Business
In 'generational moment,' Port of L.A. faces shifting winds in business and politics
The Port of Los Angeles has long been the single busiest seaport in the Western Hemisphere, employing thousands of Southern Californians and playing a critical role in the vast supply chain that underpins both the California economy and that of the United States as a whole.
Together with neighboring Port of Long Beach in the San Pedro Bay, it handles a whopping 40% of all the container traffic from continental Asia.
But today, as Port of Los Angeles director Gene Seroka puts it, this important but largely anonymous institution faces a “generational moment,” a set of challenges crucial for the regional economy and the well-being of many Americans.
Seroka has been leading the seaport since 2014. He recently sat down with the L.A. Times to discuss key issues involving the port.
We’ve been getting signs of slowing consumer spending. How busy have you been so far this year, and what do you see ahead?
It’s been an extraordinary year. For the first six months of the year, our business is up more than 14%, driven mainly by the strength of the U.S. We also have a dock workers’ negotiation on the East Coast, a drought in the Panama Canal and security issues in the Red Sea leading up to the Suez Canal. Many importers and exporters have told me that fractionally, they’ve shifted some of their allocation our way to hedge against any worsening in those three areas.
You’ve made many trips to Washington, including for three meetings with President Biden. What might changes in the White House and Congress mean for future funding and support?
Well, that remains to be a pretty big question mark. We’ve had unprecedented progress in the area of focus on ports, and a lot of it was brought to light because of the supply chain crunch that we saw during COVID. We saw the bipartisan Infrastructure Investment and Jobs Act that was passed, the Inflation Reduction Act, and now the Environmental Protection Agency call for applications on the Clean Ports Program, which should be announced sometime in the fourth quarter of this year.
What I’ve seen so far is that in the last three years, we’ve submitted applications for more than $1 billion in [federal and state] grant money, and we’ve earned over $380 million. That’s probably our best three-year period that I can recall.
Depending on what happens in November, can things shift?
The infrastructure law runs through ’26, but based on my own experience, yes. I think we could see more of the same type and better support, or we could see a complete reverse.
What would create that?
Changing policy, changing focus away from the state of California. I don’t want to speculate, but I have seen what it looked like — the lack of access, the lack of any meaningful legislation like the infrastructure act. So, again, I don’t want to speculate, but we’ve had a pretty good run here. This industry, still to this day, even with all the technology and the global trade, it’s still a relationship-based business. And it still is relationships that carry us in Washington and Sacramento today.
And how was your access to and relationship with the Trump administration?
It was very limited, if nonexistent.
What about tariffs? Biden recently increased tariffs on a wider array of Chinese goods — steel, EV cars, solar cells. And there’s potential for even higher, broader tariffs to come, especially if Trump wins.
Dating back to 2018, the previous administration implemented tariffs on a variety of goods originating from China. Those tariffs were met with retaliatory tariffs that really were very impactful on a negative side for a number of American companies, including the agricultural sector. Flash forward, the most recent tariffs that the Biden administration put in were on $18 billion worth of goods. It’s a very narrow, targeted approach to tariffs. So I don’t see that impacting the Port of Los Angeles. What we’ve seen with tariffs policy, and in some cases rhetoric, is that here at the Port of Los Angeles, the portfolio with China is now down to about 45% [from 57% three years ago].
How much potential do other countries around the Pacific Rim have for becoming alternatives to China in terms of manufacturing?
No one can replace China as a manufacturing hub. But we’ve made up that difference by capturing cargo from other markets, and specifically Southeast Asia – Vietnam, Indonesia, Thailand, to name three. We’ve also seen growth in manufacturing in Mexico. And while some folks would say, OK, you’re building up more products in Mexico to come across the border by truck or rail, but we’re also feeding components into the maquiladora areas like Mexicali here in Baja, California. So there’s still a market for us to be a strong player, especially as Mexico continues to shine in the manufacturing community.
What about India, which seems to be rising in terms of manufacturing in the global economy?
It is. And I was just in India back in January. I had an opportunity to visit with Ambassador Eric Garcetti. What I can tell you is in the most recent full calendar year, China exported some 260 million 20-foot equivalent units of cargo. India exported 17 million. So while what we see there is opportunity and there is great talent, manufacturing in the same vein that we see in Asia may not happen overnight.
