Environmental issues threaten competitiveness in Southern California
May 9, 2007 by SwizStick
Filed under Seafreight, Supply Chain Management
Coming on the heels of last week’s reprint titled Teamsters and Turtles that discussed how the unions are increasingly linking themselves to the environmental movement comes this absolute must read from this week’s issue of The Journal of Commerce on how the ports’ ambitious environmental initiatives could threaten their competitiveness and also that of the logistics industry overall. We have requested and received permission to reprint Peter Tirschwell’s column here:
Losing sight of the goal – Peter Tirschwell, VP and Editorial Director of Commonwealth Business Media’s Magazine Division.
The unwritten contract between the Southern California community and the ports of Los Angeles and Long Beach is broken. The local communities have said “Enough,” to the pollution created by ships, trucks, trains and yard equipment, and essentially will allow no more expansion at the nation’s largest trade gateway unless the ports and their users clean up their environmental act. But in their zeal to rewrite this contract, the ports are losing sight of the real objective. If they continue down the road they’re on, they risk significant damage to their competitiveness and to that of the Southern California logistics industry overall.
At the moment, expansion is off the table. Any project that would result in a physical expansion of the ports or in an increase in cargo – anything from new leases, to new terminals, to acquiring the next generation of container cranes to handle larger ships – requires consensus by environmental and local community groups and therefore is dead in the water in the current environment.
APL wants to develop 30 more acres of terminal space. TraPac is without a lease and wants to bring in new cranes. BNSF plans a new near-dock intermodal rail facility. These and other projects are in limbo.
The ports’ Clean Air Action Plan, in which they commit to reduce particulate matter pollution by 47 percent over the next five years and nitrogen oxide and sulfur oxide emissions by similar ambitious percentages, is the fix they propose to clear the way for the resumption of port expansion.
The private sector understands this; this is not a situation where the ports or their users are in denial as to the situation. The ports are governed by politically appointed commissions whos priorities reflect the concerns of local communities that have been vocal and unequivocal about what they want: clean air. The shippers, terminals, carriers, truckers, rail-roads, 3PLs and other port businesses know they have been behind the curve environmentally and want to get the situation rectified as soon as possible. In other words, both the port users and the ports themselves agree on the need to clean up the air quickly and with measurable results. In the process of accomplishing this, however, something has gone seriously wrong.
In what by many accounts is a political environment that has never been more hostile to the ports, the debate has metastasized from one solely about air quality into one that includes a broader agenda with anti-trade overtones.
The “Clean Trucks” program that the ports proposed in April to implement the Clean Air Action Plan for trucks would not just replace old rigs with new ones, but would completely restructure harbor drayage at the Los Angeles-Long Beach complex. Under the ports’ proposal, only trucking companies granted a concession by the ports would be allowed to send trucks into marine terminals, and within 4 1/2 years, all owner-operators that haul boxes between the terminals and nearby rail and distribution facilities would be replaced by employees of the concessioned trucking companies.
“Converting the 16,000 or so owner-operators into statutory employees has significant ramifications,” labor attorney Paul Heylman wrote in an e-mail alert last week. In particular, it opens the door for the Teamsters’ union to achieve its long-standing goal of unionizing harbor drivers.
Coming on top of what the industry acknowledges to be higher trucking costs from the conversion to new rigs and the Transportation Worker Identification Credential program’s expected weeding out of illegal immigrants from the trucker work force, this change could cause costs to skyrocket.
In other words, what started as a legitimate effort to clean up the air now includes a social-justice agenda for truckers that the communities are not lobbying for and that will inevitably lead to a long and costly court battle. A private-sector proposal – one that sticks to the real issue – would fund a harborwide truck replacement program through “dirty truck” fees and have emissions levels mandated by the state. That proposal was widely rebuffed. “My impression of the response was that it was dead on arrival,” said Robin Lanier, executive director of the Waterfront Coalition, a shipper group. “There are a lot of folks who are not real happy with the ports right now.”
There is still time to straighten this out. But if this plan goes through, I can hear shippers saying, “The Panama Canal can’t expand fast enough.”
All emphasis mine.
With businesses leaving high-cost, regulation-burden California for more business-friendly states such as Nevada, Arizona, etc. it seems the ports (and California in general) are dead set on making the business climate in California even more negative. It’s interesting to me that an issue that all parties agree on and want to take action on is in danger of deteriorating due to overly zealous political commissions with a broader political agenda.
Rates to the East Coast are rising due to demand. Larger vessels and greater economies of scale are pushing all-water Suez canal routes that skip the West Coast entirely. As port congestion, stifled expansion, stricter regulations, and higher costs contribute to the anti-competitiveness of Los Angeles/Long Beach, companies will naturally seek to reduce costs and risks by moving and routing their shipments elsewhere. As Peter says, there is still time to straighten this all out, but if not it would have serious ramifications for the economy and competitiveness of Southern California.
Eric on Mon, 14th May 2007 1:42 pm
Excellent article gents.
This kind of problem in Socal is going to push traffic into Mexican ports and the PNW.
Breaking News: Court rules against LA/Long Beach Clean Truck Program | Third Party Logistics News - 3PLwire on Fri, 20th Mar 2009 5:03 pm
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