June 1, 2021- Round Table Discussion on Sustainable Supply Chain – via Zoom

Tuesday, June 1, 2021

Virtual Meeting via ZOOM


Present:  Deborah Barmack, Carole Beswick, Mike Burrows, Ken Coate, Sandra Cuellar, Michelle Decker, Kevin Dyerly, Louis Goodwin, Milford Harrison, Fran Inman, Mark Kaenel, Lena Kent, Lowell King, Pam Langford, Bill Lemann, Darcy McNaboe, Miguel Mendoza, John Mirau, Dan Murphy, Vikki Ostermann,  Catherine Pritchett, Thomas Rice, Michael Rivera, Dan Schenkel, Kristine Scott, Paul Shimoff, Phil Southard, Eric Ustation, Lupe Valdez, Pete Van Helden, Reggie Webb, Ray Wolfe, Marisa Yeager and Frank Zabaleta.

To conserve time, members were asked to put announcements in the Zoom chat area.

Announcements:  1) The group was reminded that Inland Action will host an in-person outdoor reception on Thursday, June 3, 2021, from 4-7:00P.M. at Redlands Country Club.  Members were encouraged to attend.  2)  Staff is trying to get appointments for our Sacramento Advocacy Day (Tuesday, June 8th) with: Senators Leyva, Ochoa Bogh, Portantino and Assemblymembers Ramos & Rodriguez. If you would like to assist with any of these, please contact Carole Beswick.

Motion by K. Coate/Second by K. Scott/Passed: Minutes from May 25, 2021

Mike Burrows, Chair of the Transportation Committee served as the Moderator of the Round Table Discussion on Sustainable Supply Chain.  Panel participants: Ray Wolfe, Exec. Director, San Bernardino County Transportation Authority; Michelle Decker, lead organizational contact for Inland Empire Growth & Opportunity (IEGO); Fran Inman, Sr. V. P. Majestic Realty & CTC member; Lena Kent, Director Public Affairs, BNSF; Lupe Valdez, Director Public Affairs, Union Pacific Railroad and Miguel Mendoza, Senior Manager, Public Policy, Amazon.com Inc.

Mike Burrows stated that the panel presentation is an opportunity to listen and gain perspective from those across the transportation spectrum.  He asked panelists to limit their discussion to 3-4 minutes each.  Questions and/or comments should be submitted in the Zoom chat area where they will be addressed if time permits.

Ray Wolfe-Infrastructure and Capacity

San Bernardino County now has 373 million sq. ft. in warehouse space.  Every 1million sq. ft. of single use warehouse space generates 233 5-axel trucks or larger increasing our congestion and reducing our air quality, but the warehouse and logistics industries are responsible for 20% of our economy.  Estimates from SCAG indicate that truck volume is growing and will increase by 40-75%.  The State is no longer focused on increasing capacity but is prioritizing investments and strategies on travelers opting out of congestion also known as Vehicle Mile Reduction (VMR).  They are currently working on a Climate Action Plan for Transportation Infrastructure (CAPTI) which builds on executive orders aimed at reducing greenhouse gas (GHG) emissions in transportation.  Investments will be targeted towards transit and active transportation with some limited highway solutions to improve transit (using bus only lanes).   We no longer have support from the State to increase the needed capacity for this growth in truck volume.  Answers must come from innovative technology such as zero emission truck requirements for short haul runs.  Additionally, the underground tunnel planned for connection to the airport may be utilized to offset some of the surface truck traffic as the tunnel is expandable.

Michelle Decker-Sustainable Growth & Opportunity in Logistics

The Community Foundation has since 2018 been charged with hosting and incubating Inland Empire Growth & Opportunity (IEGO).  Leaders from private and public sectors in Riverside and San Bernardino counties have catalyzed an effort to forge a strategic agenda for advancing inclusive growth and opportunity that will benefit residents of both counties and put the region on the path to a more prosperous and secure future. They have been building up bi-county infrastructure and to put people around the table to focus on particular sectors and to reorganize the conversations to make them more inclusive.  The State desires conversations with all the various regions and it is critical that the Inland Empire figure out what priorities the State has and to align with it as much as possible.  We need to stay in the conversation and there is concern that the IE has fallen off the State’s radar.   IEGO is focused on bringing many voices together, however some of the logistics sectors like industry, job quality, environmental justice and community are all having different conversations with the State.  The State focus is on High Road Training Programs, worker and job quality and climate.  Although they are not experienced in regional economic development and regionalism, that is their desire. The CA Economic Resilience Fund is coming to various regions and what the State considers to be a region has not yet been defined.  The IE has a disproportionate number of people with less than a 4-year degree and the data from Brookings helped IEGO land on the following sectors to grow jobs in the region: logistics, advanced manufacturing, green technology, solar and information technology & cyber security.  The group decided to focus on sustainable logistics as it is and has the potential to bring in entrepreneurship to grow business, use research & development to innovate and use capital differently.  The potential is great in part because of the existing density of this sector.  With this focus they brought together key partners from Hhigher Ed., K-12, industry, county government and local government to build an investment plan for sustainable logistics.  Since the end of 2020, the plan is being shared with the State and different partners.  The main components are: Research & Development, Entrepreneurship & Commercialization, Life Long Learning and becoming a global eco system hub.  The process bringing our large and diverse region together onto the same page is challenging but must happen in order to present unity to the State.  Counties like Kern are ahead of this process, and we do not want to be left behind.  If all assets can pull together as a network to move the logistics sector, then we can do the same for other sectors.

