Supply Chain
Policy Decision Makers May Have an Alternative Agenda

“International shippers will be forced to shoulder a disproportionate share of the burden for transportation infrastructure development, enhancement and environmental initiatives.”

When Cargo Business News invited me to write a column concerning our industry, I jumped at the opportunity. Given the recent Clean Trucks Plan approval by the Federal Marine Commission (FMC), I feel the need to explain, from many shippers’ and logistics industry stakeholders’ perspective, some of the underlying motivations for this and other container shipping�related policies currently under consideration. The long-term impacts of such programs are very costly and have the ability to restrict the free flow of goods through the global supply chain.

Remember the days when elected officials and state governments embraced the news that a new ocean service was coming to their local port facility? When they embraced the foreign carriers as economic development engines for their communities, making them look good in the eyes of voters? Well, the tide has changed on this favorable view of our industry, and those same politicians now have a different agenda in mind.

Having served as an executive for a major ocean carrier in Long Beach, Calif., I’m programmed to be skeptical of, but not necessarily opposed to, the introduction of new container-shipping fees. My views are influenced by behind-the-scenes access to information and cost models for port development, management and growth developed by shipping industry experts, not by legislative bureaucrats. Today I’ve relocated to Charlotte, N.C., as the vice president of sales and business development at Globe Express Services and regularly speak on such topics at various conferences and industry events. I’ve found that people are hungry for information on proposed policies and container-shipping fees and for an explanation as to how the political mindset, with regard to the shipping community, has shifted so abruptly.

I encourage them to consider the work of the Pacific Merchant Shippers Association (PMSA), the West Coast association that has the difficult task of representing the stakeholders, terminal operators and ocean carriers along the Pacific Coast. In 2005, the PMSA monitored more than 100 pieces of legislation aimed directly at shippers and consignees — bills ranging from the imposition of container fees to those touted as having community environmental benefits. Environmental groups rallied around aggressive claims against the industry but for the most part were unsuccessful in moving these bills forward. Many bills were poorly conceived and written, so few in the shipping community considered them a threat. As a result, many shippers failed to become engaged in the legislative process and to challenge such measures, which in hindsight was a mistake.

Fortunately, the shipping industry has shown some ability to respond to political pressure. For example, the PierPASS Program at the ports of Los Angeles (LA) and Long Beach (LB) has proven to be a huge success.

Since PierPASS, state Sen. Alan Lowenthal has continued to press his agenda forward. His current piece of legislation — the pending Container Usage Program (State Bill 974) — may well be passed and signed by Gov. Arnold Schwarzenegger by the time this column goes to press. The bill calls for a $35 per TEU fee to be collected by the state to pay for infrastructure projects within the region. The fee will apply to ANY CONTAINER PASSING THROUGH the port facilities, even those bound for the intermodal system serving the U.S. heartland. Will the money be applied toward infrastructure improvements, as proposed? Or will it be lost in the budget morass of a state that’s more than $17 billion in debt and climbing?

In addition, the ports of LA and LB are implementing a Port Infrastructure Fee of $15 per TEU, with revenues again earmarked for infrastructure development. The Port of Oakland is also considering an infrastructure fee of its own.
I’m a strong proponent of building, maintaining and investing in our nation’s transportation infrastructure. However, my concern with the aforementioned policies is that they may appear to address one objective (e.g., port infrastructure, usage, etc.), but under closer scrutiny an alternative agenda emerges. For example, the Clean Trucks Program to be implemented by the ports of LA and LB (also being studied by the ports of Oakland and Seattle) is being touted as an “environmental” program to remove old trucks from the harbor and thus help reduce the industry’s environmental impact. But is there another agenda at work here?

Why have we heard so little about the other impacts of this program, namely, that independent owner-operators would lose their access to the terminals unless they agree to become “employee” drivers? The Teamsters have been trying (unsuccessfully) to organize these owner-operators for more than 10 years. I’d like to suggest that the union is fully supportive of the Clean Trucks Program because it will conveniently open the door to organizing “employee drivers.” While the port commissioners and management are working on the seemingly admirable objective of cleaning up harbor communities, why is this policy aimed only at the “independent owner-operators” working within the harbor, while trucks moving 53’ domestic trailers around the region operate under a separate set of standards?

The bottom line is simple: Our industry is in trouble because we failed to take such issues seriously. In the meantime, we become a very real target. When a state is bankrupt, its legislators become desperate for revenue and look for creative ways to refill the coffers.

A new reality is taking shape in California that is likely to spread nationwide: international shippers will be forced to shoulder a disproportionate share of the burden for transportation infrastructure development, enhancement and environmental initiatives. Given these disturbing trends, international shippers and logistics industry stakeholders would be well served to engage such proposals earlier in the legislative process, to ensure that such fees, if needed, are thoughtfully considered, fairly administered and wisely spent.