2012-2017STRATEGIC

PLAN

C i t y o f L o s A n g e L e s H A r b o r d e p A r t m e n t

2014 UPDATE

port of Los Angeles board of Harbor Commissioners & executive director

Ambassador Vilma Martinez Commission President

David Arian Commission Vice President

Patricia Castellanos Commissioner

Anthony Pirozzi, Jr. Commissioner

Edward R. Renwick Commissioner

Gene Seroka Executive Director

TABLE OF CONTENTS

Strategic Plan Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

America’s Port® . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Strategic Plan Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Objective 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Objective 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Objective 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Objective 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

A Roadmap for Continued SuccessThe Port of Los Angeles is our nation’s #1 port and a major economic driver for our local, regional and national economy. Keeping our port at peak performance is not only essential for job and economic growth across the region, but also for assuring that our nation is competitive in the global marketplace.

As home to the largest manufacturing sector in the U.S. and with a well-established reputation as a global center of innovation and creativity, the Los Angeles region benefits significantly from the commerce and tourism generated by the Port of Los Angeles. By the same token, as the western capital of the U.S., the northern capital

of Latin America, and the eastern capital of the Pacific Rim, Los Angeles is America’s gateway for international trade and the backbone of the largest Customs District in the U.S.

This Strategic Plan is our roadmap to assure the continued success of the Port of Los Angeles as it advances into an increasingly dynamic and competitive trade environment in the years ahead. Maintaining safe, sustainable and efficient cargo trade through our port will help reinforce Los Angeles’ leadership position as an international trade hub and global gateway of connectivity.

Mayor Eric Garcetti City of Los Angeles

STRATEGIC PLAN SUMMARYSTRATEGIC PLAN SUMMARYC i t y o f L o s A n g e l e s H a r b o r D e p a r t m e n t

World-Class Infrastructure thatPromotes Growth

An Efficient, Secure andEnvironmentally SustainableSupply Chain

Improved FinancialPerformance of Port Assets

Strong Relationships withStakeholders

Our VisionWe are America’s Port® - the nation’s #1 container port and the global model for sustainability,

security, and social responsibility.

Our MissionWe deliver value to our customers by providing superior infrastructure and promoting efficient

operations that grow our port as North America’s preferred gateway.

OBJECTIVE 1 OBJECTIVE 2

OBJECTIVE 3 OBJECTIVE 4

Initiative 1 Facilitate supply chain efficiencies and terminal velocity with supply chain partners.

Initiative 2 Implement security and public safety strategies that support goods movement and mitigate risk.

Initiative 3 Continue environmental stewardship through implementation of programs with clear and measurable standards.

Initiative 1 Increase cargo revenue by attracting new volumes and establishing long-term volume commitments.

Initiative 2 Increase the utilization of port facilities.

Initiative 3 Ensure that port properties are revenue efficient and reflect current land values and market- based compensation.

Initiative 1 Enhance a world-class customer service delivery product.

Initiative 2 Attract visitors to the LA Waterfront of Wilmington and San Pedro.

Initiative 3 Make the Harbor Department the employer of choice by providing opportunities for professional development and promoting excellence.

Initiative 1 Develop a Capital Improvement Program (CIP) that improves the port’s operational strength and financial sustainability.

Initiative 2 Deliver terminal and infrastructure projects on time and within budget.

Initiative 3 Optimize maintenance to extend infrastructure life and utility.

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AmERICA’S PoRT®

The Port of Los Angeles – America’s Port® -- is the premier gateway for international commerce. Located 20 miles south of downtown Los Angeles in the San Pedro Bay, the port encompasses 7,500 acres of land and water along 43 miles of waterfront. It features 23 passenger and cargo terminals, including automobile, breakbulk, container, dry and liquid bulk, and warehouse facilities that handle billions of dollars worth of cargo each year. The port generates tremendous economic activity, including commerce and goods movement activity that facilitates more than three million jobs nationwide. In California alone, more than one million jobs are related to trade through the Port of Los Angeles.

As the leading gateway for trade between the U.S. and Asia, our port and supply chain partners provide outstanding cargo conveyance through modernized and “big-ship-ready” marine terminal facilities; the largest workforce of skilled longshore labor; warehouse and trans-loading centers to meet the needs of every shipper; the nation’s largest and newest drayage fleet; and rail connections that offer frequency and speed-to-market access to major freight hubs across the U.S.

