It’s a beautiful California night. Standing on the deck of the retired RMS Queen Mary, Industrial PRIME is admiring the spectacular silhouette of the city of Long Beach.
In the warm and gentle summer breeze, it is hard to believe that we are staying in one of the greatest metropolitan areas in the world. On the other hand, when we take a look over our shoulder, we can see a glimpse of the busiest port complex in the United States – it’s only a stone’s throw away. And yet, the night is quiet and the air feels clean and fresh. Tomorrow, we are going to find out just how is that possible.
For the last but certainly not least instalment in our California trilogy, we decided to head to the port to interview the man at the helm of something truly special.
Mr Jon Slangerup is very proud. He is in charge of a port that is part of one of the largest port complexes in the world. Especially for the past ten years, it has distinguished itself as not only an excellent port, but also as one with such a strong focus on environmental sustainability that it has been voted the greenest port in the world several times.
We are intrigued. But when we learn that the port is planning to grow further and go even greener, we are hooked.
Welcome to the Port of Long Beach.
The Green Port In the Green State
Before his appointment as CEO of the Port of Long Beach in July 2014, Jon Slangerup had spent the majority of his career in the world of express logistics and delivery.
After retiring from FedEx in 2000, he found himself involved in a variety of companies dealing with green energy technologies. He became a candidate for his current position by accident, hearing about the position from a friend. At the time, he didn’t even think he was particularly qualified for the job…
However, what the Port of Long Beach was looking for was not your typical port executive. Instead, they wanted someone with an energy background, someone who could bring a new perspective to the job.
“I met with the board and immediately got excited about their vision,” Slangerup recalls. “An industrial setting where there is such a focus on environmental sustainability is a true rarity. For me, the chance to get back into a large-scale logistics operation combined with my newer commitment and affection for clean technologies – it was simply irresistible.”
Over the past years, the Port of Long Beach has been voted the world’s greenest port on numerous occasions. It has also been voted the best port in the world, and therein lies the port’s uniqueness: it is an unmatched combination of an effective gateway for trade and true commitment to environmental sustainability.
All this has not gone unnoticed by the Long Beach citizens. As Slangerup puts it, the city and the port are one. Remarkable, considering ports are often associated with noise and pollution.
“People tend to view ports pretty negatively,” he admits. “But in this beautiful city, the view is extremely positive. We do not pollute the city. Instead, we bring plenty of jobs to the economy, while providing other kinds of benefits to the citizens, behind the scenes. There is a mutual appreciation between us and the people, and we work hard to maintain that relationship.”
Needless to say, the port’s significance to the state of California is undeniable. The most populous state in the United States and a powerful economy, California is also considered to be one of the country’s greenest states.
“If you look at the history of California for the last 30 years, you’ll find that there has been a zero or negative increase in energy consumption per capita,” says Slangerup. “That is amazing. All this conservation is really part of the culture.”
How it became part of the culture, Slangerup doesn’t know. But what he does know is that it was this very culture that drove the Port of Long Beach towards adopting its Green Port Policy ten years ago. California, we learn, is a tough place to do business: the state has more environmental regulations than any other state or country in the world.
“At the time we had two choices,” he recalls. “We could either be forced into compliance against increasingly tough water and air quality standards, or we could take an aggressive posture and take it on and become the leader. We chose the latter. That is when this entire remarkable change began.”
Taking a look down at the port, we find that the water is crystal clear, with starfish, tortoises, and lobsters moving around without a care in the world. This achievement is being talked about all over the world.
“Major ports in Asia are now partnering with us to find out how we did all this,” Slangerup says. “They want to learn from us, because not only are we super green, we are also making more money than we used to – we are the most profitable port in California!”
And just how exactly is the Port of Long Beach doing it?
Slangerup points out two things. Firstly, the port has a firm belief in that environmental sustainability and economic growth are in fact the two sides of the same coin – they are by no means incompatible.
“If you aggressively pursue quality initiatives, including air and water quality, you eliminate many costs that you otherwise would have to mitigate,” he says. “In California, the punishment for not doing it is much greater than the actual cost of doing it. We don’t pay any fines. On the contrary, while becoming leaders in adopting all these quality initiatives, we have also become more profitable.”
Secondly, Slangerup also believes that the cleaner an environmental system is, the more efficient it is. Therefore, it makes perfect sense to him to protect it. It makes perfect sense to Industrial PRIME as well.
Never Take Your Business for Granted
Around 80 percent of the trade volume on the North American West Coast moves through the port complex formed by the Port of Long Beach and its neighbour and partner, the Port of Los Angeles.
In spite of this impressive figure, the competition is fierce, as emerging ports want their share of the business. In order to maintain their lead, Long Beach and L.A. cooperate on practically everything – except the customer!
