The U.S. Department of Transportation and California have formed a strategic partnership to help facilitate new freight projects and financing opportunities for multibillion-dollar infrastructure improvements in the state that enable goods movement nationwide.
The agreement focuses on addressing long-term structural issues that have contributed to the supply chain bottlenecks being felt around the nation this year amid record import demand and operational breakdowns at every stage within the logistics system. And it follows California Gov. Gavin Newsom’s executive order last week activating state resources to help provide immediate relief for port congestion and shortfalls in truck capacity.
Under the collaborative approach, California can expedite work on a network of related projects, rather than using a piecemeal approach, to upgrade trade corridors, including around the gateway ports of Los Angeles and Long Beach and the giant warehousing district known as the Inland Empire, officials said Thursday in a joint news release.
“California’s ports and infrastructure system is key to the country’s supply chain. Thanks to our collaboration with the Biden-Harris administration, this innovative federal-state partnership will help us fast-track those projects that will make our ports and infrastructure even more efficient,” Newsom said. “This partnership will help us jump-start and support multiple infrastructure projects to improve our supply chain, making sure goods get to where they need to go faster, cheaper and in a more environmentally friendly manner.”
Public and public-private projects that could receive support through the agreement include:
- Port upgrades.
- Expanding capacity for freight rail.
- Developing inland port facilities for increased warehouse storage.
- Rail yard and truck electrification.
- Highway upgrades to improve truck travel times.
- Grade-separated crossings to reduce the number of rail-street intersections and improve safety and efficiency.
- Land ports of entry to expand trade capacity and cross-border commerce with Mexico and Canada.
Under the Emerging Projects Agreement, the Build America Bureau at the U.S. DOT will support the California State Transportation Agency in developing infrastructure projects designed to improve the capacity and resiliency of the freight system and assist project sponsors in exploring innovative financing opportunities for billions in infrastructure investment, in part through existing credit assistance programs.
“Our supply chains are being put to the test, with unprecedented consumer demand and pandemic-driven disruptions combining with the results of decades-long underinvestment in our infrastructure. That’s why this administration is working around-the-clock to address both near-term and long-term challenges to our supply chains, including investments such as those in the bipartisan infrastructure deal,” said U.S. Transportation Secretary Pete Buttigieg. “Today’s announcement marks an innovative partnership with California that will help modernize our infrastructure, confront climate change, speed the movement of goods and grow our economy.”
John Porcari, the White House’s port envoy, said the partnership with California will serve as a model for other states with nationally significant projects.
The Newsom administration has been working closely with the White House’s Supply Chain Disruption Task Force and industry groups on ways to support private-sector initiatives to improve cargo velocity. The situation has reached critical mass as the busiest shopping period approaches and many shipments remain stranded on ships, on the docks and in warehouses because of equipment, labor and infrastructure constraints made worse by unforeseen weather and other events.
California’s efforts include making state-owned properties available to store excess shipping containers clogging the ports and to identify other parcels that can be leased on a short-term basis. The order also instructs transportation agencies to quickly identify priority freight routes that could be temporarily exempted from the existing gross weight limit of 80,000 pounds so commercial vehicles can carry more cargo.
The White House is pushing the Southern California ports, as well as major companies with distribution centers in the area, to operate around-the-clock to optimize utilization of existing infrastructure and spread out cargo flows more evenly. Initial commitments are very small and not expected to move the needle on congestion in the near term, but officials say they hope to build momentum for more adoption of the 24/7 concept.
Meanwhile, the DOT is working with local and state divisions of motor vehicles to cut red tape and make it easier for truck drivers to obtain commercial driver’s licenses. It says the effort has already resulted in DMVs issuing 60% more CDLs this year compared to 2020.
“Having our federal and state transportation agencies working in unison to help fund infrastructure is exactly what we need,” said Port of Los Angeles Executive Director Gene Seroka, who has long pushed for more strategic national infrastructure policies. “We have projects in need of funding that will reduce cargo delays, improve efficiency, reduce emissions and improve safety for waterfront workers and motorists throughout the region.”
Officials said infrastructure projects will be considered based on their potential to improve supply chain resilience while ensuring communities and the environment are protected from increased industrial activity.
California’s recently enacted budget includes $250 million for ports, $280 million for infrastructure projects at and around the Port of Oakland, and $1.3 billion over three years for zero-emission trucks, transit buses and school buses, including the deployment of more than 1,000 zero-emission port drayage trucks.