A recent series of efforts by Long Beach City Hall officials to tap the Port of Long Beach to cover declining city revenues could have serious long-term financial implications for the port, including: threatening the port's exceptionally positive bond credit rating; impacting the port's timely investment in infrastructure; raising the specter of increased cargo diversions; and, creating concerns regarding the autonomy of the port from city politics.
The Port of Long Beach, the second busiest container port in the Western Hemisphere, is owned by the state of California but operated by a nearly autonomous City of Long Beach department in trust for all the citizens of the state.
Long Beach operates as a landlord port, receiving no taxpayer funds and generating revenue primarily from leases of marine facilities to private firms and docking fees on vessels calling at the port.
Port revenues are prohibited by law from being used by the city for General Fund purposes, however, port revenues can be utilized through a special city fund for mainly maritime-, navigation-, and recreation-related expenses within the coastal tideland areas of the city. The city in turn can then offset General Fund expenses that would have been expended in the tidelands by utilizing the port funds.
City Budget Woes
The city of Long Beach, like many cities in California, is currently facing serious financial problems primarily related to increasing personnel-related costs and declining revenues from such sources as property taxes. Last month, city officials were forced to cut more than $18.5 million to achieve a mandated structurally-balanced city budget for fiscal year 2011.
Projections indicate that the city faces even further budget problems in coming years.
City officials, desperate to find new sources of revenue, have begun turning to the vastly profitable port, already a sizable revenue stream for City Hall.
In the past 20 years the port has paid City Hall nearly $440 million in either direct transfers or in payments for city services. This is an average of $22 million a year, or roughly 20 percent of the port's average annual profits.
Despite this apparent steady stream of port revenue to City Hall, city officials in the past 12 months have launched several efforts to divert even more funds from the port.
Port Oil Revenues
Late last year, city officials signed a deal with a major oil firm that essentially cut the port out of any revenue from future oil wells developed on port-owned oil property. Under the deal with Occidental Petroleum, revenues from future oil production will now be split between City Hall and Occidental. The deal is estimated to shift up to $15 million a year from port coffers to City Hall.
While the deal does not impact current wells generating revenue for the port, City Hall officials have also targeted these existing wells in a November ballot measure that proposes changes to port-related language in the Long Beach city charter.
Measure D, drafted by Mayor Bob Foster and several City Council members, seeks to turn over control of all port-controlled oil property and revenues to City Hall. The measure also seeks to change the way an annual port-to-city transfer of port profits is formulated.
Foster has argued that the oil-related portion of the ballot measure is meant to clarify charter language and is not an attempt to take more money from the port.
However, a study conducted by port staff prior to the announcement of the ballot measure estimated that the port expected to make $120 million in oil revenues from existing wells between 2010 and 2014. This would mean, if Measure D is approved by voters, that an average of $24 million a year will be diverted from the port to City Hall coffers.
Port-to-City Transfer
The ballot measure was crafted after port officials rejected City Hall's request to change the way port staff formulate the port's net profits. The annual transfer is currently limited by the city charter to 10 percent of the port's annual net profit--based on the port's annual audited financials.
The transfer portion of the ballot measure seeks to change the transfer formula from 10 percent of port net profit to 5 percent of port gross earnings. The average transfer over the past 10 years has been $11.7 million per year.
Despite no analysis being conducted to determine the future financial impacts of the measure, Foster has maintained that the fiscal impact to the port will be minor. He has repeatedly stated that the Measure D change in the charter is an effort to simplify the calculation of the transfer and is not about increasing the amount of the transfer.
However, based on the net and gross revenues of the port over the past ten years, the city stands to receive an average of $3 million more per year under the "5 percent of gross" formulation proposed in the ballot measure.
The port has also been tapped by City Hall to cover the debt service of the city's financially flagging Aquarium of the Pacific. This year the port paid nearly $3 million to cover the aquarium debt. In previous years, the amount has been even higher. Based on the financial situation of the city and the aquarium, it is likely that the port will have to cover the aquarium debt in the future as well.