PORT DIVERSITY

COMMUNITY BENEFITS

ECONOMIC BENEFITS

CARGOREVENUEGROWTH

CARGOREVENUEGROWTH

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The Port of Los Angeles is an economic engine with a wide array of diverse uses and community benefits. Our success has been built upon our unique value proposition that provides for infrastructure-supporting economies of scale, as well as fast, consistent access to national markets. The port’s container business accounts for more than 80 percent of its revenue and thousands of jobs in the region. Maintaining our containerized cargo business is necessary to continue to invest in the future of the port and community.

Competition

Approximately 50 percent of the containers that pass through the Port are discretionary, which means that they take routes through L.A. to destinations outside the region, mainly to the U.S. Midwest by rail. However, future competitive challenges are expected. Other U.S. West Coast ports are expanding their facilities and Canada is investing in national port and railroad infrastructure. With the planned expansion of the Panama Canal, U.S. East Coast ports are also expanding to attract more cargo, as are the railroads linking these ports to U.S. Midwest markets. Protecting and growing discretionary cargo market share in the face of changing economic conditions and intensifying competition is the key to the future of the port and the region. The port will accomplish this with customers as the focus, and dedicated employees as the foundation.

Alliances

The shipping industry has seen a fundamental shift in recent years as ocean carriers and shipping lines have sought out other carrier partners. They have accomplished this by forming super alliances and modifying their ship deployments and trade gateway preferences. Super alliances, among existing carrier alliances, have changed the traditional carrier/port relationship. In the past, a carrier’s ship would almost exclusively call at its own container terminal. But now carriers have greater flexibility regarding the terminals where their ships can call. Terminal selection is influenced by the ships operated by carrier partners and the trade volumes of specific trade routes. The Port of Los Angeles must continue to be aware and responsive to this and future changes so that our facilities and connections can readily and efficiently accommodate the needs of our customers.

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Growing competition from U.S. West Coast ports -- coupled

with the creation of new shipping line alliances and other major

operational changes -- means that the Port of Los Angeles

must be ready to meet the opportunities and challenges of

a dynamic and changing trade landscape. In light of these

profound changes in the cargo industry, this Strategic Plan was

developed as an update to the 2012-2017 Strategic Plan.

With the leadership of Mayor Eric Garcetti’s new Board of

Harbor Commissioners and Executive Director, a project team

comprised of port senior managers and division heads engaged

in a strategic planning process. The process included input

from workshops as well as employees who represented all five

bureaus of the Harbor Department. This updated Plan is the

result of that process.

Vision

Our Vision declares the Port of Los Angeles’ goal to retain its

position as the #1 volume container port in North America while

continuing our competitive edge in environmental initiatives,

security measures, and social responsibility.

Sustainability

The Port of Los Angeles has long led the charge for

environmental change in the port and maritime industries,

carefully balancing the need to protect the environment while

facilitating global trade. We have been at the forefront of

reducing air emissions, improving water quality and cultivating

new green technologies that create good jobs and bright futures

for millions of people.

Our Vision

We are America’s Port®

- the nation’s #1 container

port and the global model for

sustainability, security, and

social responsibility.

Our Mission

We deliver value to our

customers by providing superior

infrastructure and promoting

efficient operations that grow

our port as North America’s

preferred gateway.

STRATEGIC PLAN oVERVIEW

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Security

The Port of Los Angeles takes an integrated multi-agency and

multi-layered approach to port security. The port works closely

with the U.S. Coast Guard, Customs and Border Protection,

and Department of Homeland Security, as well as state, county

and local law enforcement on a daily basis. We help ensure that

protective measures are in place throughout the port.

Social Responsibility

As a neighbor to the surrounding communities of Wilmington

and San Pedro, we understand our critical role in local job

creation and economic development, as well as the need to

invest in community programs, waterfront projects and business

development initiatives that contribute to the prosperity and

quality of life for Harbor Area residents.

Mission

While our Vision tells us who we are, our Mission statement

guides the day-to-day focus of our activities. It underscores the

core Harbor Department activities that will help our customers

grow cargo volume and allow the Port of Los Angeles to continue

to be an exceptional source of economic and community benefits.

Implementation

The Plan will be used by port staff to align activities and

operational plans with our mission based on key performance

indicators (Objectives). These four Objectives address

infrastructure, the supply chain, financial performance, and

stakeholder relationships. Both the budget planning process and

staff performance evaluations will be influenced by the cohesive

policy direction provided by the Plan. The Plan will remain a living

document, subject to continuous performance measurement,

annual assessment before each budget process, and

re-evaluation to ensure its relevance and appropriate focus.

