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Shafter Report-V17

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Shafter Report-V17 The Shafter Advantage The California Integrated Logistics Center A Partnership Project of The City of Shafter Northwest Container Services, Inc. The Port of Oakland Prepared by Lon Hatamiya, Director Tapan Munroe, Director LECG, LLC Emeryville, California Acknowledgements The authors would like to acknowledge and thank Brent Green, Director of Busi- ness Development for the City of Shafter, Art Scheunemann of Northwest Container Services, Inc., Mark Westwind of Munroe Consulting Inc., and Doug Svensson and Peter Cheng of Applied Development Economics, Inc., for their support and contri- butions to this report. LeCG The Shafter Advantage Table of Contents Executive Summary......................................................................................... 1 Key Points ..................................................................................................... 1 I. The Importance of International Trade ......................................................... 1 II. Trade Flow Challenges............................................................................... 2 III. The California ILC Partnership................................................................... 3 Benefits.......................................................................................................... 7 Introduction ..................................................................................................... 9 I. The Importance of International Trade ...................................................... 10 Key Points ................................................................................................... 10 A. United States........................................................................................... 10 B. California................................................................................................. 11 C. San Pedro Bay Ports ............................................................................... 12 D. Economic Benefits................................................................................... 13 II. L.A. Region Goods Movement Challenges............................................... 14 Key Points ................................................................................................... 14 A. Port Congestion....................................................................................... 14 B. L.A. Region Trucking ............................................................................... 18 C. L.A. Region Railways............................................................................... 20 D. Empty Container Movement..................................................................... 23 E. Security Challenges................................................................................. 25 F. Environmental Challenges ....................................................................... 26 III. The California Integrated Logistics Center.............................................. 28 Key Points ................................................................................................... 28 A. Project Overview...................................................................................... 28 B. Market Analysis ....................................................................................... 30 C. Key Players and Beneficiaries.................................................................. 33 D. Success Factors...................................................................................... 33 E. Challenges .............................................................................................. 33 F. Benefits ................................................................................................... 34 G. The Shafter Advantage............................................................................ 38 November 2004 i LeCG The Shafter Advantage Executive Summary Key Points · International commodity trade is vital to the nation’s economic well-being. One in seven jobs in California are dependent on international trade and one in five nationally. California pro- vides the nation with key trade links to Asian trade partners via its three global gateway ports: Los Angeles, Long Beach and Oakland. · The Ports of Los Angeles and Long Beach as well as the supporting goods movement infra- structure are seriously congested while container traffic flow through these ports is expected to triple over the next twenty years. The economic impact of any extended disruption to these ports (e.g. by earthquake, terrorist attack or labor dispute) would be staggering. Routing more international trade through the Port of Oakland would distribute and alleviate some of this risk. · In order to position the Port of Oakland as a viable alternative to the Ports of San Pedro Bay, fast and affordable movement of containerized freight from Oakland to Southern California must be provided. This is made possible through the addition of off-port rail intermodal capac- ity in the Southern Central Valley. · The California Integrated Logistics Center (CILC) will be a comprehensive intermodal ser- vices facility strategically located in Shafter along major north/south rail and highway routes through the Central Valley. · The CILC project will open a “back door” into the L.A. Basin through the Port of Oakland and the Central Valley while also making an Oakland/Shafter rail shuttle economically viable. · The proposed California ILC will be developed as a unique public/private initiative between the City of Shafter, Northwest Container Services, Inc., and the Port of Oakland. · By shifting more goods movement from trucks to rail, the proposed Oakland/Shafter rail shut- tle will lead to a decrease in highway congestion, fewer truck-related accidents, and an over- all decrease in total vehicle emissions. · In addition, the Shafter region, the Bay Area, and the state will benefit from the additional jobs created and an overall increase in economic vitality as a result of this project. I. The Importance of International Trade International commodity trade is vital to the nation’s economic well- Figure A being. Imports and exports Rail Trade Flow through San Pedro Bay Ports through U.S. ports support millions (Line weight indicates intermodal volume) of trade-related jobs. Our imports range from vital raw materials (in- cluding oil) to a myriad of luxury goods. Our exports include waste paper, scrap metal, precision manufactured goods, fruits, vege- tables, nuts (almonds and pista- chios), frozen beef and chicken, cotton and fiber, and fine wines. California ports play a major role in the nation’s goods movement business. (Figure A) Source: U.S. Dept. of Transportation November 2004 1 LeCG The Shafter Advantage California provides the nation with key trade links to our Asian trade partners including Ja- Figure B pan, China, South Korea and Taiwan via its Trade Flow Imbalance three global gateway ports: Los Angeles, Long through West Coast Ports Beach and Oakland. (Figure B) The Port of Long Beach alone is responsible for 1.4 million trade-related jobs throughout the nation. Inter- national trade directly and indirectly supports one in seven jobs in California. II. Trade Flow Challenges The state and the national economies are highly dependent on goods movement through San Pedro Bay via the Ports of Los Angeles and Long Beach. This places both the state and the nation at risk should anything constrain the free flow of containers through these ports (e.g. a dock strike, earthquake or terrorist attack). The potential cost of extended “downtime” at the San Pedro Bay Ports would be staggering both for the state and for the nation. While even brief periods of trade flow stop- The ports of Los Angeles and Long Beach page through Los Angeles and Long Beach are clearly dominant along the West Coast. would be costly, there are chronic problems in Such an imbalance risks serious economic impact should traffic through these ports California’s goods movement infrastructure be disrupted for any reason. that are equally as threatening to the economy over the long-run. The primary problem is the severe congestion at the San Pedro Bay Ports and the supporting goods movement infrastructure that frequently results in highly expensive de- lays in loading and unloading cargo ships – delays that can cost carriers well over $1,000 per hour. In response to all-too-common delays, carriers regularly divert cargo ships to Seattle, Port- land, Anchorage, Ensenada (Mexico), Panama and other ports to unload goods destined for Cali- fornia and elsewhere in the nation. L.A. Basin Goods Movement Congestion Threatens the State’s Economy · Turn-around time for vessels at San Pedro Bay Ports is doubling creating high costs for shippers and carriers. · Truckers must wait up to six hours at port terminals, adding to shipping costs. · L.A. Basin highways are seriously congested: 800,000 truck trips per day, 26M miles/day projected to increase to 50M miles/day by 2020. · I-710 serves 40,000 trucks per day projected to increase to 97,000 trucks per day by 2020. I-10 and I-15 serve 87,000 trucks per day. · L.A. rail corridors handle 112 freight trains per day, projected to rise to 165 in 2010 and 283 by 2030. · Delays and congestion frequently cause ships to be diverted away from the San Pedro Bay Ports to other ports and other countries. · The region, the state and the nation suffer from the loss of container traffic to other ports, states and countries. November 2004 2 LeCG The Shafter
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