN'T EVERYBODY WIN, I.E. YOU KNOW, THERE SEEMS TO BE PLENTY
OF ROOM FOR THE CAPACITY.
A COUPLE OF YEARS AGO, WE WERE TALKING ABOUT TRIPLE THE GROWTH
IN LA IN THE NEXT 10-20 YEARS OR SO.
AND OF COURSE WE COULDN'T POSSIBLY HANDLE
THAT IN THE FIRST PLACE.
BUT THE FACT THAT CARGO IS GOING TO EXPAND INTO THE GULF
AND INTO THE EAST COAST AND EVERYWHERE ELSE,
I DON'T' THINK IT SHOULD, YOU KNOW,
WORRY US TOO TERRIBLY MUCH.
WE DO HAVE THE INFRASTRUCTURE.
ALL OF THAT GROWTH HAS TO GO SOMEWHERE
AND NOT NECESSARILY LEAVING OUR PORT.
>> CAPTAIN MCKENNA, THAT'S A GREAT QUESTION.
AND I THINK YOU RAISED A VERY GOOD POINT.
A LOT OF OUR DISCUSSIONS UP HERE ACROSS THE PANEL
AND OUR PREPARED PRESENTATIONS ABOUT MARKET SHARE.
BUT IF WE LOOK BACK AT THE HISTORY OF SAN PEDRO BAY PORTS,
THE ONLY TIME WE ACTUALLY SAW AN ABSOLUTE DROP
IN CARGO BEFORE THE RECESSION WHICH AFFECTED EVERYBODY WAS
AFTER THAT CONGESTION IN 2004-2005.
WE'VE HAD LOSS OF MARKET SHARE HERE A LITTLE BIT ALREADY
TO THE EAST COAST WHILE VOLUMES KEPT INCREASING.
SO, THAT'S ACTUALLY THE RIGHT PERSPECTIVE TO HAVE.
TRADE IN OUR FORECAST IS SUCH THAT IT CONTINUES TO GROW,
AS I SHOWED, FASTER THAN THE ECONOMY AS A WHOLE.
VOLUMES CONTINUE TO INCREASE.
SO THERE'S ACTUALLY, AS MARY SAID, IT'S YOUR CARGO TO LOSE,
WELL, REALLY IN A WAY, IT'S YOUR MARKET SHARE TO LOSE.
YOU CAN STILL LOSE MARKET SHARE
AND STILL HAVE TO HANDLE MORE CARGO.
AND THAT CAN HAPPEN FOR MANY, MANY,
MANY YEARS SUCH THAT WE STILL RUN
UP AGAINST CAPACITY CONSTRAINTS EVEN
AS THE MARKET SHARE MIGHT FALL.
SO SOME OF THESE RISKS THAT'S THERE IS ONLY CENTERED
AROUND DISCUSSING MARKET SHARE.
BUT IN TERMS OF THE ABSOLUTE VOLUME, IT HAVE TO BE HANDLED
AND THE JOBS AND THIS PHYSICAL SPACE
AND THE THROUGHPUT CAPACITY WE HAVE, IT'LL STILL HAVE
TO INCREASE EVEN IF THERE'S SOME LOSS OF MARKET SHARE.
>> NO, I ABSOLUTELY AGREE WITH THAT.
I MEAN WE ARE SAYING IT'S A SHARE TO LOSE, BUT YOU KNOW,
THE VOLUMES ARE EXPECTED TO GROW.
AND REMEMBER, THE VOLUMES ARE RELATED TO WORLD POPULATION,
AND THEY ARE RELATED TO THE MATURING OF EMERGING MARKETS
AND BEING ABLE TO MEET THEIR DESIRES TO BE WEALTHIER
AND TO HAVE A BETTER LIFE.
AND SO, WE'RE GOING TO SEE TRADE CONTINUE TO GROW
AT A PHENOMENAL LEVEL.
