Port of Call for CA’s Crippled Commerce

JAN. 10, 2010


If Gov. Jerry Brown has any chance of draining California’s budget swamp of red ink, he’s going to need more than aggressive spending cuts and votes for more taxes, as he proposes.  He’s also going to need a resurgence in California’s business environment, but at one of the state’s few commerce success stories, the ports of Los Angeles and Long Beach, there are more signs of classic California non-competitiveness than there are of a return to health for the state’s business sector.

Yes, activity is up by single digits over last year at the ports, which are  America’s busiest, as companies slowly bring in more goods from Asia to rebuild inventories they had let drop through the Great Recession. But even as more than 12 million containers will be unloaded at Southern California docks this year, there are grave threats to the future of Southern California’s logistics behemoths, and they’re posed by exactly the same elements that threaten the rest of the state’s economy – powerful unions and California’s incessant compulsion to be a world leader in the environmental movement without thought to the cost.

The two are intertwined at Southern California’s ports because the group pushing hardest for “environmental justice” there, the Los Angeles Alliance for a New Economy, is largely funded and controlled by unions.  Now known exclusively by its acronym because, like all that’s wrong with California, it is pushing its influence nationally, LAANE receives funding for its staff of 41 from progressive foundations, like George Soros’ Tides Foundation, and labor unions, which hold the chairmanship and six of the group’s 14 board seats.  (The remaining seats are held by labor academics and directors of organizations with similar objectives.)

LAANE’s Coalition for Clean and Safe Ports started its attack on the ports by sending community organizers into largely Hispanic, Spanish-speaking neighborhoods near the ports to tell families and single mothers that the ports “are killing your children” because truck, rail and ship exhaust causes all sorts of health ailments, right up to sexually transmitted diseases – apparently in reference to the notoriously unhealthy semen of seamen.  So, when the Port of Los Angeles and the Port of Long Beach announced their Green Ports Policy in 2004, the first effort by any seaport in the world to make environmental sensitivity a core operating principle, and their Clean Air Action Plan in 2005, which would reduce air pollution from port operations by 45 percent over five years, port administrators thought everyone, including LAANE, would be happy.

“Instead,” lamented one port official, “we pissed off everybody. There were no happy people.”  LAANE and the Natural Resources Defense Council, which holds a seat on the LAANE board, filed a lawsuit challenging what it saw as a “backroom deal” between the ports and the truckers, while the American Trucking Associations filed its own lawsuit in an effort to lessen the Clean Air Action Plan’s impact on truckers.

After five years of forcing costly changes on port operations and fighting lawsuits from all sides, the ports have unquestionably succeeded in making the air over San Pedro Bay and the highways and rail lines leading to it a little cleaner, but at a cost.  The Green Ports Policy still consumes almost 10 percent of the Port of Long Beach’s budget – $71 million – and eats up a similar percentage of the port’s capital improvement budget.  The numbers for the Port of Los Angeles are similar.  The ports recover the high cost of their green programs by charging higher fees to everyone who uses the ports, from Chinese shipping conglomerates to independent truckers.

The fleet of 10,000 or more trucks that serve the port is rapidly transforming as operators unload perfectly functional trucks and replace them with new, cleaner-burning models that cost as much as $200,000 each to buy – a $2 billion environmental mandate.  Plus, the trucks cost about 50 percent more to operate than older models, according to drivers.  Those costs get added to the bills shippers pay.  And the shippers themselves are being hit with new regulations from the California Air Resources Board requiring them to cut ships’ engines while at dock and plug instead into electrical power.  That requires retrofits on the ships, and over $21 million this year in dock improvements in Long Beach alone– which will be recovered, you guessed it, through higher fees to the shippers.  California is currently the only state with such requirements.

Obviously, the blind hope that the added cost of being green wouldn’t get in the way of the ports’ real job of moving goods has proved to be, to use a favorite word of the environmental movement, unsustainable – as is always the case in California. The same is true of the pipe dream of thousands of California green jobs and a robust green economy, touted by opponents of last November’s Proposition 23, which would have overturned the hugely costly regulation-fest known as the Global Warming Solutions Act.  Just this week, Silicon Valley-based AQT Solar announced it would build its new manufacturing plant, which ultimately will employ 1,000 workers, in South Carolina. Dozens of other green companies preceded AQT fleeing the regulatory madness of California, but the state nonetheless continues to insist on being the world’s green Don Quixote.  Brown’s appointment of one of the greenest of California’s former legislators, John Laird, as his Resources Secretary signals his intention to keep a firm hold on the lance as he continues to charge at windmills.

Meanwhile, the unions are doing their part to ensure California’s ports will cost more to use than ports elsewhere.  The Maritime Clerks Union is on strike for better wages and benefits, even though half of these paper-pushers make over $100,000 a year, with some earning over $250,000.  Longshoremen in the LA and Long Beach ports have even juicier contracts, especially since they won a provision that requires two longshoremen to be present at all times for any one job.  The result, a port official recently told a local business group, is that only one of the pair works at any given time, so they all receive full-time pay for half-time work.  The Longshoreman contract is up for negotiation in a few years, and shippers fear the union will grab even more lucrative benefits, at their expense.

The ports’ decreased competitiveness couldn’t have come at a worse time.  In publications like the Journal of Commerce, competing ports are exploiting the high cost shippers pay for the Southern California ports’ aggressive environmental programs, running ads with headlines like, “Spend less green to go green.”  They tout lower docking fees, lower trucking fees and similarly good rail and highway connections to the rest of America.  Ports along the Gulf Coast and Atlantic are increasing their anti-California campaign rhetoric in anticipation of the 2014 opening of a wider Panama Canal, which will be able to transport the massive ocean-going container ships, which currently can go no further than the West Coast, directly to Gulf and East Coast ports.  Ports there are gearing up for an anticipated major swing away from California by shippers – and their push is aided by California’s insane environmental regulations.  One company recently spent over 10 years winning regulatory approvals and fighting lawsuits before it could expand its port facilities in Southern California, while in Florida, a similar expansion was approved and built in just a couple years.

Ports – and consumers – across America should take note.  Faced with a growing competitive disadvantage because of their Green Ports Initiative, and a healthy fear of the consequences of a Panama Canal capable of handling the ships they’re unloading today for continental cross-shipment, Los Angeles and Long Beach are seeking federal legislation or EPA regulations that would force other ports to adopt the very clean air programs that have made them uncompetitive.  And LAANE brags that its successes in forcing high-cost regulations on Southern California ports has led them to push for similar programs in Oakland, New  York, New Jersey, Seattle and Florida.

It’s apparent that even as California conspires to make its ports less competitive, it is succeeding in exporting record amounts of environmental lunacy and costly regulations to the rest of America.

Laer Pearce, a veteran of three decades of California public affairs, is currently working on a book that shows how everything wrong with America comes from California.

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