Inflection Point

By John McLaurin, President, Pacific Merchant Shipping Association

Maritime Day was held recently in Olympia, Washington. California’s Port Day took place on February 19th in Sacramento, California. Both events celebrate the contributions of their respective state’s public port authorities and the importance that these vital assets play in the economy of each state.

In addition to celebrating the benefits of our ports, these events also serve as a test of just how much elected or regulatory officials value the hundreds of thousands of jobs, billions of dollars in revenue, and technological innovations that our ports generate.

The loss of West Coast market share has been well documented, both in this publication and others. No matter what metric is used, growth is occurring at higher rates on other coasts, at other ports, states, and countries as compared to West Coast ports. With growth elsewhere, California loses jobs and revenue from our communities.

West Coast ports have been leaders, certainly nationally, if not internationally, by addressing environmental challenges, developing new operational programs, and being an incubator for zero and near-zero emissions technology and information sharing.

As it is often said, cargo follows the path of least resistance – and one major factor is cost. Unfortunately, West Coast ports are subject to costs that are higher than other North America competitors, such as higher lease and energy costs, and local and state regulatory compliance costs not imposed in competitive gateways.

West Coast ports are leading the nation in new clean technology as port tenants utilize zero and near-zero emission equipment to move cargo by experimenting with electricity, batteries, LNG, and hydrogen fuel cells. The advances in emission reduction technology at our ports are occurring in a competitive setting that demands performance, not promise.

But it all comes at a cost – both in money and in cargo. If policymakers ignore the issue of cargo diversion, loss of market share, and flat growth rates for West Coast ports – they do so at the risk of undermining the very environmental goals that they seek to achieve and run the risk of harming their state and regional economies. As cargo volumes grow at higher rates at Canadian, East, and Gulf coast ports, as compared to West Coast ports, often it is done at the expense of the environment – in particular, greenhouse gas emissions.

West Coast elected officials and regulatory agencies also need to take a hard look in the mirror about their policies and programs. No one is requesting a rollback of programs – but we are asking for some balance in state policies and recognition that the economics matter.

In his recent 2020 State of the Port address, Gene Seroka, the Executive Director of the Port of Los Angeles, stated in his opening remarks that “…our Port is stronger when we act together, because we are all connected.” He went on to outline many of the challenges and achievements that are occurring within Southern California’s supply chain. In his closing comments, he noted that “…we are truly at an inflection point. How we respond to the challenges ahead of us will define the future: not just the future of the Port, but of our surrounding communities, our regional and national economies, and the millions of jobs connected to what we do.” His remarks were a call to action, of collaboration, vision, and partnership.

I believe that most elements of the supply chain are ready to answer the call for action. What remains to be seen is whether our political and regulatory leaders are willing to join in this effort.