Regulating Away Part of the Infrastructure Needed to Restore Our Infrastructure
By Jock O’Connell
Mainstream media reports on maritime trade tend to focus a lot on containers, almost to the exclusion of other modes of oceanborne commerce. So, in states like California and Washington (and maybe, one day soon, Oregon) which host imposing container terminals, even newly-elected legislators and municipal leaders probably know what a TEU is. As for their familiarity with the transport of commodities measured in tons, barrels or bushels, not so much.
But there’s much more to ocean shipping than goods that travel in boxes. Petroleum, coal, ores, grains, motor vehicles, windmill components, for example, are all transported around the world, usually on vessels custom-built to handle each type of cargo. And these segments of maritime trade often pass without much public notice, except of course when there’s an oil spill or when deliveries of critically needed supplies are hindered.
California’s end-of-drought deluges this winter have caused enormous damage, most famously to the Oroville Dam spillway but also to innumerable streets, highways, bridges, and levees. Infrastructure that was already in deplorable condition was stressed and occasionally failed as downpour followed downpour. As a result, demand for the concrete to repair roads, rebuild bridges, and reinforce levees is likely to surge dramatically in coming months.
One of concrete’s essential ingredients, along with water and cement, is aggregate, inert granular materials such as sand, gravel, or crushed stone. Most of California’s demand for aggregate this spring and summer will be met from local quarries, because it is both economically and environmentally undesirable to truck such a heavy but low-value commodity over long distances.
But we also import aggregate as well as cement and other construction materials (including steel) by sea, usually through niche ports that handle little, if any of the state’s container trade. The option of transporting these materials by sea is especially beneficial in meeting the construction needs of densely-populated urban areas whose roadways are already congested by traffic.
The Ports of Redwood City, Richmond, and San Francisco handle the bulk of the U.S. West Coast imports of HS 2517, the Harmonized System classification for the pebbles, gravel, and crushed stones that comprise aggregate. In fact, the Port of San Francisco’s leading cargo is imported construction aggregate shipped from Canada. (The port also handles other construction needs such as steel coils, rebar, and structural steel.) Tourists visiting the Embarcadero do not see this business, which is tucked away well south of AT&T Park. Last year, the Port of San Francisco handled not a single TEU but did move nearly 1.4 million metric tons of dry bulk cargo, all of it imported. The ability to move construction materials through the port not only helps contain building costs, it reduces the truck traffic and adverse environmental impacts within a city whose skyline is being spectacularly transformed by new, towering buildings.
A few miles south, the Port of Redwood City plays a similar role with respect to construction projects in Silicon Valley and elsewhere on the Peninsula. As at the Port of San Francisco, aggregate arrives in large ocean-going ships such as the 750-foot long CSL (Canadian Steamship Lines) Tecumseh in the photo above.
Much of the imported aggregate comes from the Orca Quarry, located on the northeast coast of Canada’s Vancouver Island. The quarry is operated by Polaris Materials Corporation. In California, Polaris imports aggregate via the Ports of Richmond and Long Beach. The Richmond Terminal primarily serves the northeastern San Francisco Bay area. In July 2014, Polaris commenced construction of an aggregate receiving terminal in the Port of Long Beach to service the Los Angeles area. That facility began operations just over a year ago. Spurred largely by President Trump’s campaign promises, there’s much talk today about restoring the nation’s frayed infrastructure. The need is clearly there. In its 2017 report card, the American Society of Civil Engineers gave the country’s infrastructure an overall grade of D+, largely unchanged since its previous report in 2013.
Left out of public discussions and political debates is whether states like California may be regulating away an important component of the infrastructure needed to rebuild its infrastructure. To one extent or another, all ports face existential challenges from government regulators and neighboring communities. As discussed elsewhere in this newsletter, the cost of meeting stricter air quality requirements threatens to undermine the fundamental economics of port operations in California. Alas, a more holistic strategy for balancing the state’s sundry public policy goals is probably too much to expect.
The commentary, views, and opinions expressed by Jock O’Connell are his own and do not reflect the views or positions of the Pacific Merchant Shipping Association. PMSA does not endorse, support, or make any representations regarding the content provided by any third party commentator.