Tuesday, October 5, 2010

Fidley Watch: Sending Business East

Recently National Public Radio reported on the work being done by East Coast ports to accommodate the flood of larger container ships that will be sailing through the new Panama Canal locks. The Port of Virginia, in Norfolk, is already deep enough to take the large ships. Virginia’s unemployment rate has hovered around 7 percent for the last year, more than two points below the national average.

NPR notes that Robert Morris, Senior Director of External Affairs for the Georgia Ports Authority says the Port of Savannah spent $40 million and more than a decade on environmental impact studies to dredge the Savannah River. Mr. Morris says, “…the completion of the Panama Canal is really the biggest game changer in the maritime business for the East Coast since the invention of the container, and East Coast ports are getting ready for that.”

Georgia’s unemployment has fluctuated between 10.2 and 10.8.

When the dredging is done, Morris says, Savannah will be uniquely positioned to unload and ship cargo to the Gulf States and Midwest. The Port of Virginia will be ready to supply Chicago and other heartland cities after its own massive project, enlarging 28 railroad tunnels for double-stacked trains.

Meanwhile, West Coast ports or their governing bodies continue to discourage business. Last month at the port of Los Angeles (California’s unemployment figures hit 13.2 percent in January and were rising past 12.2 percent at press time), governing board approved new trucking regulations that will phase out independent owner-operator drayage drivers by the end of 2013 in lieu of per-hour employee drivers. The regulations, supported by the Teamsters, are expected to make it easier for the union to organize what until now have been independent drivers.

The new employee-only mandate could affect more than 6,000 port-servicing drivers that are currently independent owner-operators. Portions of the truck plan implemented since 2008 resulted in more than 10,000 drivers leaving the port drayage service and the shuttering of hundreds of local mostly small trucking firms.

The result will most likely be higher drayage rates for vessels calling at Los Angeles.

The new three-year phase-in schedule approved Monday calls for 20 percent of all gate calls at the port to be handled by employee drivers by the end of 2011, 66 percent by the end of 2012 and 100 percent by the end of 2013, just in time for the opening of the new Panama locks. The Mayor of Oakland, Ron Dellums, is working with organized labor on a similar plan.

While the Port of Long Beach plan doesn’t contain the employee mandate, the port has its own problems. In November, Long Beach voters will decide on Proposition D, an amendment to the City Charter designed to give City Hall a bigger share of Port of Long Beach revenues. The two-part measure would change the formula for fund transfers from the port to a trust that pays for harbor improvements and change the language in the city charter to clarify the city’s jurisdiction over oil properties at the port.

The result would be a loss of port revenue estimated in the hundreds of millions of dollars over a ten-year period- money that would be used develop infrastructure and provide port services, at a time when competition from other ports continues to grow (see page 6, for a story about new container service between Asia and the Port of Manzanillo, Mexico).

While East Coast ports are preparing to welcome Asian cargo, the West Coast seems to be inviting it to leave. Do the mayors and city councils of the West Coast port cities understand the consequences of their actions, or will they blame other factors when carriers start bypassing unwelcoming West Coast ports for greener pastures?