Port of LA wants to add incentives for “green” vessels

ESI is an international web-based ship-rating system ports can use to promote clean ships by rewarding operators whose vessels exceed current environmental performance standards and regulationsBy Patrick Burnson, Executive Editor
November 22, 2011

The Port of Los Angeles is working with the International Association of Ports and Harbors (IAPH) to develop incentive program strategies to participate in the Environmental Ship Index (ESI) Program starting in 2012. 

ESI is an international web-based ship-rating system ports can use to promote clean ships by rewarding operators whose vessels exceed current environmental performance standards and regulations.

“We are hoping that this will be the start to give BCO’s (beneficial cargo owners) a voice on where cargo is routed,” said ports spokesman, Phillip Sanfield.“We believe that there should be a financial reward given to ports and carriers for doing the right thing.”

Port staff presented an outline of the program to the Board of Harbor Commissioners last week and expects to submit recommendations for participation in the program to the Board by early 2012.

The announcement comes on the fifth anniversary of the port’s adoption of the Clean Air Action Plan (CAAP), landmark pollution reduction initiative whose measures have helped to cut harmful air emissions from port-related sources in the San Pedro Bay by as much as 76 percent.

The CAAP was designed as a blueprint for charting a permanent course for the Port of Los Angeles to operate the cleanest, most environmentally sustainable port. In 2010, the port reaffirmed its commitment to the CAAP by expanding its programs and setting more aggressive targets with near-term goals through 2014 and long-term objectives through 2023.

“The Port of Los Angeles is looking forward to being part of these international standards and setting the stage for North American ports to follow suit and reward operators for greening their fleets,” said Port of Los Angeles Executive Director Geraldine Knatz, Ph.D. and IAPH president. “As participation grows, the benefits increase for carriers and communities.”

The Port of Los Angeles adopted the CAAP to help tackle harmful emissions in the South Coast Air Basin. After launching the CAAP in 2006, the port has met or exceeded nearly all its goals for reducing air pollution from port-related sources. Ships remain the toughest challenge, as they are regulated by international convention and represent the single largest source of air pollution from port-related operations.

The ESI identifies voluntary engine, fuel and technology enhancements ships can use to exceed current environmental performance standards. The ESI targets primary pollutants, which include nitrogen oxides (NOx), sulfur oxides (SOx), and diesel particulate matter (DPM). The program also contains a component to help reduce greenhouse gases.  The index was developed by some of the world’s major ports collaborating under the World Ports Climate Initiative, a project of the IAPH.

Nine European ports in the Netherlands, Norway, Germany, Belgium and Italy have signed on to participate in the ESI and either have current programs or are in the process of developing programs to offer financial incentives to reward operators whose ships outperform environmental standards.

Some thoughts and signs about the economy

A few economic indicators released this week were not new or jarring in terms of a “wow factor,” but they are telling at the same time.

One of these indicators is that according to the Department of Commerce third quarter GDP growth checked in at 2.0 percent, which is down from a previous estimate of 2.5 percent. I am sure we all wish that final tally had been 0.5 percent heading in the other direction, but what can you do?

The other one from Commerce told us that new orders for manufactured goods in October fell 0.7 percent to $197.7 billion and overall shipments were up 1.3 percent, while inventories were up 0.5 percent.

These numbers are pretty much status quo, given the slow growth occurring at the moment and many preceding months. But as the year comes to an end in a matter of weeks, we all would like to see more growth.

On a more positive front are solid export numbers in recent months, especially from the Port of Los Angeles, whom reported an all-time high in October exports. Some of this is due to a “cheaper” dollar, but it is a good sign.

And retail sales figure to show some strength very soon, with Black Friday (or is it now Black Thursday?) soon to be upon us. It stands to reason that November and December retail sales will be strong and definitely serve as a nice late in the year stimulus for the economy.

While things are far from perfect, we are slowly moving in the right direction, it seems. This is also bearing out in fairly decent truck tonnage and intermodal/rail carload numbers we have seen in recent weeks.

In regards to the truck tonnage volumes, I asked Chuck Clowdis from IHS Global Insight to offer up his take on the most recent batch of data from the American Trucking Associations, which stated that in October its advance seasonally-adjusted (SA) For-Hire Truck Tonnage index increased 0.5 percent in October, following a revised 1.5 percent and was up 5.7 percent annually, whereas the non seasonally-adjusted index was down 0.8 percent from September and up 4.8 percent annually.

“The latest ATA tonnage numbers are slight but still encouraging,” said Clowdis. “We now need to see what holiday spending reveals. It has been especially difficult to take true measure of inventory levels and many are still rather low for this time of year.”

The changing patterns pertaining to inventory control and management are also creating an interesting supply chain dynamic, which, many industry stakeholders have told me, is creating a sort of “new normal.” As you probably know, retailers, especially, are being far more conservative with inventory levels than they have in the past—and with good reason.

In any event, it is worth keeping an eye on as we hopefully continue to see positive progress made on the recovery front.