In the early months of the pandemic there were, at one time, more than a hundred cargo ships stuck at sea waiting to berth. What’s to prevent something like that happening again in San Pedro Bay?
Well, that’s job No. 1, in my view. What we did learn with the benefit of history is that this port must remain as a transit facility and not as a warehouse. Unfortunately, back in 2021 and 2022, a number of large importers used this port to store containers. Unbeknownst to us, they had deals with shipping lines to make sure that they could hold their containers here at the port for little to no charge. Once we diagnosed that by doing some data mining through our own system, the Port Optimizer, we were able to start moving cargo again.
No one was trying to hurt us, nothing sinister was taking place. The American consumer was simply buying at a pace that we’ve never witnessed. And importers had to get as much cargo here as quickly as possible, and it was just clogging up the works.
So now the next thing is going to be, how do we make sure that we can anticipate what’s going to take place next in the supply chain? A lot of that comes with data. I’ve been to Asia five times this year so far, and I’ve been to Europe once. I’m spending a lot of my energy talking to importers and exporters, service providers, leadership at the C-suite level to try to make sure I anticipate as much as possible, what’s happening now and what we can expect in the future.
More recently, we all read about the accident in Baltimore last March when a large container ship crashed into the Francis Scott Key Bridge. What’s the potential for such a mishap here, and what have you done to reduce the risk?
Well, we work hard every day at this, led by our head of public safety, Port Police Chief Tom Gazsi. And while vessel engine failures happen, it’s about how we create protocol to prevent that from going any further. We put a minimum of two tugboats on every ship that comes into this port. And for the larger ones, those workhorse vessels, you’ll likely see four tugs tied to a ship in the event of a power failure or engine failure. Those tugs go into action, put the rear thrusters on, slow down and stop that ship as it’s moving.
Also, our bridge has its legs on land. We’ve got rock formation under the channel near the stanchions to prevent a ship from getting anywhere close to it.
What is the longer-term impact of automation and AI at the port? Do you see that as threatening jobs?
Here in Southern California, out of our 13 marine terminals right now, we have three that are automated, and there may be more in the future. The automation or robotics that we see on our marine terminals today really is comprised of the land-side equipment, whether it’s to move containers onto truck chassis or onto rail cars, or for retrieval when the truckers come into the terminals to pick up their imports or drop off their exports.
But it’s our belief that while technology is moving faster than ever, we cannot leave the workforce behind. And that’s part of the motivation of why we just cut the ribbon on a new mechanics training facility on Terminal Island. That’s going to up-skill and re-skill longshoremen members so they can work on newer and greener equipment, and in some cases, automated machines.
Secondly, we have designated 20 acres of property here for the nation’s first workforce training campus dealing with goods movement — to bring people in who need training on trucking, warehousing, even coding [and] technology such as artificial intelligence that will be important to this port in the future.
What are the biggest environmental challenges at the Port of L.A.?
There’s nothing more that we want to see than for ourselves, the Port of Long Beach and others to reach this aspiration of a zero-emission port operation. But there are a lot of things that have to take place. We’ve got to be able to accelerate the technology, make it affordable for small businesses to be able to join.
Please know that of the 20,000 trucks that are registered to do business at the port, more than half are small businesses. We’ve got to make the barriers to entry as plausible as possible. We also have to support them by creating the infrastructure necessary to run these new and cleanest trucks that are possible.
For example, there are 7,500 gasoline stations in the state of California. There are only 46 hydrogen fueling stations. And according to their oversight board, they only work about half the time. There are only 92 high-speed heavy duty truck chargers in the country, less than two per state.
Now, we’ve also been working closely with the shipping industry for the past several years on cleaner and renewable fuels. We call this our green shipping corridor strategy. If we could reduce the emissions from ships moving from our largest trading partner in China, from Shanghai to the ports of L.A. and Long Beach, if we can reduce that emissions by 10%, that would be the equivalent of all the emissions in the Port of Los Angeles for an entire year.
Finally, let me ask you about jobs at the port. What kinds of skills do you look for now and will be looking for in the future?
The interesting thing about this port complex is there are a variety of jobs and skill sets that are always in demand. For example, we talk a lot about the people that actually move the cargo — the longshoremen, the marine clerks, the truck drivers and warehouse folks, the mechanics are all vital to this port. And that’s part of the motivation for us setting up that mechanic center as well as the broader goods movement training campus that I spoke of on the 20 acres of property at the Port of Los Angeles.
