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Cal Cartage Operations May Be ‘Casualty’ Of BNSF Rail Yard Project

Proposed Green Intermodal Facility To Reduce 710 Freeway Truck Trips, But May Displace 1,000 Current Jobs

By Sean Belk - Staff Writer

October 25 - A transloading facility operated by one of the largest freight-handling, warehouse and transportation companies in the region may soon disappear – after being displaced by a new rail yard – if the company can’t find a suitable new location in the next year.

Burlington Northern Santa Fe Railway (BNSF) plans to build a new intermodal facility known as Southern California International Gateway (SCIG) that would take up a majority of the 600,000-square-foot transloading facility operated by California Cartage Company, a well-known local firm with the largest fleet of green trucks in the port complex.

Cal Cartage has occupied its 70-acre site in Wilmington since the 1950s. Today, the company unloads a few hundred cargo containers per day from the ports of Long Beach and Los Angeles, moving goods to 25 retail distribution centers, bound for department stores across the country.

California Cartage Company operates a 70-acre site at 2401 E. Pacific Coast Hwy. in Wilmington
near the Long Beach border that is being taken over by Burlington Northern Santa Fe Railway
(BNSF) for a new intermodal near-dock facility. Cal Cartage currently leases 55 acres from the Port
of Los Angeles and 15 acres from Southern California Edison. Cal Cartage has been offered a nearby
site, but company officials say that site is considerably less than what they need. If Cal Cartage
is unable to find a new site, it will close its operation and put 1,000 employees out of work.
BNSF officials say the new project will significantly reduce truck trips on the 710 Freeway.
(Photographs by the Business Journal’s Thomas McConville)

The company leases 55 acres of its site from the Port of Los Angeles, which has proposed relocating that portion of Cal Cartage’s operations to a much smaller site south of Pacific Coast Highway, according to a draft environmental impact report (EIR) released in September. The other 15 acres is used to park containers on land owned by Southern California Edison (SCE).

But, so far, the port’s offer of the nearby 10-acre site wouldn’t allow for a facility big enough to stay in business, said Bob Curry, Cal Cartage president. “Hopefully somebody will find something for us that will keep us here, otherwise we will not be in business,” he said. “We will be a casualty of war, I guess you might say . . . I think the word is collateral damage.”

The $500 million SCIG project is proposed as a near-dock facility that would allow containers to be loaded from trucks onto rail just four miles from the docks rather than carting the cargo 24 miles to facilities elsewhere. The new rail yard is projected to be the “greenest intermodal facility in the United States,” while removing more than 1.5 million truck trips from the 710 Freeway annually at opening, according to BNSF.

The project is expected to take three years to complete, starting in 2013 pending EIR approval, and would generate about 1,500 construction jobs annually. BNSF has tentatively agreed to enter into a project labor agreement, which means union employees will most likely be used to build the project. The facility is also expected to provide for 660 permanent direct and indirect jobs by 2016, with one third of the jobs being local hires, according to the port’s EIR.

But, if Cal Cartage were to leave, the region may lose close to 1,000 existing jobs provided by the transloading operation, according to an economic impact study released last year by the Los Angeles Economic Development Corporation (LAEDC).

Cal Cartage, whose administrative headquarters is located in the Bixby Knolls area of Long Beach, employs a majority of its workers in transportation and warehousing, with other jobs in retail trade, healthcare, administrative and other services. The company also hires K&R Trucking, an affiliate that employs 150 owner-operator truck drivers who haul containers from port terminals to the transloading facility, and another trucking group that takes the goods to distribution centers.

Employment at the facility fluctuates with international trade flows and seasonal peak months. During the recession, the firm’s revenue dropped 10 percent from 2007 to 2008 and an additional 30 percent from 2008 to 2009, according to the LAEDC. Over a five-year period the company took in average revenue of $29.5 million per year.

At least two other trucking-related companies, Three Rivers Trucking and Fast-Lane Transportation, would have to relocate operations due to the project, according to the EIR. Phone calls to the companies seeking comment were not returned. However, Cal Cartage is the largest operation impacted by the proposed rail yard.

Lena Kent, spokesperson for BNSF, said the rail company is not involved in negotiations with the port on where to relocate Cal Cartage or property acquisition, adding that the issues are to be sorted out through the EIR process.

Plans For Relocation

The port plans to transfer Cal Cartage’s month-to-month lease to BNSF, which would then operate the SCIG project under a new 30-year lease starting in 2016.

According to the port’s EIR, Three Rivers Trucking is to terminate its lease for parking and queuing on port property, while staying on property leased from SCE, with a reduction in size due to the north lead tracks. Fast Lane Transportation is expected to relocate to a vacant 4.5-acre site immediately south of its current location.

