responding to increasing port- related freight …...2000 -- scaqmd mates ii study 2000 –nrdc vs...
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USC School of Policy, Planning and Development
Responding to Increasing Port-
Related Freight Volumes:
Lessons Learned
OECD/ITF Research Roundtable
Seaport Competition and Hinterland Connections
10 – 11 April 2008
Genevieve Giuliano
University of Southern California
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USC PPD
Introduction
Ports, trade and the regulatory environment
Forces of change: growth in port-related trade
and its impacts
The Los Angeles region
• Responses:
AB 2650
PierPass
• Explaining outcomes
Conclusions
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USC PPD
The Regulatory Environment
Favored status of ports, int’l trade interests
• Engines of economic development
• Ports as quasi-public authorities
Globalization
• Trade as function of global market dynamics
Regulatory authority
• Federal role – facilitate competition
• Interstate commerce exempt from state, local regulations
• Non-US carriers exempt from US regulation
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USC PPD
Forces of change
Rapid growth of
international trade
Local vs dispersed
economic benefits
Localized consequences
• Traffic congestion
• Air pollution
1990 $889 B
2000 $2,000 B
2005 $2,579 B
US Trade in Goods
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Los Angeles Region
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0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
TE
U (
millio
ns
Los Angeles
Long Beach
Oakland
Tacoma
Seattle
Vancouver
Pacific Coast Port Growth, TEUs
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USC PPD
Significant events
2000 -- SCAQMD MATES II Study
2000 – NRDC vs Port of LA• China Shipping Terminal
2001 – 9/11
2002 – Opening of Alameda Corridor
2002 – Port shutdown
2002 – I-710 Expansion study
Public response: growing resistance to expected trade
growth, facility expansion to facilitate growth;
political pressure to reduce local external costs
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Source: SCAQMD MATES IIMATES II PM <10 Exposure Map
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Response: State legislative efforts
2000 AB 1775 passed Cover coke piles and coke transport
2001 Karnette First proposal for cargo fee
2002 AB 2650 passed Reduced queue time at terminal gates
2004 AB 2041 withdrawn Establish port management congestion district
2004 AB 2042 not passed Baseline for “no net increase”
2005 SB 760 not passed $30/TEU mitigation fee in LA/LB
2005 SB 764 passed;
suspended in 2006
Caps on port emissions
2005 AB 1101 not passed Regulate ports, distribution centers as
stationary sources
2006 SB 927 vetoed $30/TEU mitigation fee in LA/LB
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USC PPD
AB 2650 provisions
Took effect 7/1/02; in force 7/1/03
Fines terminal operator $250 for each truck
idling more than 30 minutes while in queue
Terminals with extended gate hours (≥ 70
hrs/wk) exempt
Enforced by local air district
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USC PPD
AB 2650: Results summary
Enforcement
• No citations at LA/LB, 4 at Oakland
Gate hours not changed
Appointment use limited at most terminals
No evidence that queues or cargo process time reduced
• Truckers reported no change in wait times
• No difference in transaction time, with or without appointments
Conclusion: No impact on emissions
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USC PPD
Winners and losers
Terminal operators
• No costly changes to operations, potential productivity gains
Longshore labor
• Working conditions not affected
Ports, ocean carriers
• No official responsibility
Major retailers
• Operate 24/7
Drayage truckers
• No improvement in turn times
Warehousing, distribution, consignees
• No improvement in delivery times
General public
• No reduction in congestion, emissions
Elected officials
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USC PPD
OFFPeak implementation A response to AB 2041
MTOs get anti-trust exemption to cooperate and set prices
PierPASS, Inc. non-profit to administer
Implemented July 2005
Provisions
• $40/TEU for road cargo entering/exiting during peak hours ($50/TEU as of 4/06)
• Peak hours = M-F 3AM – 6 PM
• Exemptions
Empty returns, chassis returns, domestic freight, transshipments, cargo subject to ACTA fee
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Off-peak cargo as share of eligible cargo
20
25
30
35
40
45
50
Aug 05 week 1
Sept 05 w
eek 1
Sept 05 w
eek 5
Oct 05 w
eek 4
Nov 05 w
eek 4
Dec 05 w
eek 3
Jan 06 week 3
Feb 06 week 3
Mar 06 w
eek 3
April 06 w
eek 2
May 06 week 2
June 06 week 2
July 06 w
eek 2
Aug 06 week 2
Sept 06 w
eek 1
perc
ent
Fee
increase to
$50/TEU
Note: Eligible cargo about 55% – 60% all cargo
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I-710 ave weekday hourly share truck traffic
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%0 1 2 3 4 5 6 7 8 9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
2006
2004
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USC PPD
OFFPeak: Results summary
Stated diversion targets reached
• Immediate and continued shift of eligible cargo to off-peak
period
• Significant impact on local highway system
• Offset much of past 2 year’s port growth
Container fee and program structure
• MTO collaboration limits competition, reduces financial
risk
• Proprietary financial records preclude public scrutiny
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USC PPD
Winners and losers Terminal operators
• Competition, risk, control
Longshore labor
• Premium pay
Ports
• Credit for making changes
Major retailers
• 24/7 structure in place
General public
• Reduced congestion, air emissions
Elected officials
Drayage trucking
• Longer work hours, limited premium pay
• No time savings
Warehousing, distribution, smaller retailers
• Adjust operations, absorb extra costs
Consignees
• Pay the OFFPeak fee
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USC PPD
Conclusions from case studies
Contrasting outcomes, winners and losers
reflect institutional relationships, market
and political power of entities within the
international trade supply chain
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Supply chain conceptual model
Steamship
lines
Export
producers
Ports
Terminal
operators
ILWU
Warehouse &
distribution
Import
consumers
Secondary
manufacturingFreight
forwarders
Drayage
Trucking
Rail
Major
retailers
State, local
governments
Dominant Actors
Natural Allies
Price Taker
Weaker Actors
Critical Link
Stevedore
companies
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USC PPD
Lessons from the case studies
Capacity of dominant actors to respond to pressures for environmental mitigation
• Strategy: cooperation for mutual benefit; control responses and revenue streams
• Goal: continue port growth
Facilitating role of US regulatory policy
• FMC discussion agreements allow MTOs to cooperate
• Interstate commerce prohibits trucker cooperation
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USC PPD
Is Los Angeles unique?
YES
• LA/LB size and west
coast dominance
(inelastic demand)
• Scale of congestion,
pollution problems
• Frequency and scope of
state regulatory efforts
• Effectiveness of
environmental advocates
NO
• Growing congestion, air
pollution problems in
other metro areas
• Appointment systems
proposed in NY/NJ,
Seattle
• Extended gate hours in
NY/NJ
• FMC discussion
agreements
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USC PPD
Closing Thoughts
Changing trade dynamics impose more local costs, more dispersed benefits
Ports less able to influence trade flows, but seen as more responsible for local impacts
• Must respond if public infrastructure investments are to be made
Re internalizing externalities
• At what point do pollution charges, regulations affect competitiveness?