The other piece is that you’ve got a growing community here in this harbor enclave. There are 260,000 residents, a lot of young kids going through school that see this port every day and want to be a part of it. We need engineers, naval architects and others that have expertise [who can] design, build and create for our industrial sector of marine terminals and other cargo moving interests.
And the next big thing obviously will be to put an even deeper emphasis on folks with information technology capabilities, whether it’s a young kid who knows technology because they play video games or those who have taken interest in coding, all the way to folks who are going now to college and grad school studying the sciences to be more involved in technology.
Business
Beverly Hills is dragging its heels on a new building. The governor says: Build it
California officials are turning the screws on the city of Beverly Hills, where approval of a new hotel and apartment complex is moving too slowly for state housing bosses and the governor.
The lightning rod is a planned mixed-use development near Wilshire Boulevard that has been brought forth under a state law intended to force cities to add more housing whether they like the proposals or not.
The 19-story building on Linden Drive by local developer Leo Pustilnikov would be big by Beverly Hills standards and include a 73-room hotel and restaurant on the first five floors. Plans call for the higher floors to contain 165 apartments including 33 units reserved for rental to lower-income households.
The project so far has failed to pass muster with city planning leaders, who say Pustilnikov hasn’t provided all the details about the project that the city requires to consider approval.
Pustilnikov has pioneered a novel interpretation of a state law known as the “builder’s remedy” to push cities to allow development projects at a size and scale otherwise barred under zoning rules.
As part of their efforts to tackle California’s housing shortage and homelessness crisis, legislators recently beefed up the law, by giving developers leverage to get large proposals approved so long as they set aside a percentage for low-income residents.
Last month the state Department of Housing and Community Development backed Pustilnikov in a “notice of violation” to the city, saying it was violating state housing laws by holding up the project.
“The City Council should reverse its decision and direct city staff to process the project without further delay,” the state notice said, referring to a council vote in June to delay the approval process.
Gov. Gavin Newsom piled on in a statement, saying that the city is violating the law by “blocking” the proposal and referring to opponents of the project as NIMBYs — a highly charged acronym for “not in my backyard” that refers to homeowners who resist development projects in their neighborhoods.
“We can’t solve homelessness without addressing our housing shortage,” the governor said. “Now is a time to build more housing, not cave to the demands of NIMBYs.”
Beverly Hills already faced pressure to approve the Linden project before the state’s letter. In June, Californians for Homeownership, a nonprofit affiliated with the California Assn. of Realtors, sued the city in Los Angeles County Superior Court for not advancing the development.
Some residents in the neighborhood south of Wilshire Boulevard are up in arms about the scale of the project that is designated to fill a parking lot at 125-129 S. Linden Drive between a five-story office building and low-rise apartment buildings.
“None of us are opposed to affordable housing,” said Kenneth A. Goldman, president of the Southwest Beverly Hills Homeowners Assn., but “you don’t have to be a NIMBY to say that’s just so far out of line.”
It would be almost four times taller than the five-story height limit the city has on its books and could threaten the neighborhood’s “quiet lifestyle,” Goldman said. The construction period would be “hell,” he added.
The city has until Sept. 20 to respond to state housing officials and indicated in a statement that the delay was due in part to Pustilnikov changing the original all-residential proposal to include the hotel. It is a switch that could offer a financial coup for the developer in a tourist-friendly city, where getting permission to build a new hotel is a tall order.
Last year Beverly Hills voters decided to rescind the City Council’s approval of an ultra-opulent hotel called Cheval Blanc on the edge of Rodeo Drive after French luxury retailer LVMH spent millions of dollars planning the project.
Of the Linden Drive proposal, the city said in a statement, “The project has not been denied.”
“What was originally submitted as a purely residential project has now morphed into a 73-room hotel and restaurant project with 35 fewer residential units, including a reduction of 7 affordable units,” it said.
When the application is complete, the city said, a public hearing will be held, followed by Planning Commission review and potential approval by the City Council.
That process may be complicated by Pustilnikov’s stated intention to sell his interest in the Linden Drive property as part of a Chapter 11 bankruptcy proceeding involving another of his real estate projects.