Bottom Line
These four efforts alone have the potential, based on the various estimates of each revenue stream, to divert more than $45 million a year from the port to the city. Adding in the port's average $22 million a year in either direct transfers or payments for city services, and the port could be looking at sending roughly $67 million a year in revenue, or nearly 58 percent of its average annual profits, to City Hall.
In addition, City Hall is turning to the port more and more frequently for small items. This year alone the port was asked to offer up tens of thousands of dollars to support such city services as the municipal band and the Fourth of July fireworks show. These are in addition to the dozens of city events like the Long Beach Grand Prix and the Long Beach Seafest that the port is routinely asked to sponsor.
While the port can potentially sustain these diversions of revenue in the short term, the growing rapidity and size of the diversions has the potential for long-term problems.
Port Bond Rating
One area is in the port's bond rating. The port currently enjoys very positive bond ratings from each of the major bond rating agencies.
This rating assess the credit worthiness of a business entity's debt issues and serves almost the same function as a credit rating or FICO score does for individuals.
On a basic level, a high bond credit rating allows an entity like the Port of Long Beach, to obtain easier access to credit and at better terms. The opposite effect results from a lower bond rating.
Just like Equifax or TransUnion generate credit ratings for individuals, so to do a group of ratings agencies issue bond ratings for businesses and municipal entities like the port. In the case of bond ratings, the "big three" ratings firms are Fitch, Moody's and Standard & Poors.
In their evaluations of the port, each of these agencies cites similar specific port strengths that could be impacted by the continued diversion of port revenues.
Port Development
One of these strengths is the port's infrastructure, including, as detailed in a March 2010 Moody's report, "state-of-the-art facilities, including mega terminals and good road and rail connections."
In order to maintain this infrastructure the port has to invest sizable amounts of money. For example, the port's cost for the recently started Middle Harbor Project, which will rehabilitate and reconfigure several smaller terminals into one larger and more efficient mega terminal, is expected to be $751 million over ten years.
An increase in the amount of port revenues headed to City Hall could not only delay such port projects but could cause the port to re-evaluate which projects are deemed a priority. This in turn could cause a re-evaluation of the port's bond rating by the ratings agencies.
At least $1.2 billion of the port's 10-year $4.7 billion capital development project is expected to come from issuing debt. Any change in the port's bond rating would add significant cost to obtaining this debt. Based on the findings of a recent study by the non-profit Civil Federation on the cost of bond rating downgrades to the state of Illinois, the port could face more than $120 million in additional payments on the $1.2 billion in planned debt if the port's bond rating slips just one level.
Cargo Diversions
The rating agencies have also cited any increase in cargo diversions from the port as a potential risk to the port's rating.
The shifting of port revenue to City Hall could result in such diversion, if the port were forced to increase service fees or even implement a container fee to cover the loss of revenues to City Hall.
And it would not take much of an increase to force shippers to look elsewhere, according to a recent a recent analysis done by the Southern California Association of Governments, or SCAG. This group, the largest regional planning group in the nation, is mandated by the federal government to research and draw up plans for transportation, growth management, hazardous waste management, and air quality for the Southern California region.
The SCAG analysis, which looked at the impact of container fees on Southern California port traffic, found that a $100 fee per container would drive away 10 percent of the port's total imports in the short term and 23 percent over the long term. A $200 per-container fee would drive 19 percent of the port's total imports away over the short term and nearly 43 percent over the long term.
In other words, a $200 per-container fee would, over the long term, eliminate all the traffic gains made by the port in the past 15 years of growth. Even the $100 per-container fee's short term impacts would return the port to the same levels experienced during the height of the economic downturn in late 2008 and early 2009.
Loss of Autonomy
The City of Long Beach Harbor Department, which operates the port, was set up under the city charter to be nearly autonomous from the day-to-day politics of City Hall. In fact, City Hall only has several ways to directly impact the operation of the port: the mayor and City Council appoint the five members of the port commission; the City Council must approve the port's annual budget; the Mayor has line-item veto power over the port budget; and, the City Council can remove a sitting port commissioner under specific circumstances. Beyond these actions, City Hall has very little control over port staff beyond the application of political pressure on port officials.