In the case of Cal Cartage, however, the port is asking the company to reduce its size by 72 percent, relocating to a 10-acre site south of Pacific Coast Highway currently occupied by the Alameda Corridor Transportation Authority maintenance facility. The company will continue to operate on land owned by SCE, according to the EIR.

“These structures are assumed generally to resemble the existing structures in size and appearance, except that the California Cartage warehouses would be smaller, more modern, and more efficient structures than the existing warehouses, given the large reduction in property acreage,” the EIR states.

However, Curry said the options provided by the port would only allow the company to operate its trucking operations and would be too small to maintain its transloading facility. “That’s all they gave us,” he said. “It’s not something we had any choice in. For an efficient and viable operation we need at least 30 acres and all they offered us was a 10-acre parcel.”

While the plan calls for Cal Cartage to utilize its remaining property on SCE land for trucking operations, access to the site would also be impacted by the project and would require a driveway leading from Sepulveda Boulevard through the Three Rivers Trucking facility.

If forced to leave, Curry said the outbound cargo would have to be moved through other facilities across the country. “The sad thing about it is many good employees are going to lose the cargo if it can’t find a home here to be transloaded,” he said. “The cargo is going to go to some other facility around the country, anywhere from Norfolk to Savannah to Charleston . . . or maybe New Jersey.”

According to the LAEDC report, proximity to the ports is key for Cal Cartage to stay competitive in Southern California. Having a transloading facility close to the ports reduces the number of containers destined for locations around the country by 30 percent, while reducing the round-trips that truck drivers can complete in a shift, ultimately reducing expenses.

If no suitable alternative is found, the company may opt to relocate to Washington State, near the Port of Seattle or the Port of Tacoma, or in Georgia near the Port of Savannah, where Cal Cartage already has a facility, according to the report.

“The site needs to be no further from the ports than the City of Vernon in order to be viable,” according to the LAEDC study. “Losing the transloading facility to another region would be a double blow for Los Angeles: it would cost the region jobs and send the wrong signal to the rest of the goods movement industry.”

Competing For Green

The SCIG project has been criticized by some West Long Beach residents and environmental groups due to pollution they say would be caused by the new facility. It would negatively impact nearby Hudson Elementary School and residential neighborhoods, according to Michael Clements, chief of staff for Councilmember James Johnson of the 7th District, where the project will reside.

He added that in order to haul the containers to the facility, it would require an extra 5,000 to 6,000 truck trips per year through West Long Beach. “This facility, if you look at it on a map, is right next to homes and schools,” Clements said. “The councilmember has been opposed to the rail project, [or] any project that will increase dirty diesel truck traffic through neighborhoods in the 7th District, including West Long Beach.”

The project also comes amidst a lawsuit filed recently by the Natural Resources Defense Council, East Yard Communities for Environmental Justice and the Center of Community Action and Environmental Justice against BNSF and Union Pacific over diesel pollution caused by rail operations.

Kent, however, said trucks would be required to use a designated ramp that will be built from the docks directly to the new facility, so trucks would not impact the area. She said the project actually reduces truck trips substantially. “That’s the misconception a lot of people keep putting out there,” Kent said. “Our trucks do not go anywhere near that area.”

Additionally, BNSF is expected to spend $100 million alone on environmentally friendly technology, she said. New technology would include: wide-span all-electric cranes, to be the third such operation in the country after Seattle and Memphis; ultra-low emission switching locomotives; and low-emission rail yard equipment.

The project is expected to exceed by 17 times the twin ports’ minimum requirement for new construction under its Clean Air Action Plan, while better utilizing the Alameda Corridor, Kent said. “We’re seeing an overwhelming amount of people in that community who are looking forward to the fact that we’re going to clean up an industrial site and [bring] the jobs that come along with it,” she said.

The LAEDC report states that Cal Cartage too has been a leader in green initiatives. The most important green action to date has been the company’s involvement in the ports’ Clean Trucks Program, helping truck owner-operators who were struggling to finance the purchase of cleaner burning trucks required by port-imposed mandates.

“[The loss of Cal Cartage] could set back efforts to green international trade-related activity,” according to the LAEDC. “Cal Cartage has embraced the ports’ emissions reduction goals and been recognized by state and local government officials for its role in the greening of goods movement operations in the port area.”

Curry added that the fate of the company’s Southern California presence depends on if and when the port’s EIR will be certified, possibly decided within the next several months. “We’re hopeful we can stay there for a long time,” he said. “The EIR and its movement, whether it’s fast or slow, is really the key to our staying in business . . . We’re like somebody on death row with appeals.”

The public comment period for the port’s draft EIR closes on December 22. Public meetings are to be held on November 10 at 6 p.m. at Silverado Park Community Center, 1545 W. 31st. St. in Long Beach, and November 16 at 6 p.m. at the Wilmington Senior Center, 1371 Eubank St. in Wilmington. For more information, visit www.portoflosangeles.org.