Challenges Facing California’s Ports

John R. McLaurin
President of the Pacific Merchant Shipping Association

Despite a history of success, 2014 will pose a number of challenges for public ports throughout California.

It is no overstatement to say that California’s economic wellbeing is dramatically and positively impacted when the volume of international trade flowing through our public ports is growing.  Hundreds of thousands of jobs throughout California are directly related to international trade.  In addition, port-related trade generates billions of dollars a year in local, state and general federal taxes.

These economic benefits heighten the need for California to focus on competitiveness issues given the numerous changes that are occurring nationally and internationally throughout the supply chain.  Increasing investment in infrastructure in other port gateways in Canada and the Gulf and East Coast states, a shifting of some manufacturing from China to other South Asian countries and greater use of the Suez Canal by cargo interests, not to mention the impending expansion of the Panama Canal, are providing more options for the trade community.  Despite California’s historical dominance as a trade gateway, these changes will result in winners and losers in the chase for cargo and jobs

The maritime industry itself is also going through an evolution with the consolidation of terminal operations at west coast ports and the creation of new vessel alliances in which the world’s largest ocean carriers are maximizing shared vessel space and services.

Finally, while the goals are well-intentioned and the positive results undeniable, we must consistently grapple with the costs imposed on the supply chain of numerous California-only environmental regulations that are not incurred in other competitor states or ports across North America.  These increased costs are not insignificant when compared to other competitors’ trade gateways, and need to be implemented in a way which is sensitive to competitiveness as well.

Despite these challenges, California’s public ports have plenty to offer the international trade community.  Our ports have large and modern terminals; marine terminal operators have invested billions of dollars in projects to expand and modernize their facilities, using the latest and cleanest technologies – coupled by public sector dollars provided primarily by revenue generated by port customers; we have a large consumer population and distribution network infrastructure; and a labor force that is committed to the Port’s success. However, because of the changing nature of trade and the growing competitiveness threats, the State of California must actively advocate and pursue the use of its public ports as gateways.  One only need look at efforts in other states and Canada which are specifically focused to draw cargo away from California. Our ports and the California-based supply chain needs the Governor’s visible and public leadership to maintain and attract international trade and the hundreds-of-thousands of jobs that are dependent on that activity which benefits all Californians.

California’s ports are a tremendous economic asset that serve the nation and the world, but like all critical resources, there must be a collective commitment to their protection.  Our challenge is to protect and grow the ports to secure their role in California’s economic vitality.

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