In the past, all three rating agencies have cited the port's autonomy from City Hall politics as a distinct strength enjoyed by the port that figures into the port's strong ratings.
However, Foster has made it clear in recent days that while the port should be kept at "arm's-length," the port has a fiduciary responsibility to the city in addition to its trust responsibility to the state.
While this opinion runs counter to numerous legal decisions by the state Supreme Court stretching back to the early days of the port, the mayor and city staff have become more aggressive in the past year on imposing the will of City Hall on the port.
Examples of this include the development of the oil deal with Occidental. During the negotiations, City Hall officials sided with Occidental over the valuation of the port oil property and attempted to pressure port officials who disagreed to go along with the valuation. City Hall also led port officials to believe that the port would still be receiving the revenues from any future oil development. Port officials were notified shortly before the deal was signed that City Hall had unilaterally decided that the city, and not the port, would be receiving any revenue generated under the deal.
Another example was the recent dressing down of port officials at an Aug. 3 public council meeting by the mayor. After two port commissioners rose to question the timing of Measure D and the fact that no financial impact study was done, Foster and nearly all of the council members slammed the two commissioners for not cooperating with City Hall on the transfer timing issue, despite initial assertions by the City Auditor that the port had been very cooperative. The mayor and council repeatedly stated during the meeting that the "us-versus-them culture" of the port needed to change.
The most recent example was the recent veto of a $60 million item in the port budget by the mayor. Foster intimated that the line item, for the removal of a port maintenance yard sitting in the path of an impending bridge replacement project, was a way for the port to move forward with a decade-old plan to build a new port administration building--despite several assurances by port officials prior to the veto that the administration building was no longer moving forward. Foster told port officials that the port could seek approval for the funds from the council as a budget amendment, thus placing the council in the position of approving the funds for the port project instead of the port commission.
Gag Order
While none of the bond rating agencies have suggested that any change in the port's bond ratings are being considered, all three agencies have said that they are watching the moves by City Hall closely.
For their part, port officials have said that the port can handle the current financial demands placed upon them by City Hall. In fact. in some cases, such as the municipal band and fireworks show, the port has offered to pay voluntarily.
However, it is unknown how port officials feel about Measure D and its potential impacts. Shortly after the Aug. 3 council meeting where the two port commissioners were dressed down, the City Attorney's office forwarded a memo to the port admonishing port staff from publicly discussing the ballot measure. The memo, which cited state fair election laws, even warned port staff of possible criminal penalties.
Due mainly to the public dressing down and the warning memo, no opposing view to Measure D will appear on the ballot--only the pro-measure argument drafted by City Hall. When a prominent trade group tried to compose an opposing argument in the several days provided to craft an argument before the ballot deadline, the group found many people in the industry that were opposed to the measure but none that would be willing to sign on to the argument.
Thursday, October 7, 2010
Los Angeles Port Begin Collecting $2,500 Truck Firm Fee
The Port of Los Angeles has begun charging a one-time $2,500 fee to each trucking firm wishing to do business within the port.
The fee is part of an access-licensing component of the port's so called "Clean Truck Plan."
In April 2009, at the request of the American Trucking Associations, a federal judge enjoined most of the components of the access-licensing scheme.
After a trial earlier this year, the same judge ruled Sept. 10 that the scheme could proceed and lifted the injunction. The ruling, which covers the access license scheme and other portions of the truck plan, is currently being appealed by the ATA to the California Ninth Circuit Court of Appeals.
Under the regulations imposed by the port under the truck plan, the more than 900 trucking firms servicing the port must have a signed access license agreement with the port and meet all of the port criteria contained within it. These port-defined criteria include such requirements as details of the truck firm's financial capabilities, use of employee drivers according to a port phase-in schedule, a detailed off-street parking plan and truck maintenance plans.
