Supply Excellence

“Greening” the US Ports

October 6th, 2008 · by Rachel Rutkoski · No Comments · oil/energy, sourcing, supply management

A recent Newsweek article showcased the “greening” of the Los Angeles and Long Beach ports. Both ports have a long history of polluting the air, water and citizens’ lungs in the area. In fact, their current clean up efforts were sparked by a combination of lawsuits, shockingly high local cancer rates and public outcry.

But in their defense, port officials in LA and the LBC are taking their new found environmentalism very seriously - so much so that they are literally paying for container ships to use cleaner marine diesel instead of cheaper bunker fuel (at a difference of $650 per ton). They’re also using the first “Prius of the Sea” hybrid tugboat, electric trucks and plug-in ships, so engines don’t need to run auxiliary diesel engines while docked in port for up to 3 days, in order to cut emissions in half by 2012.

And since most cargo is offloaded onto short-haul trucks, which transport the containers to distribution centers, tightening up the trucks’ emission standards is key component as well. October 1st was the first day of a new rule barring pre-1989 trucks from the ports and an even stricter diesel rule takes effect in 2012.

These green port initiatives represent commendable political will, noble goals and eventually perhaps even costs savings (depending on economies of scale for new technology and what direction oil prices hit). Although they lead the way, LA and Long Beach are not alone in their green port initiatives. Up and down the east and west coasts, other ports are slowly moving towards more green operations.

So where does all of this leave transportation buyers and companies that utilize US ports in their transportation mix?

Well the good news is that the government has picked up most of the tab to date. In California’s case, when a bill to attach a per container charge of $30 hit the Governor’s desk in 2006, he vetoed it (the price a state pays to keep their lucrative ports competitive I suppose). A few individual shippers, such as Maersk, have also voluntarily cleaned up their fleets and rolled out some of the new technology.

All told, the impact right now on transportation pricing is minimal. And when you also consider that companies can include shipping through “greener” ports among their own sustainability programs, it adds another positive aspect. And with the competitive nature of shipping contracts, if/when any surcharges or fees make their way into your shippers’ proposals, it may be possible to push back on them just like you should for any accessorial charges.

Rachel Rutkoski is a Category Manager for Transportation and Logistics in Ariba’s Global Services Organization. Rachel is recognized by the Institute for Supply Management as a Certified Professional in Supply Management (C.P.S.M.) and has several years experience as a supply chain and transportation analyst in Fortune 500 companies.

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