AND SO IF YOU HAVE A DECLINING MARKET SHARE
BUT THE VOLUME IS STILL GOING UP, YOU SHOULDN'T BE WORRIED.
>> LAST QUESTION TO RICH DINES.
>> THANK YOU.
RICH DINES.
I'M A MEMBER OF THE CITT POLICY & STEERING COMMITTEE
AND A PROUD MEMBER OF ILW LOCAL 13.
I WANTED TO RECOGNIZE REPRESENTATIVE LAURA RICHARDSON
WHO IS HERE TONIGHT BECAUSE OF HER EFFORTS IN SECURING FUNDING
TO BUILD THE NEW GERALD DESMOND BRIDGE
WHICH IS A ONE-BILLION DOLLAR INFRASTRUCTURE IMPROVEMENT
PROJECT WHICH WILL ADDRESS TWO OF THE PROBLEMS
THAT WE HAVE HERE IN LA AND LONG BEACH
WHICH ARE CAPACITY AND CONGESTION.
THAT BEING SAID, THE PORTS ARE ALSO INVESTING AN AMOUNT
OF MONEY IN IMPROVING THE PORTS, AS MUCH AS THE COST
OF THE PANAMA CANAL ITSELF.
SO, WE'RE GONNA BE SPENDING 5-BILLION DOLLARS HERE JUST
LIKE THEY'RE THERE.
AND LA AND LONG BEACH DIDN'T' BECOME THE BIGGEST
AND THE BEST OVERNIGHT.
SO MY QUESTION LEADING IS WILL THE EASTERN GULF COAST PORTS BE
READY WHEN THE PANAMA CANAL OPENS WITH DREDGING TO TAKE
ON THE 8-12,000 TEU SHIPS.
WILL THEY HAVE CAPACITY ISSUES IN THEIR NEAR FUTURE
WHEN THEY DO TAKE IT ON?
AND FINALLY, ALBERT EINSTEIN SAID
WITH EVERY DIFFICULTY LIES OPPORTUNITY.
WILL LA AND LONG BEACH BE ABLE TO CAPTURE CARGO SHIPS
FOR EMERGING MARKETS LIKE BRAZIL COMING WEST NOT ONLY SHIPS
GOING EAST.
THANK YOU.
>> THANKS.
AND I'D LIKE TO--
[ APPLAUSE ]
>> AND THIS WILL BE OUR OPPORTUNITY FOR EACH
OF THE PANELISTS TO GIVE SOME CLOSING REMARKS
AS THEY ANSWER THAT QUESTION.
SO WHY DON'T I START WITH PAUL AND WORK OUR WAY
THROUGH MARY AND THEN TODD.
>> THANK YOU, RICH.
YOU HAVE A VERY GOOD QUESTION.
I MEAN THERE'S A LOT OF OPPORTUNITY HERE CLEARLY.
AND YOUR POINTS ABOUT THE INVESTMENTS BEING MADE HERE
AND INFRASTRUCTURE AND THE TERMINALS TO CONTINUE
TO HANDLE THE PLAN PROJECTED,
INCREASES IN CARGO VOLUMES ARE ABSOLUTELY RIGHT.
YOU'RE BUILDING FROM STRENGTH, THE INVESTMENTS ARE HERE.
I KNOW THE COMMUNITY TRIES VERY HARD TO WORK
THROUGH ALL THE ISSUES AROUND STAKEHOLDERS TO COME
UP WITH THE FUNDING THE INVESTMENTS,
THE PERMITTING THE COMPLIANCE AND ENVIRONMENTAL ISSUES,
AND ALL THE OTHER CHALLENGES,
BUT IT'S A PRETTY ADVANCED COMMUNITY,
BUT THAT IT'S A LONG TIME YOU'VE HAD SOME SUCCESS,
YOU'VE HAD SOME BREAKTHROUGHS WITH SOME OF THE IS APPROVALS,
FOR SOME FURTHER TERMINAL EXPANSION, GETTING THE FUNDING
ON THE GERALD DESMOND BRIDGE REPLACEMENT IS A BIG MILESTONE.