The $2,500 fee is in addition to an annual $100 per truck fee that the port began collecting in February.
The fee is part of an access-licensing component of the port's so called "Clean Truck Plan."
In April 2009, at the request of the American Trucking Associations, a federal judge enjoined most of the components of the access-licensing scheme.
After a trial earlier this year, the same judge ruled Sept. 10 that the scheme could proceed and lifted the injunction. The ruling, which covers the access license scheme and other portions of the truck plan, is currently being appealed by the ATA to the California Ninth Circuit Court of Appeals.
Under the regulations imposed by the port under the truck plan, the more than 900 trucking firms servicing the port must have a signed access license agreement with the port and meet all of the port criteria contained within it. These port-defined criteria include such requirements as details of the truck firm's financial capabilities, use of employee drivers according to a port phase-in schedule, a detailed off-street parking plan and truck maintenance plans.
The $2,500 fee is in addition to an annual $100 per truck fee that the port began collecting in February.
SoCal Ports Postpone Vote On New Green Goals
The governing boards for the ports of Los Angeles and Long Beach on Wednesday postponed a vote that would tighten the goals of the ports' jointly developed environmental programs.
Port officials said the delay was to offer the public more time to review the proposed updates to the ports' Clean Air Action Plan, an omnibus document detailing the two ports' varied programs aimed at reducing ports-generated pollution.
The update to the CAAP has been spurred by the rapid attainment of many of the goals set down when the document was crafted in 2006. One program contained in the CAAP, which targeted truck-generated diesel air pollution, reached the original CAAP emission reduction goals nearly two years ahead of schedule, due in large part to a rapid implementation of a more than $600 million turnover of the current drayage fleet by the trucking industry.
Port officials, who hope to vote on the CAAP update sometime in November, also said that the vote delay would afford the two ports additional time "to clarify the document for industry and other stakeholders." In a statement, the ports specifically mention that staff from the two ports staff plans to sit down with rail industry representatives to discuss the CAAP update's proposed measures on long haul locomotives, possibly to seek an equivalent alternative.
Port officials said the delay was to offer the public more time to review the proposed updates to the ports' Clean Air Action Plan, an omnibus document detailing the two ports' varied programs aimed at reducing ports-generated pollution.
The update to the CAAP has been spurred by the rapid attainment of many of the goals set down when the document was crafted in 2006. One program contained in the CAAP, which targeted truck-generated diesel air pollution, reached the original CAAP emission reduction goals nearly two years ahead of schedule, due in large part to a rapid implementation of a more than $600 million turnover of the current drayage fleet by the trucking industry.
Port officials, who hope to vote on the CAAP update sometime in November, also said that the vote delay would afford the two ports additional time "to clarify the document for industry and other stakeholders." In a statement, the ports specifically mention that staff from the two ports staff plans to sit down with rail industry representatives to discuss the CAAP update's proposed measures on long haul locomotives, possibly to seek an equivalent alternative.
Bellingham Port Names New Top Exec
After a nearly 15-month wait and at least one failed round of candidates, the Port of Bellingham has selected a new top executive.
The port commission on Tuesday selected Charles Sheldon, a 20-year veteran of the Port of Seattle, to be the port's new executive director. The 63-year-old Sheldon is currently serving as a special projects coordinator for the Seattle port's executive team.
Bellingham commissioners praised Sheldon's long track record with Seattle and his experience with large development projects such as the third runway project at Seattle-Tacoma International Airport.
Sheldon, who beat out two other finalists, will reportedly be paid in the middle of the advertised range for the position of $125,000 to $135,000.
Earlier this year, the port announced five finalists for the executive director position after whittling down a pool of more than 110 applicants. Shortly before a round of public meetings to introduce the candidates, two of the five finalists removed their names from contention. Port officials then decided they wanted additional candidates beyond the three remaining finalists. Although the three individuals were asked to keep their names in contention, each withdrew his name shortly after the port decision to expand the candidate pool.
