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American ShipperWarehouse

SoCal port heads growl at TIGER funding snub

SoCal port heads growl at TIGER funding snub

   Executive directors of the nation's two largest seaports expressed dismay Thursday at the lack of funds dedicated to the ports of Los Angeles and Long Beach during the first round of Transportation Investment Generating Economic Recovery (TIGER) grants in February.

   The U.S. Department of Transportation gave away $777 million in grants, but none for the two ports.

   'I was shocked that L.A. and Long Beach got zero from TIGER,' said Port of Los Angeles Executive Director Geraldine Knatz. 'It turned out to be a lot more political than we thought. The money is supposed to be reserved for merit, for big projects of national significance.'

   Port of Long Beach Executive Director Richard Steinke was more blunt.

   'It's ridiculous,' he said. 'I liken it to the port security grants. There were some terrific mistakes made in that program early on. I'm very disappointed.'

   Both directors said some projects that did receive money didn't meet the mandate of the grant, which, according to the Department of Transportation Web site, was for 'preserving and creating jobs and promoting economic recovery, investing in transportation infrastructure that will provide long-term economic benefits.'

   Congresswoman Laura Richardson, D-Calif., said she will question DOT officials as to how the ports managed to secure no funding under the program.

Knatz

   'I find it hard to understand how you can fund port communities in general, but not fund the largest port complex in America,' Richardson said in February. 'I will be requesting a briefing on the rationale for excluding a port complex that ' is the busiest in America. Particularly at such a precarious moment when maintaining and creating jobs is our top priority.'

   The two port chiefs spoke Thursday at a question-and-answer session organized by the Harbor Association of Industry and Commerce in Long Beach, an event that touched on a range of subjects, including how the Panama Canal may affect the competitive landscape of container shipping in North America.

   The directors were asked if the various fees being collected or planned in the Southern California ports might induce discretionary cargo to move via the Panama Canal to U.S. East Coast ports once a new set of wider locks opens in 2014.

Steinke

   'Customers have bigger issues then a clean trucks fee in deciding where they want to route their cargo,' Steinke said. 'We don't know what the canal fees will be. We do know what the costs of dredging will be (for U.S. East Coast ports planning to capitalize on the wider set of locks). I don't think we'll see this earth-shattering movement of cargo unless we don't do what we need to be doing. Cargo wants to come to Southern California. It makes sense for shippers and lines to come here. But if certain things don't happen, if projects don't get done or if there are labor issues, it will put questions into people's minds.”

   'Cargo won't all shift on the first day the new locks open,' Knatz said. 'We have to focus on what we're doing, because if it's not the canal, it will be something else. Our customers want to come here. They really do. It's our job to keep them here, to keep them happy.

   As for Prince Rupert, the terminal development in Northwest Canada, Knatz praised the way the Canadian government showed a focus on doing what's best for cargo.

   'Prince Rupert was a best practice in terms of a strategic national effort,' she said, noting that the government even set aside money for fire service at the terminal so that cost wasn't passed on to the port.

   'Lines were offered attractive rates at Prince Rupert, but I'm not sure that's sustainable,' Steinke said. 'We have to make sure we don't stub our toe. Maybe (Prince Rupert) is not preferable, but they've shown that it's viable.'

   One of the fees the ports had planned on collecting from last year was a port infrastructure fee on each container transiting the docks. But collection of the fee was deferred because of the extreme drop in volumes through the Southern California ports the last two years. Knatz said the ports may now delay the fee again until 2012, at which time volume is expected to have fully recovered, or shelve it altogether until there's sufficient demand to support the fee.

   But Steinke said infrastructure funding is a key issue that won't go away.

   'Do the ports have enough money for the all the projects? No,' Steinke said. 'Will money come from the state or from TIGER or some other source? Port projects like the Gerald Desmond Bridge (a key span in Long Beach the port is hoping to replace) are in flux. We'll finish the (environmental review) but then where do we go? We have to keep people aware of the infrastructure costs, whether it's a national fee or a port fee.'

   The port chiefs were asked what impact the burgeoning West Coast Collaboration has had so far. The collaboration is a lobbying effort by the U.S. West Coast's six major container ports and the Union Pacific and BNSF railroads to market the ports in the face of increased competition throughout North America.

   'Going to Washington (D.C.) and having the six port executive directors made an impression,' Knatz said. 'Especially if we have the two CEOs of the railroads with us.'

   'There are a lot of different marketing efforts out there,' Steinke said. 'There's a need for the investment to go to load centers. We're all going to do what we need to for our customers, but we aren't going to work at cross-purposes.'

   Steinke said the collaboration gives the West Coast ports a chance to 'disprove some of the myths' about the ports' competitiveness.

   Meanwhile, Steinke and Knatz both commended the West Coast longshore labor union, the International Longshore and Warehouse Union, for helping push through port infrastructure projects that were being held up by bureaucracy. They said those projects will help the Southern California ports maintain their competitive edge.

   'We've gotten to the point where we all need to pull together to ensure our proper place,' Steinke said. 'When volume was great, there was ambivalence about these projects (which the ports say are vital to induce trade growth in the future). Now there's a recognition that we need these projects.'

   Knatz flatly said, 'if it wasn't for the ILWU, we wouldn't have got the (environmental review) of the TraPac terminal through and that broke the logjam. We've been able to get five more documents approved since then.'

   An expansion of the TraPac terminal had been held up for nearly a decade over environmental concerns.

   As for forecasts for the coming year, both directors weren't overly optimistic.

   'We are still trying to forecast conservatively,' said Knatz. 'We're assuming 2 percent growth in the next fiscal year. Some customers said that we'll do better but I want to be cautious.'

   'I'd be hesitant to say the economic recovery has begun,' said Steinke. 'There have been too many variables this year that may be giving false impressions. The last three months have been good for the San Pedro Bay ports, but I don't think that translates to a recovery.' ' Eric Johnson