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Objective 1World-Class Infrastructure that Promotes Growth The infrastructure advantage at the Port of Los Angeles has allowed us to become the nation’s #1 container port. The Harbor Department must continue to deliver these capabilities to our customers who lease our property, facilitate thousands of jobs and generate substantial economic activity for the greater Los Angeles metropolitan area and beyond. For years to come, the infrastructure we develop must be designed to anticipate the dynamic logistics needs of seaborne trade and allow for our port’s long-term growth and success.

Initiative 1 Develop a Capital Improvement Program (CIP) that improves the port’s operational strength and financial sustainability.

Metrics: a. Percentage of CIP allocated to cargo-related projects

b. Rate of return for proposed projects

c. Debt service coverage ratio

The Harbor Department will plan for the long-term success of the port by building infrastructure that helps meet our customers’ needs. Our core business depends on cargo, so our investment choices will largely focus on terminal and transportation improvements. The percentage of CIP allocated to cargo-related projects will show how much of our limited resources we are dedicating to our core versus non-core business. The rate of return on proposed projects is a second measure to guide us in making the wisest investments for the port’s long-term competitiveness. Finally, the total dollar amount that we spend on the CIP each year must be at a level that can be sustained by our operating revenue without exhausting our borrowing capacity. We track the sustainability of our spending levels through our debt service coverage ratio.

Initiative 2 Deliver terminal and infrastructure projects on time and within budget.

Metrics: a. Scheduled milestones

b. Dollars budgeted vs. dollars spent

After identifying the right investments, the port will focus our efforts to deliver them on time and on budget. Tracking the planning, environmental, design and construction milestones for projects, coupled with diligent management of dollars budgeted vs. dollars spent, will strengthen our customers’ ability to plan and grow their operations.

Initiative 3 Optimize maintenance to extend infrastructure life and utility.

Metric: a. Percentage of infrastructure in “state of good repair”

Proper investment in the life and utility of port infrastructure will result in long-term cost savings for the Harbor Department and our customers. We will develop a plan that tracks the maintenance needs of our berths, structures, roadways and rail routes so they remain in a safe, reliable and satisfactory condition. The percentage of infrastructure in a “state of good repair” will be the measure for how well we are keeping up with our maintenance obligations.

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Initiative 1 Facilitate supply chain efficiencies and terminal velocity with supply chain partners. Metrics: a. Berth, gate and rail productivity

b. TEU productivity per acre

A primary driver of the overall capacity of the port is the efficiency of the supply chain that flows through it. As a landlord port, the Harbor Department plays a crucial role in facilitating efficiency and working with our various partners to improve the speed and consistency by which cargo is transported. Key measures of supply chain efficiency through the port include cargo movements between a vessel and berth; the speed by which trucks move through gates; and the extent that rail departures are on time. The optimization of terminal backland areas to manage inbound and outbound container flow will be an additional measure of supply chain efficiency.

Initiative 2 Implement security and public safety strategies that support goods movement and mitigate risk. Metrics: a. Number of vessel and terminal safety inspections

b. Number and effectiveness of joint preparedness exercises

The modern goods movement environment requires that ports be prepared for a variety of incidents, from natural disasters to potential acts of terror. The Harbor Department will reduce risks against goods movement through regular inspections of facilities. We will also work to prevent incidents and improve our response to incidents by holding joint preparedness exercises with our supply chain partners for a variety of potential incidents (e.g., active shooter, hazmat release, seismic event). We will track the effectiveness of these joint exercises in order to measure the success of our strategies – without having to go through a real incident.

Initiative 3 Continue environmental stewardship through implementation of programs with clear and measurable standards. Metric: a. Emissions vs. Clean Air Action Plan standards for air

pollutants (NOx, SOx, DPM) from port-related sources

The Port of Los Angeles is committed to environmental stewardship and improving the health of local residents and workers. The port will continue to establish programs with clear and measurable standards, as exhibited in the landmark San Pedro Bay Ports Clean Air Action Plan (CAAP), developed in partnership with our industry stakeholders and environmental regulatory agencies. We remain committed to reducing NOx, SOx and DPM emissions from port-related sources as identified in the CAAP.