Sheldon was part of a second pool of three candidates pulled from the original applicant pool.
Port Facilities Director Fred Seeger has served as the port's interim executive director since the resignation of former port top executive Jim Darling in June 2009.
The port commission on Tuesday selected Charles Sheldon, a 20-year veteran of the Port of Seattle, to be the port's new executive director. The 63-year-old Sheldon is currently serving as a special projects coordinator for the Seattle port's executive team.
Bellingham commissioners praised Sheldon's long track record with Seattle and his experience with large development projects such as the third runway project at Seattle-Tacoma International Airport.
Sheldon, who beat out two other finalists, will reportedly be paid in the middle of the advertised range for the position of $125,000 to $135,000.
Earlier this year, the port announced five finalists for the executive director position after whittling down a pool of more than 110 applicants. Shortly before a round of public meetings to introduce the candidates, two of the five finalists removed their names from contention. Port officials then decided they wanted additional candidates beyond the three remaining finalists. Although the three individuals were asked to keep their names in contention, each withdrew his name shortly after the port decision to expand the candidate pool.
Sheldon was part of a second pool of three candidates pulled from the original applicant pool.
Port Facilities Director Fred Seeger has served as the port's interim executive director since the resignation of former port top executive Jim Darling in June 2009.
Tuesday, October 5, 2010
FIDLEY WATCH - Sending Business East
Chris Philips, Managing Editor
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?
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?
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?
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?
Mayor Appoints Docker Activist to Los Angeles Port Board
Mayor Villaraigosa has appointed local union activist and longtime docker David Arian to the Los Angeles Board of Harbor Commissioners.
Arian, a native of San Pedro, began his career as a longshoreman in 1965 and remained an active member of the International Longshore & Warehouse Union for 44 years until his retirement in 2009. In 1991, he was elected to a term as International President of the ILWU.
In 2006, Mayor Villaraigosa asked him to sit on the joint port advisory for the Port of Los Angeles and Long Beach’s Clean Air Action Plan.
Describing himself in the past as a "militant union advocate," Arian has been an active member of the San Pedro community for decades working with organizations like the Toberman Settlement House, the Harbor Interfaith Shelter, and the San Pedro Boys & Girls Club.
He has also served for nearly a decade as president of the Harry Bridges Institute, a San Pedro-based non-profit dedicated to the memory and legacy of ILWU founder Harry Bridges.
Arian still faces a confirmation vote by the Los Angeles City Council. If confirmed, Arian will fill a seat vacated suddenly by Commissioner Joseph Radisich in mid-September. Radisich, also a long-time ILWU member, was the second departure from the port board in a roughly two-month period. Harbor Commission Vice President Jerilyn Lopez-Mendoza left the port board in July to pursue a new private sector job and in early September, Villaraigosa appointed his former chief of staff Robin Kramer to fill Lopez-Mendoza's vacant seat.
Arian, a native of San Pedro, began his career as a longshoreman in 1965 and remained an active member of the International Longshore & Warehouse Union for 44 years until his retirement in 2009. In 1991, he was elected to a term as International President of the ILWU.
In 2006, Mayor Villaraigosa asked him to sit on the joint port advisory for the Port of Los Angeles and Long Beach’s Clean Air Action Plan.
Describing himself in the past as a "militant union advocate," Arian has been an active member of the San Pedro community for decades working with organizations like the Toberman Settlement House, the Harbor Interfaith Shelter, and the San Pedro Boys & Girls Club.
He has also served for nearly a decade as president of the Harry Bridges Institute, a San Pedro-based non-profit dedicated to the memory and legacy of ILWU founder Harry Bridges.
Arian still faces a confirmation vote by the Los Angeles City Council. If confirmed, Arian will fill a seat vacated suddenly by Commissioner Joseph Radisich in mid-September. Radisich, also a long-time ILWU member, was the second departure from the port board in a roughly two-month period. Harbor Commission Vice President Jerilyn Lopez-Mendoza left the port board in July to pursue a new private sector job and in early September, Villaraigosa appointed his former chief of staff Robin Kramer to fill Lopez-Mendoza's vacant seat.
