In their first meeting under the formal discussion agreement recently approved by the Federal Maritime Commission, ranking staff of the two San Pedro Bay ports — the busiest seaport complex in the United States — agreed that the primary goal of the collaboration is to get cargo moving more efficiently. The initial meeting, held at Port of Long Beach headquarters, set the stage to discuss a framework for how the ports will cooperate, work with stakeholders from throughout the supply chain and communicate the results of the efforts.

At the end of February, the Federal Maritime Commission agreed to allow the two ports to cooperate far more strategically on finding new ways to prevent congestion and cargo delays, improve the transportation network and enhance air quality. The decision came after several months of severe congestion and shipment delays caused by a number of factors.

“Through this working group, we will engage with our stakeholders to discuss issues and develop solutions for optimizing cargo flow through our ports,” said Port of Los Angeles Executive Director Gene Seroka. “Our ports, customers, labor force and supply chain partners are committed to taking this gateway to a new and higher level of performance, and we’ll accomplish this by working together.”

“Our shared goal is to optimize the performance of the trans-Pacific supply chain,” said Port of Long Beach Chief Executive Officer Jon Slangerup. “The San Pedro Bay has always been the fastest route between Asia and the U.S. and I’m confident we will find ways to significantly increase the velocity of goods movement and overall efficiency of our end-to-end system, thereby reinforcing our gateway as the No. 1 choice for shipments to and from Asia.”

The ports will discuss innovative approaches to improving the efficiency of marine terminal, trucking, rail and vessel operations. The ports also plan to discuss legislative advocacy, security enhancements, infrastructure, technology and environmental improvements related to supply chain optimization. The deployment of larger ships, coupled with a new level of vessel-sharing dynamics created by carrier alliances, have created congestion issues at many large ports, but the problems have been especially severe at the San Pedro Bay ports due to the higher volumes of intermodal cargo that flow through the gateway.

The Port of Los Angeles and Port of Long Beach are the two largest ports in the nation, first and second respectively, and combined are the ninth-largest port complex in the world. The two ports handle approximately 40 percent of the nation’s total containerized import traffic and 25 percent of its total exports. Trade that flows through the San Pedro Bay ports complex generates more than 3 million jobs nationwide.

The vessels will have a length of 200 meters (m), width of 35.2m, and
a 10m draught. COSCO Shipyard and Maersk Line have agreed to keep the price confidential.

The order is the first step in the investment programme announced by Maersk Line. Over the next five years USD 15 billion will go into vessel new building, retrofit programme, containers and other equipment. Hereby, Maersk Line will be able to add capacity in line with growth in global container shipping demand as well as replace less efficient chartered tonnage.

“I am very happy to announce this new order and the first in our investment programme. Our strategy is to grow with the market and to do so we need new vessels from 2017,” says Søren Toft, COO in Maersk Line. “We expect to place additional orders during 2015.”

Maersk Line has ordered the vessels for Seago Line, its fully-owned container shipping line dedicated to short-sea services in Europe and throughout the Mediterranean region. The vessels, built to trade in Northern Europe through sea ice, will achieve unprecedented economies of scale. They will provide Seago Line short-sea and feeder customers with competitive services, also in the winter.

Seago Line will deploy the vessels in the Baltic and North Sea regions. They will replace several container vessels, half the size or less of the new buildings. The vessels will sail on marine gas oil (MGO). They are therefore compliant with the SOx (Sulphur oxides) emission limits, which went into force 1 January 2015, creating the ECA (Emission Control Area) zone in Northern Europe.

The vessels will be delivered in April – November 2017. The order includes an option for two (2) additional vessels to be declared within eight (8) months. It is the first time, that Maersk Line places a new building order with COSCO Shipyard. It is also the first time the shipyard will build container vessels. However, the Maersk Group has worked with COSCO Shipbuilding Group in the past. Maersk Line also uses the shipyard for vessel retrofits and dry docking.

“I am very confident that COSCO Shipyard, with their solid shipbuilding experience and a good track record will deliver high quality and fuel efficient vessels,” says Søren Toft.

“Since joining the commission, it has been my goal to ensure that this organization demonstrate strong financial health,” said Port of Seattle Commission Co-President Stephanie Bowman. “I am pleased that these numbers put us on a strong footing for 2015.”

In 2014, Sea-Tac International Airport passengers increased 7.7% above 2013. This reflects new scheduled flights, primarily by Alaska and Delta, with much of the new seat capacity added in the second half of the year. The airport’s strong passenger growth drove particularly strong financial results in parking, dining, retail, rental car, and other non-airline revenues that came in 8.6% above budget for the year.

Seaport net operating income exceeded budget by $1 million, as TEU volume dropped 11 percent from 2013. Grain volumes were up 168 percent from 2013, at 3,618 metric tons, and 64 percent over 2014 budget. Cruise showed another strong year, with over 800,000 revenue passengers for the seventh year in a row.

The Real Estate Division showed a net operating income that exceeded budget by nearly $2 million, with port commercial properties at 93 percent occupancy, above the year-end 2014 Seattle market average of 92 percent. Recreational marinas were at target occupancy of 96 percent.

A number of other key business events were accomplished in 2014 including
the following:

Planning began for renovation of the North Satellite and International Arrivals Hall at Sea-Tac International Airport.

Terminal 5 began the process of modernization to make ‘Big Ship Ready.’

Successfully launched the SODO Business Improvement District with the City of Seattle
and SODO businesses and property owners.

Achieved agreements with the Muckleshoot Indian Tribe and the Suquamish Tribe to
return to the tribes Native American cultural materials.

Finalized a project list as part of the joint Freight Access Project and launched the
Freight Master Plan with the City of Seattle.

Successfully negotiated updates to the City of Seattle’s Shoreline Master Plan.

Completed the Economic Impact Study of the Port of Seattle.

Including both operating and non-operating revenues, overall 2014 total revenues were $742.4M, $11.9M higher than the budget and $8.2M higher than the 2013 actual. 2014 total expenses were $611.0M, $41.7M lower than the budget and $11.8M lower than 2013 actual. The Port’s bottom line net income for the year was $131.5M, up $20M, or 18 percent 2013.