I THINK THE INDUSTRY RECOGNIZES THAT.
AND IN FACT, MY PERCEPTION FROM THE BELTWAY VIEW
ON THE EAST COAST IS THAT, YOU KNOW,
SAN PEDRO BAY HAS RESPONDED IN THE PAST DECADE TO SOME
OF THE CHALLENGES THAT WERE THERE EARLIER IN THE PART
OF THE LAST DECADE AND THAT HAS REALLY STEPPED UP.
NOW, IN SOME RESPECTS, IT'S BEEN ADVANTAGED BY THE FACT
THAT YOU'VE HAD A RECESSION, WHICH HAS HURT JOBS
AND INCOME HERE BUT ALSO GIVING YOU SOME BREATHING ROOM TO CATCH
UP IN TERMS THE CAPACITY NEEDS.
AND PLANNING HAS PROCEEDED.
THE INVESTMENTS HAVE PROCEEDED.
IT'S CLEARLY THAT THE COMMUNITY DIDN'T GIVE UP.
WE'VE HEARD THAT FROM PORT MANAGEMENT,
OTHERS IN THE COMMUNITY THAT IN THE RECESSION THEY WEREN'T
STOPPING GOING FORWARDS WITH THE PLANNING NECESSARY
TO HANDLE GROWTH AND TRADE.
AND I THINK THERE ARE SOME OTHER PORTS IN THE COUNTRY
THAT REALLY LOST SOME TIME IN THE RECESSION
BECAUSE THEY WEREN'T ABLE TO ADVANCE SOME OF THE PLANS
THAT THEY NEED TO BE ABLE TO HAVE CAPACITY TO TRY TO COMPETE
FOR CANAL TRAFFIC IF IT WOULD COME TO THEM.
AND SOME OF THOSE IMPEDIMENTS ARE VERY REAL
AND ARE NOT GONNA BE EASIER OR CHEAP TO FIX, AND IN SOME CASES,
THE POLITICS ARE MUCH MORE IN THEIR INFANCY IN THE EAST COAST
IN TERMS OF THOSE COMMUNITIES WORKING TOGETHER
TO SOLVE THE PROBLEMS THAT THIS COMMUNITY HAS ALREADY WORKED
THROUGH, AND AS MUCH FURTHER DOWN THE ROAD IN TERMS
OF BEING ABLE TO COME UP WITH SOLUTIONS TO THE PROBLEMS.
>> MARY?
>> WELL, I THINK THE ECONOMIC RECESSION HAS GIVEN MULTIPLE
SUPPORTS IN THE US AND CANADA THE OPPORTUNITY TO TAKE STOCK
OF WHAT MARKETS THEY WANNA COMPETE IN
AND HOW THEY WANNA COMPETE AND WHAT PROBLEMS THEY HAVE
IN DEALING WITH CONGESTION OR UNDERSTANDING THEIR CAPACITY.
MOST PORTS HAVE CAPACITY NOW.
AND SO FOR THE SHORT TERM FUTURE, MOST ARE SEEING
THAT THIS GIVES THEM THE CHANCE TO MAKE USE
OF THE CAPACITY THEY HAVE AND TO FIGHT FOR MARKET SHARE.
BUT ULTIMATELY, OVER THE LONGER TERM, THEY WILL HAVE
TO BE MORE PORT INVESTMENTS MADE.
AND THE PORT THAT I THINK IS PROBABLY BEST POSITIONED
ON THE EAST COAST IS NORFOLK.
I KNOW THAT ALL UP AND DOWN THE EASTERN SEABOARD,
MOST OF THE PORTS ARE EXTREMELY WORRIED
ABOUT HOW MUCH BUSINESS NORFOLK IS GONNA TAKE
FROM EVERYBODY ELSE.