Los Angeles Port Offers Tariff Cuts for Imported "Green" Cars
The Port of Los Angeles will be the world's first major port to offer a reduced tariff for imported zero-emission vehicles, under a plan approved last week by the port's governing board.
The plan, if approved by Los Angeles City Council, will offer zero-emission automakers moving their goods through the Los Angeles port a 15 percent tariff reduction.
While applying to all automakers, the move is targeted at Chinese manufacturer BYD Auto Company Limited. Los Angeles City Hall has been trying to persuade the electric and hybrid automaker to use the Port of Los Angeles as its primary United States shipping gateway. In May, BYD announced that it would locate its North American headquarters in Los Angeles.
The work with BYD is part of a City Hall effort to remake Los Angeles as the "electric car capitol" of the US.
According to port officials, the “Zero Emission Vehicle Tariff Measure” is the first of its kind in the maritime industry and is available to any automobile manufacturer who imports through the Port of Los Angeles. The 15 percent tariff reduction takes effect upon approval by the Los Angeles City Council.
The plan, if approved by Los Angeles City Council, will offer zero-emission automakers moving their goods through the Los Angeles port a 15 percent tariff reduction.
While applying to all automakers, the move is targeted at Chinese manufacturer BYD Auto Company Limited. Los Angeles City Hall has been trying to persuade the electric and hybrid automaker to use the Port of Los Angeles as its primary United States shipping gateway. In May, BYD announced that it would locate its North American headquarters in Los Angeles.
The work with BYD is part of a City Hall effort to remake Los Angeles as the "electric car capitol" of the US.
According to port officials, the “Zero Emission Vehicle Tariff Measure” is the first of its kind in the maritime industry and is available to any automobile manufacturer who imports through the Port of Los Angeles. The 15 percent tariff reduction takes effect upon approval by the Los Angeles City Council.
Vancouver USA Port Cargo Faces Overland Trouble
The arrival Sunday at the Washington-state Port of Vancouver may be the easiest part of the journey for nine giant pieces of oil production equipment bound for the Kearl Oil Sands in Canada.
The oil modules, each costing more than $1 million, are part of a total of 207 such modules that are being manufactured in South Korea, transported via cargo ship to Vancouver and then set for transport to the Canadian production site.
Officials at the port have spent several years establishing Vancouver as one of the premier West Coast maritime gateways for oversized cargoes such as the oil modules.
The oil module transportation plan calls for the Imperial Oil/ExxonMobil Canada-owned modules to be moved via barge from Vancouver to the Port of Lewiston in Idaho. From Lewiston the modules will be transferred to trucks for the overland trip through the mountains of Idaho and western Montana to the production site in Canada.
The 207 modules will be sent along in 15 smaller loads spread out between now and next June.
However, Idaho officials have refused permits for the overland transport of several similar ConocoPhillips pieces of equipment and the case reached the Idaho Supreme Court on Friday. A decision is expected within the next four weeks.
The oil modules will have to wait at Lewiston until the permit case is decided. In addition, the Montana Department of Transportation has said it will not decide on whether to issue permits to allow the oil modules to move through Montana until the Idaho court rules on the permit cases.
Public concerns about the oil module transport plan have also raised public concern in Idaho and Montana. Opponents of the oil module plan have said they fear major traffic delays, potential damage to roads and bridges, and possible impact to scenic and cultural resources along the proposed route.
Imperial Oil/ExxonMobil Canada, speaking to the Missoulian newspaper, would not say if the firm has a contingency plan if the overland transport permits are denied.
An Imperial Oil/ExxonMobil Canada spokesperson told the paper that the oil firm is "confident in the process" and the firm's intent is to move the oil modules along the proposed route.
Linwood Laughy of Kooskia, Idaho, one of the plaintiffs in the ConocoPhillips permit case in Idaho, told the paper that Imperial Oil/ExxonMobil's insistence on moving forward is disappointing but no surprise.