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Objective 2An Efficient, Secure, and Environmentally Sustainable Supply ChainGoods movement at the Port of Los Angeles relies upon a complex supply chain system with a variety of business partners and service providers that facilitate the flow of cargo through the port and on to its final destination. The Harbor Department must strive to work with our supply chain partners to ensure that all links in the chain remain strong. Specifically, our goals are to increase efficiency of cargo movement through the port from start to finish; support the safety and security of the port and its cargo; and commit to actionable plans that advance the long-term environmental sustainability of the port.

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Initiative 1 Increase cargo revenue by attracting new volumes and establishing long-term volume commitments. Metrics: a. Cargo volume and market share

b. Revenue

Cargo trade supports regional jobs and economic development, providing the majority of the revenue that sustains our operations and allows us to continually improve our port and waterfront real estate. We will help our customers market and attract additional volumes and long-term commitments. The Port’s total cargo volume, market share among U.S. West Coast ports and total revenue are the barometers by which we will judge our success.

Initiative 2 Increase the utilization of port facilities. Metrics: a. Percent of vacant land available for lease

b. Percent of available land occupied

The Harbor Department primarily manages and leases property, and as such, strives to put all of its land holdings to good use. We will plan for the remediation of all properties that currently cannot be leased due to contamination. Additionally,

we will work to market and identify customers for properties that are available.

Initiative 3 Ensure that port properties are revenue efficient and reflect current land values and market-based compensation. Metric: a. Gross actual dollars vs. gross potential dollars

Each property parcel in the Harbor District has a potential rent, based on land value and market-based rates. But a parcel’s actual rent rate may be below these values. We will progress towards our goal of managing a revenue-efficient property portfolio by working to minimize the gap between gross actual dollars and gross potential dollars.

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Objective 3Improved Financial Performance of Port AssetsThe financial strength of the Harbor Department is what allows us to invest in the port’s future. With an exceptional credit record and sound fiscal management of our assets, we will retain the confidence of the investor community and access capital in the most cost effective manner possible. The port must optimize its assets, making best use of its properties and the revenues they generate.

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Initiative 1 Enhance a world-class customer service delivery product. Metric: a. Customer satisfaction as measured by conjoint

surveys, focus groups and comparative studies

The Harbor Department is proud of our culture of customer service and commitment to constantly seeking ways to improve our customers’ business and satisfaction levels. We will measure customer satisfaction through surveys that consist of targeted questions designed to get specific actionable feedback, focus groups, as well as comparative studies that measure our level of customer satisfaction versus our competitors.

Initiative 2 Attract visitors to the LA Waterfront of Wilmington and San Pedro. Metrics: a. Number of waterfront visitors

b. Revenue generated by port visitors

In addition to our cargo facility portfolio, the Port of Los Angeles has significant visitor-serving uses and public access facilities and services in port areas adjacent to the Wilmington

and San Pedro communities. We will continue to work to make our LA Waterfront more attractive through both physical investments, as well as programming of special events that bring visitors here. Year over year, our ability to grow customer revenue for LA Waterfront businesses and attract visitors will be the measurement of our success.

Initiative 3 Make the Harbor Department the employer of choice by providing opportunities for professional development and promoting excellence. Metrics: a. Hours of employee professional development

b. Employee retention rate compared to other government agencies

c. Percentage of shared goals accomplished

Our employees are the port’s life blood. In order to recruit, attract and retain a talented workforce, we will further encourage a culture that promotes excellence and provides all employees with opportunities to grow and expand their careers. We will measure our success by comparing our employee retention rate against other government agencies. We will also encourage and account for the hours that employees participate in professional development opportunities through such channels as voluntary training or education. Finally, we will implement a new program that will be the centerpiece of a robust performance management system. Managers and employees will collaboratively develop shared goals that contribute to the port’s overall mission and vision, and we will measure progress by the percentage of shared goals accomplished.

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Objective 4Strong Relationships with StakeholdersThe success of the Port of Los Angeles ultimately depends on the strength of the Harbor Department’s relationships with its various stakeholders. We must place greater emphasis on building stronger relationships with current and future customers, and with critical strategic partners such as railroads and transportation agencies, local communities and our employees.

425 South Palos Verdes Street, P.O. Box 151 • San Pedro, California 90733-0151 Tel/TDD: 310-SEA-PORT • www.portoflosangeles.org

As a covered entity under Title II of the Americans with Disabilities Act, the City of Los Angeles does not discriminate on the basis of disability and, upon request, will provide reasonable accommodation to ensure equal access to its programs, services, and activities.

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