Fran Inman-A System of Systems Solutions

Majestic Realty develops and holds property in all commercial real estate sectors, but their focus is on industrial warehouse and logistics as their core competency as they master plan business parks.  They “build & hold” and have vertical integration from entitlement, approvals, construction, development, leasing and property management.  There is a co-dependency between all goods movement partners such as public and private partners, rail, air, trucking, ports.  The State’s CAPTI plan from the State Transportation Department and Caltrans focus on achieving environmental goals. However, SB 743, which is actually the genesis of the plan, excludes freight.

In So Cal we are all suffering from the hiccups at the ports and COVID-19 definitely highlighted that the supply chain is an integral system where the workers are considered vital and kept the country going.  Consumer behavior has dramatically changed with substantial increases in home delivery which studies show will continue and increase.  As packages are returned reverse logistics is also an added phenomenon.  Warehouses are getting larger, and their designs differ in attempts to move more goods.  Operationally the rail spurs have been taken up and we are increasingly relying on trucks.  To reach environmental goals more trucks will be likely as explained in a USC study which indicated that two zero emission trucks will be needed to replace the pay load of one.  There is much work to be done but as the Brookings Study indicates we must lean into our strengths.

Lena Kent- Intermodal Systems

Rail companies like BNSF switched from the typical box cars facilities to intermodal in the late 1980’s.  The intermodal system allows a container or trailer to go from one mode of transportation to another, allowing product to go by ship, truck, or train.  International containers are taken from a ship and loaded on to a rail car and taken to destinations across the country.  Domestic business is containers coming into the ports that are taken by truck to a warehouse for sorting and then go to a local region; while others may be repackaged and come back to a rail facility.  Volume in the IE is predominantly from containers that travel here to be sorted and often go back to the L.A. rail yard as it offers many more destination options.  Intermodal facilities are in demand as they are an economic driver that on average has 20,000 direct & indirect jobs.  Warehouses typically want to be located next to these facilities as it reduces the dray.  Approximately 100 intermodal trains run through the IE daily.  Each intermodal train takes 280-400 trucks off the highway and can move a ton of freight over 500 miles on a single gallon of diesel fuel.  Aware of the need for sustainability, the rail yards have been testing electric hostlers and automatic gates to alleviate trucks queuing out on the roadways.  They are also testing battery electric locomotives and although they still have range limitations the technology is evolving and promising.

Lupe Valdez- Prism of Change

In light of the George Floyd tragedy Union Pacific Railroad (U.P.) is looking at what role they play in diversity, inclusion and equity.  These conversations are occurring not only in California, but across the country.  U.P. is looking at the environmental impacts of their operations and doing all they can to give individuals economic opportunities; both to their employees and their vendors.  In the past, the regulations to become a supplier were very high and many smaller businesses were excluded.  This has changed dramatically over the years, but they believe further improvements can be made.  Specific goals have been set and their stockholders have requested regular reports on their progress.  They are seeing an active movement in corporate America and with corporate Boards to make real change regarding diversity and inclusion.  Environmentally U.P. is revisiting battery operated locomotives initially for California. There are two types of locomotives: those that stay local and those that are interstate.  They will begin trying battery operated units on the switcher engines that stay here.  U.P. continues to review and analyze other fuel-efficient measures.

Miguel Mendoza-Private Sector Innovation

Amazon invests heavily in So. Cal. & the IE as they see a talented work force and thoughtful partners here that want to work and grow with them.   Additionally, the location is beneficial and there is a huge amount of customer demand and support.  Amazon believes they can use their influence to make an impact on sustainable logistics.  In 2019 they launched their” Climate Pledge” which is a commitment to achieve net zero carbon by 2040 (10 years ahead of the Paris Climate Agreement).  As part of the pledge companies agree to reporting and implementing carbon reduction strategies.  They now have over 100 companies that have joined the Amazon Pledge.  The net zero goal is a huge undertaking but each Amazon business unit, like their data centers, fulfillment networks, warehouses and middle mile trucking, are each tasked with making progress towards that benchmark.  Last year they committed to powering all their operations to 100% renewable energy by 2025. Last year they became the world’s largest buyer of renewable energy primarily through wind and solar farms across the U.S.  To make additional progress they have purchased 100,000 electric delivery vans that they hope sends a message from the private sector for companies to stand up and invest in these new technologies.  The vans which are made in the U.S. are already used in L.A. and will be in use in up to 15 cities by year end.  All 100,000 vehicles will be on the road by 2030.  Amazon is also testing an electric version of heavier duty trucks that align with their network and can meet their mileage requirements.  The have made numerous sustainability related improvements at their newest Regional Air Hub located at the San Bernardino International Airport.  This hub utilizes their largest variety of electric ground support equipment (GSE).  Later this year solar panels will be installed on the building and last summer they purchased 6M gal of Sustainable Aviation Fuel (SAF) which is currently being used here in Southern California.  SAF is a biofuel blend that helps lower emissions.   Many strategies must be used so they have also launched the “Climate Pledge Fund” a $2B investment where Amazon will invest in startups and others who are developing and scaling up these types of newer technologies.  Reduction of carbon in transportation and logistics industries and also those focused on energy generation and storage.

Meeting adjourned at 9:03 a.m.