California’s Ports – A Hidden Success Story
By John McLaurin, President, Pacific Merchant Shipping Association
California’s eleven public ports are one of the state’s most important and vital assets. Collectively, California’s ports form the largest gateway of trade for the United States. The question policy-makers need to answer is whether they want to build on the success and create more jobs, expand logistics operations in California, and recapture California’s dominant market share of goods moving through California ports.
Whether it is containers filled with consumer products destined for retailers all over the state, automobiles which will fill the roads, aggregate that is used to make concrete, agricultural products of all types literally feeding the world, or even scrap metal, plastics, and paper headed overseas only to be recycled into more products, cars, and packaging – all flow through California’s ports.
According to the California Association of Port Authorities, one-third of the state’s economy is impacted by goods that move through California’s ports. Five million jobs, seven hundred billion dollars in revenue, and nine billion dollars in annual state tax revenue come from our homegrown ports.
From an environmental standpoint, you would be hard-pressed to identify an industry that has reduced emissions in as large amounts and in as short a period of time as those involved in port activities. The nation’s cleanest trucks, ships, tugs, and trains work in and around our ports. For example, the San Pedro Bay ports have reduced emissions of diesel particulate matter approximately 88% and SOx by 90% between 2005 and 2017.
Port tenants are utilizing zero and near-zero emission equipment to move cargo by experimenting with electricity, batteries, LNG, and hydrogen fuel cells. Advances in emission reduction technology are occurring in a competitive setting that demands performance, not promise.
The risk to California is that these efforts are occurring in a hyper-competitive environment without much support and often with confusing and contradictory policy objectives from the state. California regulators and the Legislature may dictate an emission reduction strategy but then restrict the type of equipment or technology that can be utilized or receive public funding. Or even worse, regulators are picking technology winners and losers in an effort to roll out advanced technologies before the technologies have been proven in the field. Taken together, the state is imposing billions of dollars in regulatory-based costs, but not counterbalancing it by promoting California ports as a gateway – simply hoping that other states and ports will ultimately impose similar policies.
It is a faith-based strategy coupled with the popular political realities of the day, as opposed to one based on leadership and a solid plan for building on our success. Despite these challenges, California’s ports continue to grow – albeit slower than other North American port gateways. They continue to lose market share to their East, Gulf, Canadian, and Mexican competitors, and with it, a loss of job opportunities and tax revenue for the state.
California’s ports should be recognized for their importance to the economy and for their environmental investments, innovation, and results. But it is time for the state to step up and be an active partner in the growth and development of our ports, instead of taking them for granted.