"With no decision from the Idaho Supreme Court regarding transportation permits and growing resistance to the mega-loads in Idaho and Montana, the arrival of the first giant Imperial Oil modules at the Port of Vancouver underscores Imperial Oil's arrogance," Laughy told the newspaper via e-mail. "As they told an angry audience in Kooskia on June 29th, ‘We have no plan B.'"
The oil modules, each costing more than $1 million, are part of a total of 207 such modules that are being manufactured in South Korea, transported via cargo ship to Vancouver and then set for transport to the Canadian production site.
Officials at the port have spent several years establishing Vancouver as one of the premier West Coast maritime gateways for oversized cargoes such as the oil modules.
The oil module transportation plan calls for the Imperial Oil/ExxonMobil Canada-owned modules to be moved via barge from Vancouver to the Port of Lewiston in Idaho. From Lewiston the modules will be transferred to trucks for the overland trip through the mountains of Idaho and western Montana to the production site in Canada.
The 207 modules will be sent along in 15 smaller loads spread out between now and next June.
However, Idaho officials have refused permits for the overland transport of several similar ConocoPhillips pieces of equipment and the case reached the Idaho Supreme Court on Friday. A decision is expected within the next four weeks.
The oil modules will have to wait at Lewiston until the permit case is decided. In addition, the Montana Department of Transportation has said it will not decide on whether to issue permits to allow the oil modules to move through Montana until the Idaho court rules on the permit cases.
Public concerns about the oil module transport plan have also raised public concern in Idaho and Montana. Opponents of the oil module plan have said they fear major traffic delays, potential damage to roads and bridges, and possible impact to scenic and cultural resources along the proposed route.
Imperial Oil/ExxonMobil Canada, speaking to the Missoulian newspaper, would not say if the firm has a contingency plan if the overland transport permits are denied.
An Imperial Oil/ExxonMobil Canada spokesperson told the paper that the oil firm is "confident in the process" and the firm's intent is to move the oil modules along the proposed route.
Linwood Laughy of Kooskia, Idaho, one of the plaintiffs in the ConocoPhillips permit case in Idaho, told the paper that Imperial Oil/ExxonMobil's insistence on moving forward is disappointing but no surprise.
"With no decision from the Idaho Supreme Court regarding transportation permits and growing resistance to the mega-loads in Idaho and Montana, the arrival of the first giant Imperial Oil modules at the Port of Vancouver underscores Imperial Oil's arrogance," Laughy told the newspaper via e-mail. "As they told an angry audience in Kooskia on June 29th, ‘We have no plan B.'"
Hyundai Joins Carriers Phasing Out Port Chassis
The number of ocean carriers announcing plans to stop providing container chassis at United States ports continues to grow.
Hyundai Merchant Marine announced last week that it will begin phasing out chassis at six gateway locations as of Nov. 1 and will expand the phase-out to the rest of the nation next year.
Hyundai joins a slew of other carriers – including Atlantic Container Line, CMA CGM, Cosco, Evergreen Marine, NYK Line, and Orient Overseas Container Line – that have announced this year they will phase out container chassis at US ports and other inland locations.
The Nov. 1 round of Hyundai's phase-out plan will affect Baltimore, Md., Buffalo, N.Y., Harrisburg, Pa., Miami, Fla., Philadelphia, Pa., and Worcester, Mass.
Hyundai Merchant Marine announced last week that it will begin phasing out chassis at six gateway locations as of Nov. 1 and will expand the phase-out to the rest of the nation next year.
Hyundai joins a slew of other carriers – including Atlantic Container Line, CMA CGM, Cosco, Evergreen Marine, NYK Line, and Orient Overseas Container Line – that have announced this year they will phase out container chassis at US ports and other inland locations.
The Nov. 1 round of Hyundai's phase-out plan will affect Baltimore, Md., Buffalo, N.Y., Harrisburg, Pa., Miami, Fla., Philadelphia, Pa., and Worcester, Mass.
