port of los angeles presentation to los angeles regional...
TRANSCRIPT
Port of Los AngelesPresentation to
Los Angeles 3rd Regional Investors Conference
March 31, 2016
1. Introduction to the Port of L.A. 2. Evolving Industry Dynamics3. Cargo Volumes4. Capital Improvement Program5. Financial Position
OUTLINE
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1. INTRODUCTION TO THE PORT OF LOS ANGELES
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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 OBJECTIVE 1 STRATEGIC OBJECTIVE 2
STRATEGIC OBJECTIVE 3 STRATEGIC OBJECTIVE 4
World‐Class Infrastructure thatPromotes Growth
An Efficient, Secure and Environmentally SustainableSupply Chain
Improved FinancialPerformance of Port Assets
Strong Relationships withStakeholders
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.
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.
Vision:
Initiative 1 Enhance a world-class customer servicedelivery product.
Initiative 2 Attract visitors to the LA Waterfront ofWilmington and San Pedro.
Initiative 3 Make the Harbor Department the employerof choice by providing opportunities forprofessional development and promoting excellence.
“We are America’s Port® ‐ the nation’s #1 container port and the global model for sustainability, security, and social responsibility.”
Back to Basics Priority Outcome: Prosperous City Back to Basics Priority Outcomes: Livable City, Prosperous City, Safe City
Back to Basics Priority Outcome: Engaged CityBack to Basics Priority Outcomes: Prosperous City, Well-run City
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#1 Container Port in the Americas
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Founded in 1907
Proprietary City Department
Mayoral‐Appointed Board of 5
State Tidelands Trust Guidelines
Traditionally A “Landlord” Port Model
Container Volume
• Twenty‐foot Equivalent Units (TEUs)• 8.3 million TEUs in 2014• 7.9 million TEUs in 2013• 8.1 million TEUs in 2012• 7.9 million TEUs in 2011• 7.8 million TEUs in 2010• 6.7 million TEUs in 2009• 7.8 million TEUs in 2008• 8.4 million TEUs in 2007• 8.5 million TEUs in 2006 (best year)
8.2MillionTEUs in 2015
Scrap Metal 746,354 metric tons
Autos (WWL)164,231 units
Fruit (SSA)90,323 metric tons
8,160,457 TEUs
Our Lines of Business
+46%
Liquid Bulk (Petroleum)93,660,059 barrels
Steel (PASHA)2,690,097 metric tons
Visitors to LA Waterfront 1.6 million in 2015
+33%
‐2.1%
‐13%
+43%
Cruise 123 calls in 2015 (up by 1 call)
A “Full Service” Port
+29%
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POLA Has Key Service Advantages
• 53 feet depth of water• 8 container terminals, 91 cranes• Superior intermodal connections
InfrastructureInfrastructure
• Proximity to Asia• 20 million consumer base in Southern California• Proximity to 1.5 billion sq. ft. of warehouse space
Prime LocationPrime Location
• Clean truck program• Alternative Maritime Power• Significant decrease in pollution
Environmental Initiatives
Environmental Initiatives
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POLA Can Serve Mega Ships
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We serve ships that will be too large to transit the Panama Canal In December 2015, POLA served CMA‐CGM Benjamin Franklin, an 18,000‐
TEU capacity ship and the largest to call North America The CMA CGM Benjamin Franklin docked alongside the 15,000‐TEU
Maersk Edmonton, the second largest vessel to ever call North America
Gateway of Connectivity
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SPEED – FREQUENCY ‐ RELIABILITYSuperior Access to US Markets• Mega-region of 22 million consumers
• Good weather year-round
• 14,000-strong longshore workforce
• $1.8 Billion square feet of warehouse/DC space
• $2.4 Billion Alameda Corridor
• 100 trains daily through LA basin
• 2 Class 1 Carriers: Union Pacific& BNSF
• Access to Major Freight Hubs, including:
Chicago Atlanta New York
Memphis Houston
San Antonio Denver
Kansas City Dallas
2. EVOLVING INDUSTRY DYNAMICS
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The Container Shipping Industry is Going Through a Profound Transformation
‐17.9%
‐19.6%
‐18.1% ‐12.0%
‐1.1%
10.7%
16.0%
7.4%
‐0.2%
‐5.5%
‐7.0%
‐10.5%
‐12.1%
1.3% 4.7%
‐1.1%
‐3.2%
‐1.0%
0.5%
‐4.3%
‐1.8%
0.4% 3.4%
1.0% 5.2%
2.4%
‐1.8%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
Average Ca
rrier O
peratin
g Margin
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Source: Alphaliner. Average of APL, CMA CGM (fr 2010), CSCL, EMC, Hanjin, Hapag‐Lloyd (incl CSAV to 2014),HMM, KL, Maersk, MOL, NYK, WHL, YML, Zim.