>> AND THE HEARTLAND CORRIDOR INVESTMENT HAS A POTENTIAL
TO REALLY MAKE, TO CATAPULT NORFOLK UP TO THE NEXT LEVEL.
AND I THINK THE PORTS OUT THERE ARE QUITE CONCERNED ABOUT IT.
TO ANSWER THE LAST THOUGHT.
BRAZIL IS AN EMERGING MARKET THAT HAS EVERY POTENTIAL
OF GOING FROM STRENGTH TO STRENGTH
TO STRENGTH OVER THE NEXT WHILE.
AND I EXPECT THAT THE PANAMA CANAL WILL MEAN
THAT BRAZIL'S TRADE WITH THE WEST COAST SHOULD
BE STRENGTHENED.
>> AND THE LAST WORD TO TODD.
>> I THINK THE ANSWER IS YES THEY'LL BE READY.
BUT THE QUESTION IS WHO WILL WIN ANY WAYS.
IF YOU LOOK AT THE WEST COAST, THERE'S FOUR--
THERE'S LA, THERE'S SAN FRANCISCO-OAKLAND.
THERE'S PORTLAND TO A CERTAIN EXTENT.
SEATTLE-TACOMA.
BUT LA-LONG BEACH HAS THE LARGEST SHARE BY FAR.
SO, TO MARY'S POINT, SOME OF THEM ARE ALREADY READY NOW
AS FAR AS THE ABILITY TO SERVICE THE SHIPS.
OTHERS ARE MAKING INVESTMENTS.
AND AS I SAID IN MY PRESENTATION,
EVERY PORT ALONG THE GULF COAST
AND IN THE EAST COAST HAS A MEMORANDUM OF UNDERSTANDING.
SO I THINK WHAT WE'RE GONNA FIND IS THERE'S GONNA BE SOME
INVESTMENTS MADE IN VAIN BECAUSE OUT OF THE ENTIRE GULF COAST
AND EAST COAST PORTS, THERE'S GONNA BE LOSERS
WITHIN THEIR OWN GROUP, RIGHT?
SO SIMILAR TO THE WEST COAST, LA DOMINATES.
THERE'S GOING TO BE A WINNER ON THE EAST
AND GULF COAST PORTS PROBABLY NORFOLK.
AND MY BET IS ON HOUSTON.
AND THEY WILL DOMINATE THE SHARE THAT GOES THERE.
THE STEAMSHIP LINES WHEN THEY'RE DEPLOYED, THE 8,000, 10,000,
12,000 IF IT EVEN HAPPENS GOING THROUGH THE PANAMA CANAL,
THEY CAN'T STOP AT EVERY PORT.
THEY'RE GONNA HAVE TO CHOOSE
WHICH ONES ARE GONNA MAKE THE MOST SENSE FOR THEM.
>> PLEASE JOIN ME IN THANKING OUR PANELISTS.
[ APPLAUSE ]
>> THERE WERE A COUPLE
OF QUESTIONS WE DIDN'T GET TO ANSWER.
WE'LL DO OUR BEST TO INCORPORATE THEM IN THE WRITEUP
OF THE PROCEEDINGS OF THIS EVENT.
AT THIS TIME, I'LL LIKE TO TURN IT
OVER TO DR. GENEVIEVE GIULIANO, THE DIRECTOR
OF THE METRANS TRANSPORTATION CENTER
TO HELP TIE THINGS TOGETHER FOR US.
>> THANK YOU.
[ APPLAUSE ]
>> THIS HAS BEEN AN ABSOLUTELY INCREDIBLE EVENT
AS FAR AS I'M CONCERNED.
THIS HAS BEEN AN AMAZING SET OF PRESENTATIONS.
I'M SUPPOSED TO BE FAMOUS FOR BEING ABLE TO WRAP THINGS UP,
AND THIS IS A REAL CHALLENGE FOR TONIGHT,
SO WE'LL SEE WHAT HAPPENS.
I'M GONNA GO THROUGH THE WHO, WHAT, WHEN,
WHERE AS MY INTERPRETATION OF WHAT WE HEARD TONIGHT.
