Ocean cargo: California Gov. terminates Lowenthal bill…again

Patrick Burnson, Executive Editor -- Logistics Management, 10/3/2008

LONG BEACH, Calif.—It was “hasta luego, baby” for the controversial bill authored by Calif. senator Alan Lowenthal, D-Long Beach Calif. to raise container fees for shippers using the ports of Los Angeles and Long Beach.

In refusing to sign the bill (for the third time), Gov. Arnold Schwarzenegger stated yesterday that he was sending it back to the Legislature because it did not provide assurances that funded projects “are the most cost-effective methods to reduce diesel emissions and protect the public health.”

Shippers, who have been dealing with escalating costs and other newly-imposed port charges, greeted the news with some relief.

“Given the current financial environment, savings or cost avoidance of this magnitude is welcomed by any small or medium size company,” said Michael Berzon, president, Mar-Log Inc., a supply chain consulting company. “For those in the 10,000 FEU (forty-foot equivalent-unit) and over class it’s Miller Time!”

 Berzon, who also chairs the National Industrial Transportation League’s (NITL) ocean transport committee, noted that 5,000 FEU per year at $60 per FEU equals $300,000 in annual savings, or cost avoidance for shippers.

 The governor said in a statement that the proposed legislation failed to contain a mechanism designed to integrate the infrastructure projects into a long-term, strategic plan for goods movement. He also observed that it did not leverage the billions of dollars that could be made available through public-private partnerships– a growing trend tracked by LM.

Shippers may have made it clear to him, also, that the ports of Los Angeles and Long Beach have recently imposed new container fees that will generate revenue for many of the same purposes outlined in Lowenthal's bill. The Port of Oakland, too, is contemplating such a move.

Indeed every ocean gateway in California is benefiting from a ballot measure approved by the state’s voters in 2005 for a bond mesure giving $3 billion in funds for infrastructure, environmental mitigation and port security.

Shippers may not be celebrating the death of the bill for long, however.

“I am not sure what the future of this bill might be,” said Berzon. “Lowenthal does not seem to be easily dissuaded. He is very persistent. He could eventually find an opportune moment to re-craft something else, and as we say in the shipping business, ‘never say never.’”