We are entering an era of low‐growth and intense competition Shipping lines are struggling through the worst slump on record Developments are driving fundamental behavioral changes
Carriers Are Ordering Larger Ships
CMA CGM Benjamin Franklin exceeds
year 2025 international
emissions standards
A 14,000 TEU vessel costs up to 60% less per slot than a 4,800
TEU vessel.
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Scale is theway to cut
costs
Scale is theway to cut
costs
14,000 TEU 60% Less/Slot
8,000 TEU 47% Less/Slot
4,800
Growth In Ships Calling at POLA
2M25 megaships in service, 26 on order
Ocean 37 megaships in service, 7 on order
CKYHE22 megaships on order
G616 megaships on order
Composition of Shipping Alliances Will Continue to Evolve
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POLA Is Responding to Changing Industry Dynamics
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Deeper joint‐port collaboration
o Expanded FMC agreement approved in February 2015 allows SP Bay ports to jointly address concerns relative to congestion and supply chain issues, jointly market the gateway, jointly advocate for favorable funding and legislation, and continue joint efforts on environmental and safety initiatives
Dialogue with Supply Chain Stakeholders and develop efficiency programs that help improve cargo flow
Develop performance metrics that are embraced by Supply Chain Stakeholders
Restore customer confidence in San Pedro Bay
3. CARGO VOLUMES
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Total loaded, unloaded and empty containers. Sources: Port operator websites
POLA continues to lead North American container ports in terms of volume
POLA Remains Top North American Port ‐ CY 2015
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8.2
7.2
6.4
3.7 3.53.1
2.5 2.3 2.1
‐
1
2
3
4
5
6
7
8
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POLA POLB NY/NJ Savannah NorthwestSeaportAlliance
Vancouver Virginia Oakland Houston
Millions TEU
s
Cargo Growth Continues to Rebound Since Recession
POLA remains primarily an import port ‐ comprised mainly of furniture, apparel, auto parts, electronic products, and footwear
Exports comprised mainly of wastepaper, scrap metal, animal feeds, cotton, and resins
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(TEU
s)
Source: POLA Website
4,067 4,093 3,977 4,270 4,1592,713 2,910
2,109 2,043 1,921 1,932 1,657
1,199 1,086
173 117 134 160120
92 84
1,591 1,825 1,8371,978 2,224
1,316 1,595
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 Jul‐Feb2015
Jul‐Feb2016
In Loaded Out Loaded In Empty Out Empty
7,940 8,078 7,869 8,340 8,160
5,3205,675
POLA’s Top Trading Partners Remain Stable
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Exports(% of Total TEUs)
Imports(% of Total TEUs)
Calendar Year 2015
Source: Piers
China38.9%
Japan16.1%
South Korea10.0%
Taiwan9.7%
Hong Kong3.2%
Vietnam2.9%
Thailand2.1%
Indonesia2.0%
Singapore1.9%
United Arab Emirates1.5%
All Others11.7%
China59.2%
Japan7.4%
Taiwan5.6%
Vietnam5.1%
South Korea4.4%
Thailand4.0%
Indonesia2.4%
Hong Kong2.3%
Malaysia1.5%
India1.2%
All Others6.9%
4. CAPITAL IMPROVEMENT PROGRAM
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Terminal Projects52%
Transportation Projects
7%
Security Projects< 1%
Public Access/Environmental Enhancements
21%
Maritime Services20%
$803 MillionFiscal Years 2016-2020
CIP Projects – Revenue Producing & Targeted to Improve POLA’s Competitive Position
• CIP supports strategic goal of safe, secure and sustainable supply chain • POLA expects to fund the CIP with cash, grants and commercial paper
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Source: POLA