AND SO I'M GONNA START WITH WHAT MATTERS.
AND WHAT I HEARD IS WHAT MATTERS IS WHERE THE BUSINESS IS
AND THAT MEANS WHERE THE POPULATION IS
BECAUSE THE POPULATION IS ULTIMATELY THE CONSUMERS, RIGHT.
AND SO THE GEOGRAPHY OF THE UNITED STATES AND WHERE
THAT POPULATION IS IS IMPORTANT.
THE OTHER THING THAT MATTERS IS
WHERE ARE THE MOST EFFICIENT PRODUCERS
IN A TIME COST SENSITIVE MARKET, OKAY.
SO, IT'S REALLY WHERE IS THE MOST EFFICIENT PRODUCTION PLUS
SUPPLY CHAIN.
AND THAT INCLUDES OF COURSE TRANSPORTATION LINKS.
AND THEN THE OTHER THING THAT MATTERS
THAT I HEARD IS HOW THESE PATTERNS MAY CHANGE OVERTIME.
AND TOWARDS THE END, WE EVEN HEARD ABOUT WHAT IF,
FOR EXAMPLE, AFRICA BECOMES THE NEXT KIND OF CHINA IN TERMS
OF CHEAP PRODUCTION MARKET.
THE NEXT QUESTION IS WHERE IS THE BATTLE.
WE ALL TALKED ABOUT WHAT THIS BATTLE WAS ABOUT.
THE BATTLE IS IN MIDWEST UNITED STATES.
WE'RE ALL FIGHTING FOR THE MIDDLE OF THE UNITED STATES.
AND, AGAIN, THE BIG FACTOR IS TIME AND MONEY.
WHAT WE HAVE TODAY IS VERY EFFICIENT VELOCITY
FROM THE POINT OF VIEW OF THE GOODS' OWNER,
GOODS SHOULD NEVER SIT STILL.
SO, TO THE EXTENT THAT THE ROUTE CAN PROVIDE VELOCITY
WHERE THE PRODUCT NEVER STOPS UNTIL IT'S IN THE HANDS
OF THE CONSUMER, THAT'S WHERE THE BATTLE IS GONNA BE.
HOW IS THE BATTLE GONNA BE FOUGHT?
WELL, IT'S GONNA BE FOUGHT IN TERMS OF WHO HAS
THAT CHEAPEST ROUTING IN TERMS OF TIME AND DOLLARS,
WHO HAS THE BEST RELIABILITY, AND THEREFORE,
WHO HAS THE RESOURCES AND THE INFRASTRUCTURE.
THEN THE NEXT QUESTION IS WHO ARE THE ACTORS.
THAT IS TO SAY WHO'S GOING TO MAKE THE DECISIONS
AS THIS COMPETITIVE ENVIRONMENT MOVES FORWARD.
WE HEARD VERY CLEARLY OVER AND OVER AGAIN
THAT THE CARGO OWNER CHOOSES.
BUT I'M ACTUALLY ASKING THE QUESTION
OF WHO IS IT THAT'S GOING TO TRY
TO INFLUENCE THE CARGO OWNERS' CHOICES.
ONE OF THE THINGS I WAS ACTUALLY SURPRISED ABOUT TONIGHT IS
THAT SO LITTLE WAS SAID ABOUT THE ROLE OF GOVERNMENT.
AND IT SEEMS TO ME THAT FEDERAL STATE AND LOCAL GOVERNMENT
IN THE UNITED STATES IS TREMENDOUSLY IMPORTANT IN TERMS
OF INFLUENCING CARGO OWNER DECISIONS.
AT THE STATE AND FEDERAL LEVEL,
I THINK THE FEDERAL LEVEL IS ACTUALLY BECOMING MORE IMPORTANT
MOSTLY BECAUSE STATE REPRESENTATIVES ARE MORE
AND MORE SUCCESSFUL
IN INFLUENCING FEDERAL GOVERNMENT INVESTMENT.
