We use our size and scale to seek out world-class investment opportunities, like this marine container terminal in Los Angeles, California, that has taken action to reduce its environmental footprint.
What is Long Beach Container Terminal?
Long Beach Container Terminal (LBCT) is a marine container terminal in southern California. It’s part of the combined Los Angeles / Port of Long Beach Complex, which is the largest cargo gateway in North America.
Within that complex, LBCT handles more cargo than any other terminal, with fewer delays. Truck turn-around times set the bar for the area, while best-in-class infrastructure, deep berth access and rail connectivity keep things moving.
LBCT’s key revenue streams include:
Vessel lift
Income from loading or unloading cargo containers from vessels (main source of revenue).
Rail lift
Income generated from loading or unloading cargo containers to LBCT’s on-dock rail facility.
Terminal services
Includes income from refrigerated container monitoring, vehicle inspections and yard services.
Demurrage
Fee charged to liners for containers that are kept on the yard for extended periods or arrive earlier than anticipated. Thanks to covid-related supply chain issues, this has been an unexpectedly strong revenue stream for LBCT in recent years.
In December 2021, LBCT completed the construction of its third berth, approximately one year ahead of schedule.
Why is this a good investment?
ART invested into LBCT in late 2019 and owns a 6% interest in the terminal. Investing into LBCT offers:
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Exposure to arguably one of the most efficient and lowest cost terminals in the largest port complex in North America
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A long-term, highly contracted revenue underpinned by a 20-year commitment where a minimum volume is guaranteed with one of the largest container shipping companies in the world
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An attractive, risk-adjusted return that is correlated to US GDP
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A strong yield profile following the completion of the third berth.
Environment and safety
Over the past ten years, LBCT has taken action to reduce its environmental footprint through automation, electric fleet, shore power and rail capacity. Since 2015, LBCT has increased container movements from 700,000 to 3.3 million while greenhouse gas emissions from equipment and vehicles (scope 1 emissions) have declined. In 2022, 63% of its heavy equipment was electric.
LBCT has a climate action plan* that includes emission reduction targets with various initiatives that are estimated to cost nearly USD200 million. The plan relies on collaboration with partners throughout all parts of its network to achieve the net-zero goal.
Safety is also a top priority for LBCT with the terminal’s lost time injury frequency rate decreasing by ~50% from 2018 to 2021. LBCT has received several industry awards for safety since 2019.
Outlook
LBCT is anticipated to perform strongly and ahead of original expectations over our investment horizon. In the short term, dips in global spending habits mean that we’re likely to see less demand for containers. But medium to long term, e-commerce should stay strong - and LBCT’s advantages make it an attractive option for shippers. All of which makes for a robust outlook for this investment.
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Footnotes
*LBCT's net zero plan report: https://www.lbct.com/AboutUs/CorporateMessages
This report has been produced by LBCT. Australian Retirement Trust does not take responsibility for any possible inaccuracies.
1 Australian Retirement Trust employees provide advice as representatives of Sunsuper Financial Services Pty Ltd (ABN 50 087 154 818 AFSL No. 227867) (SFS). SFS is a separate legal entity responsible for the financial services it provides. Eligibility conditions apply. Refer to the Financial Services Guide for more information.