The Los Angeles Board of Harbor Commissioners has approved a $1.17 billion fiscal year (FY) 2017/18 annual budget for the Port of Los Angeles. The new budget closely links to the objectives set out in the Port’s Strategic Plan, which was created in 2012 and updated in 2014. These objectives focus on infrastructure improvements, supply chain efficiency, strong financial performance and stakeholder engagement.
“As we have consistently done over the last several years, this budget has been carefully aligned with the Port’s Strategic Plan objectives, which continue to serve as an important guide for our spending and investment decision-making,” said Ambassador Vilma Martinez, Harbor Commission President. “This budget keeps us on track to assure that we reach our long-term vision and mission, and continue to be the economic engine that drives growth and jobs in the region.”
For FY 2017/18, cargo volumes are expected to grow by 5.6% relative to the prior-year adopted budget, an increase of 2.8% over FY 2016/17 estimates. In calendar year (CY) 2016, the Port reported cargo volumes totaling 8,856,782 Twenty-Foot Equivalent Units, which set a Western Hemisphere record. For the first quarter of CY 2017, cargo has increased 10 percent compared to CY 2016.
Implementation of new supply chain optimization strategies over the last 18 months are among the reasons credited for the cargo upsurge. The Port currently handles more containers per ship call than any other port complex in the world. Likewise, the Port’s continued focus on integrated technology solutions—such as the joint information technology portal pilot program with GE Transportation to digitize currently manually collected cargo data— is expected to greatly improve cargo movement predictability in the future.
“Our unprecedented cargo volumes over the last 15 months are evidence that our focus on supply chain efficiency and cargo handling improvements are paying off,” said Port of Los Angeles Executive Director Gene Seroka. “We continue to earn the confidence of shippers and are encouraged by the strength of our supply chain partners. This budget will help us stay laser-focused on targeted infrastructure improvements, technology solutions and strategic resource use to ensure that we are meeting the needs of our marine terminal customers and the carriers they serve.”
This year’s adopted budget’s operating receipts—the principal mechanism for funding day-to-day Port operations—are projected to total $475.4 million, an increase driven largely by shipping service revenue growth and other cargo-related activities. Shipping service revenues are expected to comprise approximately 83.4% of operating receipts.
The FY 2017/18 Capital Improvement Program (CIP) budget of $97.7 million is lower than in prior years, due to less spending on major terminal and transportation-related projects that have been largely completed, including improvements at the TraPac and Yusen (YTI) terminals.
Among Terminal Improvements slated for FY 2017/18—which will represent 42.6% of the CIP budget—will be an $11.2 million World Cruise Center Alternative Maritime Power® (AMP®) upgrade; $8.1 million for improvements at YTI including a rail expansion of the terminal’s Intermodal Container Transfer Facility which will increase the terminal’s on-dock rail capacity by 25 percent; and $2.0 million for environmental document preparation and the design of infrastructure improvements and terminal reconstruction at EverPort, among other smaller projects.
Public Waterfront and enhancement projects are budgeted at $18.2 million, or 19% of the CIP budget, and will include such projects as the Harbor Boulevard Roadway Improvement Project and design of the Wilmington Waterfront Promenade in the vicinity of Banning’s Landing.
FY 2017/18 operating expenses are expected to be $256.5 million, a 3.0% increase over the previous fiscal year, driven mostly by increases in salaries and benefits, as well as city services.
The approved budget enables the Port to meet important financial metrics, including maintaining its AA debt rating, surpassing a 2.0 times debt service coverage, generating at least a 45% operating margin and preserving a prudent level of cash reserves that is consistent with an AA-rated port.
The Port of Los Angeles is America’s premier port and has a strong commitment to developing innovatively strategic and sustainable operations that benefit Southern California’s economy and quality of life. North America’s leading seaport by container volume and cargo value, the Port of Los Angeles facilitated $272 billion in trade during 2016. San Pedro Bay port complex operations and commerce facilitate one in nine jobs in the five-county Southern California region.
The Port of Los Angeles – A cleaner port. A brighter future.