YOU HEARD JUST AT THE VERY END HERE A MENTION
OF THE HEARTLAND CORRIDOR AND NORFOLK VIRGINIA.
IT IS NO ACCIDENT THAT NORFOLK IS AN EMERGING COMPETITOR
ON THE EAST COAST.
THEY HAVE CONNECTED WITH FEDERAL DOLLARS TO HELP THEM MAKE
THAT COMPETITIVE CASE.
THE NEXT GROUP ARE THE RAILROADS.
NONE OF THESE VERY HIGH VOLUME PORT ROUTES COULD ACTUALLY EXIST
AND BE COMPETITIVE WITHOUT EFFICIENCY
IN THE RAILROAD SYSTEM.
SO CLEARLY, THERE'S A REALLY BIG ROLE THERE.
AND THEN THERE'S INTERMODAL.
THERE'S DC AND WAREHOUSING CAPACITY AND ON AND ON.
SO WE HAVE A LARGE NUMBER OF ACTORS
WHO ARE GONNA BE MAKING DECISIONS
THAT HAVE AN INFLUENCED OUTCOMES.
SOME OF THE KEY OBSERVATIONS THAT I TOOK FROM THIS IS,
FIRST OF ALL, THE SENSE OF INTENSITY
OF COMPETITION ACROSS THESE ROUTES.
AND IF COMPETITION IS INTENSE, WHAT IT MEANS IS
THAT VERY SMALL CHANGES
IN RELATIVE TIME COST ARE GONNA MATTER A LOT,
BECAUSE THE BATTLE WAS GONNA BE ESSENTIALLY ON THE MARGIN
AT THE LAST COUPLE OF CONTAINERS,
THE LAST BIT OF BUSINESS, OKAY.
AT THE SAME TIME, THERE'S A GREAT DEAL OF FLEXIBILITY
IN SUPPLY AND LOGISTIC SYSTEMS,
AND THAT MEANS THERE'S ACTUALLY A LOT OF UNCERTAINTY WHEN WE TRY
TO ACTUALLY PREDICT ABOUT HOW THESE DECISIONS--
WHAT DECISIONS SPECIFIC ACTORS ARE ACTUALLY GOING TO MAKE.
SO THAT MEANS THIS IS REALLY UNPREDICTABLE
AT LEAST IN MY BOOK.
THERE'S ALSO THE WILDCARDS, BIG SHIFTS IN TRADE PATTERNS.
BIG SHIFTS IN TRANSPORTATION COST.
WHAT IF THERE REALLY IS A GRADE EFFORT ON TARGET--
CARBON TAXES OR SOME OTHER REGULATORY MEANS
FOR REDUCING GREENHOUSE GASES.
WHAT IF THERE IS A BREAKTHROUGH TECHNOLOGY
THAT DRAMATICALLY CHANGES COST
ACROSS THE SUPPLY CHAIN IN SOME WAY.
ALL OF THOSE THINGS COULD EASILY HAPPEN, BUT WE HAVE NO WAY
OF REALLY PREDICTING WHAT THEY MIGHT BE.
THE BOTTOM LINE THAT I CAME BACK WITH TONIGHT IS
THAT A LOT DEPENDS ON THE WAY THAT PORTS
AND THEIR ACTORS ALONG THE SUPPLY CHAIN ACTUALLY MAKE
DECISIONS TO COMPETE.
SO I AGREE WITH MARY THAT IT'S REALLY OUR CHOICE,
THE PEOPLE HERE TONIGHT AND THE MARKET SHARE
AND THE EVENTUAL PRODUCTIVITY
OF SOUTHERN CALIFORNIA PORTS IS REALLY GOING TO DEPEND
ON THE ACTORS HERE TODAY, THE SUPPLY CHAIN INTERESTS TODAY
AND HOW THEY COOPERATE AND COLLABORATE.