Key CIP Projects Support GrowthTerminal Projects1. TRAPAC: Most advanced container terminal with
advanced technology for new backland and rail yard ~$470M
2. Yang Ming: Reconstruction of existing container berth and expansion of existing rail yard ~$135M
3. Everport Redevelopment: Upgraded wharf and backland ~$60M
4. Cruise Terminal: AMP system expansion ~$17M5. YTI: Upgraded wharf and expansion of TICTF ~$85M6. APL: Multiple expansion elements for existing
container terminal ~$250MNon‐Terminal Projects7. AltaSea Development: Urban marine research and
innovation center ~$58M committedMarine Oil Terminal Engineering & Maintenance Standards Implementation: Liquid bulk wharves upgraded/replaced at various locations ~$180MLA Waterfront Development: ~$100M committed over the next five years
Transportation ProjectsA. I‐110 Connector Improvement Projects ~$104M
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3
5
6
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5. FINANCIAL POSITION
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Historical Debt Service Coverage(Fiscal Years Ending June 30th)
($000s) 2012 2013 2014 2015
Available Revenues** $435,291 $416,974 $446,910 $460,364
Operating Expenses 199,806 205,169 205,354 234,250
Net Revenues 235,485 211,805 241,556 226,114
Debt Service 71,609 72,401 65,488 69,988
Debt Service Coverage 3.3x 2.9x 3.7x 3.2xSource: POLA**Available Revenues include investment and interest income
Annual results are well above POLA’s financial policy of 2.0x
Strong Debt Service Coverage
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Consistent and Conservative Financial Policies and Practices
Annual review and approval by the Board
Current financial policies include:o Minimum $207 million of general reserves
o Minimum debt service coverage of 2.0x versus indenture requirement of 1.25x
FY2015 debt service coverage of 3.2x
o Variable rate exposure limited to 20% of long‐term debt
High liquidity as evidenced by strong days cash on hand
History of responsible expense control
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POLA currently has $951 million in senior lien fixed rate outstanding debt rated AA Available $200 million Commercial Paper Program with no notes outstanding POLA will have a potential refunding of its 2006 bonds and possibly certain
maturities of 2009 bonds for interest savings this summer
Debt Service Profile
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‐
10
20
30
40
50
60
70
80
90
100
2016* 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044
$ in m
illions
Fiscal Year
POLA: A Sound Investment POLA’s Competitive Advantages: Strategic world position, deepwater draft, strong intermodal connections, and a local market of over 20M consumers
Strong Financial Position: High debt service coverage and healthy cash balances
Experienced Management: Strategic direction and capital investment
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Contact Information Port of Los Angeles Website: www.portoflosangeles.org
TEU statistics: http://www.portoflosangeles.org/maritime/stats.asp Financial information:
• Audited statements: http://www.portoflosangeles.org/finance/financial_statements.asp
• Bond disclosures: http://www.portoflosangeles.org/finance/bond_disclosure.asp
Strategic plan:https://www.portoflosangeles.org/business/strategic_plan_update.asp
Marla Bleavins, Deputy Executive Director & Chief Financial Officer: 310-732-7706, [email protected]
Soheila Sajadian, Director of Debt & Treasury:
310-732-3756, [email protected]
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