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            november 20, 2019

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California ports suffer from higher costs


President of the Pacific Merchant Shipping Association (PMSA), John McLaurin, says California's ports have lost market share over the past decade due to high costs, regulatory uncertainties, and environmental restrictions, noting the beneficiaries have been ports on the US East and Gulf coasts and Canada's West Coast.
Addressing the Propeller Club of Los Angeles-Long Beach recently, Mr McLaurin, however acknowledged California's ports have reduced harmful diesel emissions more than any other United States port, and drayage trucks servicing the ports are the cleanest in the world.
In addition, he pointed out that some costs that beneficial cargo owners (BCOs) face in California are beyond the control of the ports, such as high intermodal rail rates compared with those charged by Canadian railroads, reported IHS Media.
Mr McLaurin urged California's ports and public policy makers to engage in a "calm, rational, and honest discussion" with members of the transportation supply chain.
"Until we have the intellectual honesty to admit that the goods movement industry is valued and provides hundreds of thousands of jobs across the state, we will continue to chase freight away," he added.
Erosion of market share began with the West Coast port shutdown during 2002 contract negotiations. Those talks, which launched the transition of West Coast ports from manual operations to the free flow of data via computers - and eventually in 2008 to the introduction of automated cargo-handling equipment - were the most contentious contract negotiations in the US since the Mechanisation and Modernisation agreement of 1960 paved the way for containerisation at West Coast ports.
He said that the natural evolution of supply chain logistics in North America contributed significantly to the loss of LA-LB market share to ports east of the Mississippi River, where two-thirds of the US population resides.
However, he also cited an "arrogance" on the part of California ports in assuming that cargo has to flow through those gateways, and short-sightedness in failing to grasp early enough the impact that the canal widening and the opening of the Fairview Container Terminal in Prince Rupert in 2007 would have on West Coast port competitiveness.
Mr McLaurin was adamant in urging that city and state regulators in California seek to achieve a balance between the costs involved in environmental regulations and the impact that "lengthy, litigious, and tortuous environmental planning and permitting" have on the resulting costs that are borne by the private sector.
"The goods movement industry is evolving. Are we prepared to embrace this change?" he said.
He noted that Los Angeles and Long Beach calculated that the cost of the updated Clean Air Action Plan of 2006 and its goals for zero-emission cargo-handling equipment by 2030 and zero-emission trucks by 2035 is US$14 billion. The Port of Los Angeles said recently it has already spent $400 million on environmental programmes since 2006, and the private sector has invested $2 billion to reduce emissions, Mr McLaurin noted.

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