THANK YOU.
[ APPLAUSE ]
>> THANK YOU SO MUCH DR. GIULIANO FOR AN AMAZING SUMMARY.
SHE PUTS ME TO AWE EVERY TIME I SEE HER SITTING THERE WRITING
NOTES AND COME OF IT IN SOME WAY QUITE AMAZING.
THANK YOU AGAIN FOR DOING THAT.
THERE'S ONLY A FEW THINGS LEFT FOR ME TO SAY AND ONE IS
THAT THE PROCEEDINGS OF TONIGHT'S EVENT ARE CAPTURED
IN A REPORT AND THAT REPORT IS GOING TO BE AVAILABLE ONLINE.
YOU CAN ALSO GO ONLINE AND FIND
OUT HOW YOU CAN PURCHASE A COPY OF THE VIDEO.
IT HAS BEEN AN HONOR, LADIES AND GENTLEMEN,
TO CHAIR THIS INAUGURAL EVENT OF OUR POINT/COUNTERPOINT.
I WOULD LIKE YOU TO PULL OUT THE GREEN EVALUATION, FILL IT OUT,
GIVE US FEEDBACK, AND TELL US WHAT KIND OF TOPICS YOU WOULD
LIKE US TO TACKLE THE NEXT TIME.
IT'S VERY IMPORTANT THAT I EXPRESS MY CREDIT TOO
TO A NUMBER OF PEOPLE WHO DO AN AMAZING CHOP IN THE BACKGROUND.
MANY OF YOU HAVE BEEN TALKING WITH ALIX TRAVER.
SHE IS THE PERSON BEHIND IT.
YES, A ROUND OF APPLAUSE.
[ APPLAUSE ]
>> TOGETHER WITH HER ASSISTANT, DIANE DELATER [PHONETIC],
ANGELI LOGAN, ROBIN SEARLE.
THEY HAVE BEEN HELPING ALL ALONG.
I WOULD LIKE TO THANK AGAIN OUR SPONSORS WHO TOGETHER
WITH THE METRANS FUND THROUGH THE DEPARTMENT OF TRANSPORTATION
AND THROUGH CALTRANS HELPED US SPONSORED THIS EVENT.
>> TO PORT OF LONG BEACH TO PORT OF LOS ANGELES, THE ILWU,
LOCAL 13 6494, THE SCDC, BNSF, ACTA,
THE LONG BEACH CITY COLLEGE, THE INTERNATIONAL TRADE OFFICE,
THE PANAMA CANAL AUTHORITY, THE HARBOR TRANSPORTATION CLUB,
SEA GRANT, AND THE LONG BEACH BUSINESS JOURNAL.
THEY DESERVE A ROUND OF APPLAUSE, RIGHT?
[ APPLAUSE ]
>> THANK YOU GOES TO OUR TRADE ASSOCIATION
WHO HAVE BEEN ENDORSING OUR EVENT.
AND ONE MORE TIME A BIG THANK YOU TO MARY, TO PAUL, TO TODD,
TO TOM O'BRIEN NOT ONLY FOR DOING A GREAT JOB
IN MODERATING THIS PANEL BUT ALSO
FOR PUTTING THE TIMELINE TOGETHER IN YOUR PROGRAM.
AND HE'S GOING TO BE RESPONSIBLE FOR THE FINAL REPORT.
GEN GIULIANO INCLUDED, A ROUND
OF APPLAUSE ONE MORE TIME FOR THE SPEAKERS.
[ APPLAUSE ]
>> AND BEFORE I CONCLUDE, I HAVE TO SAY THANK YOU RICH DINES
FOR YOUR FANTASTIC OUTREACH.
YOU'VE BROUGHT THEM ALL IN.
THIS CONCLUDES TONIGHT'S EVENT.
THANK YOU AGAIN FOR COMING AND I HOPE I SEE YOU NEXT YEAR.
THANK YOU, GOOD NIGHT.
[ APPLAUSE ]