In 2018, Pustilnikov purchased a 50-acre parcel on the Redondo Beach waterfront that is the site of a defunct power plant. The property is controlled by entities owned by Pustilnikov and a business partner, Ely Dromy. Using the builder’s remedy law, the pair has advanced a massive mixed-use project for the site with 2,700 apartments as its centerpiece. In court documents, Pustilnikov estimates that the development, if completed, would be worth $600 million.
The effort has been stymied amid fights with the city of Redondo Beach, the California Coastal Commission and AES Corp., the owner of the power plant. In late 2022, AES threatened to foreclose on Pustilnikov. To stave that off, one of the entities that own the site filed for bankruptcy.
In a recent filing in the case, Pustilnikov and Dromy said they will sell the Linden property for $27.5 million to help preserve their ownership of the power plant site.
However, a representative for Pustilinkov, Adam Englander, said in a statement that is not necessarily the case.
Instead, more investors may be brought in to the Redondo Beach property and a developer with luxury hotel experience may become a partner in the Linden project, Englander said.
“It is not anticipated,” Englander said, that the Linden project “in its current form, will be sold prior to completion.”
Pustilnkov has put forward plans to build nearly 3,500 apartment units — 700 of them dedicated as low-income — across a dozen projects in Beverly Hills, Redondo Beach, Santa Monica and West Hollywood under the builder’s remedy. The Linden project is one of seven he’s planning in Beverly Hills alone.
The builder’s remedy provides few avenues for city councils to deny the developments. But because it’s legally untested and separate state environmental laws still apply, projects are not a slam dunk. None of Pustilnikov’s proposals have been approved.
Cities are subject to the law if they do not have state-approved blueprints for future growth. Every eight years, the state requires communities to design a zoning plan accommodating specific numbers of new homes, including those set aside for low- and moderate-income families.
In the current eight-year cycle, Beverly Hills struggled to get a plan that passed muster. Elected officials and residents balked at the city’s requirement to make space for 3,104 homes, saying that doing so would unalterably change the community’s character.
The city blew multiple deadlines and was sued by Californians for Homeownership. In December, a L.A. County Superior Court judge ruled that Beverly Hills could no longer issue any building permits — including those for pools, kitchen and bathroom remodels and other renovations — because of its failure.
The city appealed the ruling and continued to process permits in the meantime, but the decision sparked alarm among civic leaders. In May, the state approved a revised housing plan for Beverly Hills, ending the threat of the permit moratorium.
Business
How Self-Driving Cars Get Help From Humans Hundreds of Miles Away
In places like San Francisco, Phoenix and Las Vegas, robot taxis are navigating city streets, each without a driver behind the steering wheel. Some don’t even have steering wheels:
But cars like this one in Las Vegas are sometimes guided by someone sitting here:
This is a command center in Foster City, Calif., operated by Zoox, a self-driving car company owned by Amazon. Like other robot taxis, the company’s self-driving cars sometimes struggle to drive themselves, so they get help from human technicians sitting in a room about 500 miles away.
Inside companies like Zoox, this kind of human assistance is taken for granted. Outside such companies, few realize that autonomous vehicles are not completely autonomous.
For years, companies avoided mentioning the remote assistance provided to their self-driving cars. The illusion of complete autonomy helped to draw attention to their technology and encourage venture capitalists to invest the billions of dollars needed to build increasingly effective autonomous vehicles.
“There is a ‘Wizard of Oz’ flavor to this,” said Gary Marcus, an entrepreneur and a professor emeritus of psychology and neural science at New York University who specializes in A.I. and autonomous machines.
If a Zoox robot taxi encounters a construction zone it has not seen before, for instance, a technician in the command center will receive an alert — a short message in a small, colored window on the side of the technician’s computer screen. Then, using the computer mouse to draw a line across the screen, the technician can send the car a new route to follow around the construction zone.
“We are not in full control of the vehicle,” said Marc Jennings, 35, a Zoox remote technician. “We are providing guidance.”
As companies like Waymo, owned by Google’s parent company, Alphabet, and Cruise, owned by General Motors, have begun to remove drivers from their cars, scrutiny of their operations has increased. After a series of high-profile accidents, they have started to acknowledge that the cars require human assistance.
While Zoox and other companies have started to reveal how humans intervene to help driverless cars, none of the companies have disclosed how many remote-assistance technicians they employ or how much it all costs. Zoox’s command center holds about three dozen people who oversee what appears to be a small number of driverless cars — two in Foster City and several more in Las Vegas — as well as a fleet of about 200 test cars that each still have a driver behind the steering wheel.
