Port of Long Beach studying business case behind short-haul rail

Written by Mischa Wanek-Libman, editor
image description
Port of Long Beach

The Port of Long Beach in California is looking to an old idea with new variables to combat traffic congestion: Short-haul rail.

 

The Port of Long Beach says that when the San Pedro Bay ports, which includes the Port of Los Angeles and Port of Long Beach, launched their Supply Chain Optimization (SCO) Initiative last year, short-haul rail quickly emerged as a strategy with tremendous potential to sharpen the regional network’s competitive edge.

Acting on that opportunity, the Port of Long Beach commissioned a study to evaluate the business case for short-haul rail that is due to be completed in the coming months. The analysis will shed light on the market demand, the anticipated costs and the next steps if the findings support shuttling cargo by rail between the San Pedro Bay port complex and the major consumer markets and warehousing districts within 100 miles of the harbor.

“Short-haul rail is a key component of a broader port rail expansion strategy to enable our regional supply chain partners to achieve significant gains in velocity, throughput and environmental improvements,” said Port of Long Beach Chief Executive Officer Jon Slangerup. “We’re taking a comprehensive look at the feasibility of this concept.”

Up to 70 percent of containerized imports that move through the San Pedro Bay ports leave the harbor complex by truck. Of that total, about 40 percent are headed east for distribution centers and warehouses in San Bernardino and Riverside counties known as the Inland Empire.

At these facilities, cargo is transloaded to larger containers or trailers for shipment by rail across the country or by truck to local destinations. This includes the Inland Empire’s own consumer market of more than 4.3 million people.

“We want to know if there is a valid business case for moving this transloaded segment of cargo to the Inland Empire by rail,” said Mike Christensen, the Port of Long Beach’s senior executive lead for supply chain optimization.

The Port of Long Beach mentions that today, the dynamics of the short-haul rail concept are different than they were when the concept was studied a decade ago in that the cost of drayage to the Inland Empire is substantially higher and freeway commutes are slower than ever. The greater Los Angeles area currently ranks as the most congested region in the nation based on average time wasted of 81 hours per commuter per year, according to the INRIX 2015 Traffic Scorecard.

Road congestion coupled with a decline in Class 1 rail traffic has created an opportunity for the supply chain to reconsider a regional rail shuttle, Christensen said, “There is a new openness to this strategy on the part of both our Class 1 railroad partners and the cargo owners we jointly serve.”

The ports are also experiencing a growing number of megaships, which deliver more cargo in a single call and during the same four or five days per ship as previously with smaller vessels. The Port of Long Beach notes that increasing the number of containers leaving the terminals by rail reduces gate waits and improves truck velocity.
“Short-haul rail could allow the entire supply chain to manage those surges more efficiently,” Christensen said.

About a quarter of the Port of Long Beach’s $4-billion, 10-year capital plan has been dedicated to rail projects. The port says all are designed to enhance on-dock rail capacity, velocity and safety and boost the rate of containers shipped directly to and from the waterfront by on-dock rail to 35 percent, up from Long Beach’s current average of 28 percent.

As the Port works to build the Green Port of the Future, its ultimate goal is moving 50 percent of all containerized cargo by rail. With a short-haul rail service that maximizes on-dock rail capacity, that target is within reach, said the Port of Long Beach’s CEO.

“Optimization means making the best and highest use of all our resources,” Slangerup said. “Taking the lead on short-haul rail reflects our ongoing commitment to leveraging our position as a world-class seaport to advance solutions that strengthen our entire regional supply chain.”

Tags: