California Gov. Gavin Newsom recently has received two written pleas to take action to prevent the state’s port industry from losing more market share. While the writers agree something must be done to stop the flow of business to ports on the East and Gulf coasts, they do not entirely agree on the causes of the loss.
Fifty-two organizations led by the Pacific Merchant Shipping Association (PMSA) sent a letter to Newsom on July 13 that said, in part, that importers began taking their business elsewhere after a 2002 longshore labor shutdown.
The International Longshore and Warehouse Union (ILWU) responded in a statement Thursday that a labor-management dispute from nearly 20 years ago should not be blamed for what it called California’s “competitive disadvantages.”
“West Coast ports are consistently strong and have always recovered market share after disruptions from natural disasters, brief labor-management disputes or economic downturns,” said Frank Ponce De Leon, an ILWU Coast Longshore Division committeeman. “Employer groups should not play American ports against one another in order to weaken environmental and labor standards.”
All parties agree West Coast ports indeed have lost market share. The PMSA letter cited analysis by economist Jock O’Connell that concluded the ports’ market share has declined 19.4% since 2006.
“According to the account often repeated in the maritime industry press, an obstreperous labor union has been singularly responsible for the loss of market share,” O’Connell wrote. “The saga is said to have begun in 2002, when a 10-day shutdown of USWC ports prompted beneficial cargo owners (BCOs) to reassess their reliance on trans-Pacific supply chains that traversed USWC ports.
“Importers in particular are said to have concluded that labor-management relations were more volatile on the USWC than at ports elsewhere in the country” and began moving containers through other North American gateways, he said.
But in his letter dated July 7, ILWU President Willie Adams focused on the future rather than the past. He recommended “increased investment in cap-and-trade, transportation and other funds to strengthen the competitiveness of California ports,” as well as the continuation of a ban on subsidizing automation. He also said the California Air Resources Board should be directed to work with the ILWU in developing future port regulations.
“The ILWU supports improving air quality on the waterfront because we live and work within port communities,” Adams wrote. “Reducing air pollution, however, does not require displacing workers through automation. In fact, automation significantly reduces efficiency while also dramatically increasing the costs to meet clean air targets.”
He said the ILWU has long advocated for reform of the federal harbor maintenance tax (HMT), which it said collects funds on cargo moving through West Coast ports and then disproportionately invests them in East and Gulf Coast ports. Because of this drain, Adams wrote, “we cannot expect that federal funds will pay for the improvements key to the success of California’s ports. This investment must come from the state.”
Port of Los Angeles Executive Director Gene Seroka also has criticized the way HMT funds are distributed.
“As we have seen through the Harbor Maintenance Trust Fund’s antiquated look at how investment takes place, we’ve been collecting the lion’s share of this tax and investing it in our competitors’ ports on the East and Gulf coasts as well as our river facilities,” Seroka said during a press conference Wednesday. “East and Gulf Coast ports have received 10 times the federal funding that has been received by West Coast ports over the last decade — $10 billion to $1 billion here on the West Coast. That has got to change if we are going to be more competitive.”
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Click for more FreightWaves/American Shipper articles by Kim Link-Wills.