“I refer to our relationship as co-opetition, a combination of cooperation and competition,” describes Slangerup. “We focus our attention on the marketplace separately, fighting for every container and vessel string. But since we are part of the same port complex, we also share a lot of ideas and focus on improvements for the entire complex.”
To quote an example, the two ports have recently been cooperating on supply chain optimization, an effort to rethink the marine supply chain from Asia through to the point of destination for the containers.
“That has opened up a whole new level of cooperation between us,” says Slangerup. “Because at the end of the day, everybody wants our business. We have to fight harder to maintain our leadership position.”
We learn that in recent years, the market share of the two major ports has begun to erode. Some of the volume has been going up to ports in Canada, while Mexico is also beginning to emerge. In addition, due to the nightmarish congestion the Port of Long Beach went through last year, around 5% of the port’s business was redirected to other ports on the East Coast.
“That was tough,” admits Slangerup. “We’ve been fighting hard to regain the business we lost. And we are regaining that, but it was nevertheless a wake-up call: you cannot take your business for granted. If you don’t do your job, somebody else somewhere else will.”
An interesting trend shaping the future of the marine and port industries is the ever-increasing size of cargo ships.
According to Slangerup, more than half of all the new ships entering the Asia-Pacific trade this decade will be too large to pass through the Panama Canal. He finds it ironic that so much work has been done to expand the canal, yet in the future less than half of the new ships will be able to pass through it.
Currently, Long Beach and L.A. represent the only port complex in the United States that can handle vessels the size of 14,000 TEU. Even larger ships are set to start coming in from Asia, and ports may even be seeing “megaships” larger than 20,000 TEU coming across the ocean within the next five years.
The Port of Long Beach has been preparing for that reality for about a decade. Needless to say, the preparation has required enormous amounts of capital investment: the port is investing between $500 and $600 million annually. According to Slangerup, the future looks promising.
“Other ports struggle, because they don’t have the natural deep water necessary to handle this size of ships,” he says. “We have that. Moreover, the infrastructure investments that have been necessary are now beginning to pay off. It’s not easy to handle these large ships that are growing even larger as we speak. But they are not going to go away.”
To give us a better perspective on the size and scope of the Port of Long Beach, Slangerup took us to see the magnificent view from the top of the port’s Joint Command and Control Center building.
Because of the size and scope of its operations, the importance of the Port of Long Beach for the entire country is significant. The port is so important, in fact, that when things were really starting to go awry with the congestion issue last year, Slangerup and co. got Washington to respond.
“500 million dollars’ worth of goods moves through this port every single day,” Slangerup points out. “Imagine the impact of that amount of goods moving – or not moving. I’m pretty sure everybody wants to be sure the port is going to operate!”
That brings us to Energy Island, which, in spite of its name, is not an island. Nor is it a funded, board-approved project yet. However, Slangerup says that the board loves the idea, while all the stakeholders that have a say in it are excited about it as well.
“We’ve been directed to do all the work necessary to put together a plan that is affordable and achieves all the objectives of Energy Island,” he says.
According to the vision, the Port of Long Beach is going to become an “island” of self-sufficiency in terms of both energy and water.
“In a nutshell, Energy Island is about total environmental sustainability and self-reliance,” Slangerup states. “We will have our own renewable or ultra-clean power generation equipment, from wind turbines to fuel cells to solar panels.”
Making Energy Island a reality involves three goals. The first one is called resiliency. Energy Island must be able to provide all the power necessary for running not only the port, but also certain critical parts of the city, in the event of a catastrophic outage of the main grid.
“We are going to create a series of micro-grids across the twenty-two terminals,” Slangerup illustrates. “Each terminal will be part of these micro-grids: they are interconnected but can each run independently and back each other up. We will ourselves provide all the power necessary to run twenty-four seven, indefinitely.”
The second goal of Energy Island is called cost containment. Energy costs are constantly on the rise, but once the Port of Long Beach has paid for their renewable resources and begun generating their own power, energy costs for their tenants and partners are guaranteed to remain flat for decades.
The third goal, according to Slangerup, is a further effort to demonstrate to the regulators that they do not have to worry about the port’s commitment to the environment.
Now that’s what we’d call ambitious. No wonder the state of California is excited about the vision. In fact, even Washington is getting excited – hardly a surprise, considering the port’s importance to the national economy.
By now, Energy Island has evolved into a comprehensive vision, constantly receiving encouraging feedback from all parties involved.
In the near future, then, anyone approaching Long Beach by plane will be greeted with an army of wind turbines sticking out from the breakwater. This will serve as an apt visual reminder: the Port of Long Beach is not only a significant industrial complex. It is also an important example of the successful integration of economic growth and an unconditional focus on environmental sustainability.
Text and images by Industrial PRIME
A view towards the beautiful city of Long Beach from the deck of RMS Queen Mary.
Industrial PRIME would like to extend a big thank you to all the people in California who helped us make this series of articles a reality. We’ll be back!
tel. +358 45136 3532