When regulators last year ordered Cruise to shut down its fleet of 400 robot taxis in San Francisco after a woman was dragged under one of its driverless vehicles, the cars were supported by about 1.5 workers per vehicle, including remote assistance staff, according to two people familiar with the company’s operations. Those workers intervened to assist the vehicles every two and a half to five miles, the people said.
The expenses associated with remote assistance are one reason robot taxis will struggle to replace traditional ride-hailing fleets operated by Uber and Lyft. Though companies like Zoox are beginning to replace drivers, they still pay people to work behind the scenes.
“It may be cheaper just to pay a driver to sit in the car and drive it,” said Thomas W. Malone, a professor at the Massachusetts Institute of Technology Center for Collective Intelligence.
Waymo and Cruise declined to comment for this story.
While those companies use traditional cars retrofitted for self-driving, Zoox is testing a new kind of vehicle in Foster City, just south of San Francisco, and in Las Vegas, not far from the Strip.
After testing the vehicles with Zoox employees, their family members and friends, the company plans to make the service available to the public this year. But this robot taxi, like all others, will lean on human assistance.
In Foster City, the company operates what it calls a “fusion center,” where employees monitor robot taxis operating both locally and in Las Vegas, several hundred miles away. From their computer screens, these workers can track live feeds of the road from cameras installed on the cars as well as a detailed overhead view of each car and its surroundings, which is stitched together using data streaming from an array of sensors on the vehicle.
The workers can provide verbal assistance to riders via speakers and microphones inside the cars. They can also assist a car if it encounters a scenario it cannot handle on its own.
“These are situations that don’t necessarily fit the mold,” said Jayne Aclan, who oversees a team of Zoox technicians that provide cars with remote assistance.
Self-driving cars can reliably handle familiar situations, like an ordinary right turn or a lane change. They are designed to brake on their own when a pedestrian runs in front of them. But they are less adept in unusual or unexpected situations. That’s why they still need the humans in the fusion center.
But even though self-driving cars have remote assistance, they still make mistakes on the road.
After reviewing the incident, Zoox indicated that its car had struggled to recognize the fire trucks because they were yellow, not red. “We continue to test and refine our driving software,” Whitney Jencks, a company spokeswoman, said.
Zoox will also continue to lean on human assistance.
“We think that computers should be able to replicate humans and replace humans in all ways,” Dr. Malone, the M.I.T. professor, said. “It is possible that might happen. But it hasn’t yet.”
Business
Civilian space-walk flight Polaris Dawn set for Friday after rocket grounding
The Polaris Dawn mission that will feature the first civilian space walk is set for Friday after the Federal Aviation Administration cleared SpaceX to use the rocket that will launch the astronauts into the space.
The five-day trip led by billionaire Jared Isaacman, which has been repeatedly delayed, is scheduled to blast off from the Kennedy Space Center on Friday, with backup launch dates on Saturday and Sunday should the weather prove unfavorable or other problems arise.
The latest delay came last week, when the FAA grounded SpaceX’s fleet of Falcon 9 rockets after the first-stage booster of a Falcon 9 fell over and exploded while trying to land on a barge off the Florida coast. The FAA lifted its order on Friday, paving the way for the Polaris Dawn mission, which will use a Falcon 9 rocket.
SpaceX said that the first stage had completed 22 launches and returns before the accident. The mishap also ended a streak of 267 successful returns for the Falcon 9 program, which has sharply lower launch costs due its reusable first stage.
The Polaris Dawn mission had been scheduled to launch early last week but was first delayed due to a helium leak in a launchpad hose that pumps helium into the Falcon 9 engines. Unfavorable conditions forecast off the coast of Florida for the splashdown prompted a second delay.
Isaacman, a fintech billionaire, is funding the space journey aboard a SpaceX Crew Dragon capsule, which typically services the International Space Station.
Accompanying him are three other crew members, including two SpaceX employees. The flight will send them to the highest Earth orbit since the Apollo program, and on the third day Isaacman and a second crew member are set to become the first civilians to walk in space.
They will be testing a new generation of form-fitting space suits that SpaceX says will be necessary to colonize the moon and Mars.
Since the mission is not docking with the space station and has limited supplies, weather conditions need to be good for both the launch and splashdown off the Florida coast.
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