California leaders try to fix freight system, once again

Shipping containers are stacked up waiting for truck transport at the Port of Los Angeles in January. California’s ports are among the nation’s busiest, and the state’s freight movement system needs upgrades.
Shipping containers are stacked up waiting for truck transport at the Port of Los Angeles in January. California’s ports are among the nation’s busiest, and the state’s freight movement system needs upgrades. Associated Press file

Last month, just as he departed for a Vatican conference on climate change, Gov. Jerry Brown issued an executive order calling on state agencies to devise by next July an integrated action plan “to improve freight efficiency, transition to zero-emission technologies, and increase competitiveness of California’s freight system.”

On a parallel track, the state Legislature plans to convene a special session this month to address the condition of a transportation infrastructure that, in many respects, has been allowed to deteriorate to third-world standards.

So with the appearance at least of a broad political consensus coupled with what seems to be a genuine sense of urgency, can we finally expect state officials to take decisive, concrete steps to improve the means by which goods get to where they’re supposed to go?

The fact that state government periodically but unsatisfyingly revisits this particular challenge warrants a skeptical eye.

In 1998, Gov. Pete Wilson issued a Statewide Goods Movement Strategy filled with detailed analysis and specific recommendations. Four years later, Gov. Gray Davis put out a proposal-rich Global Gateways Plan of 2002, which was in turn replaced by Gov. Arnold Schwarzenegger’s two-part Goods Movement Action Plan of 2005 and 2007.

As state leaders go once more into the breach, is there any reason to expect more tangible results this time? Not unless the fundamental tension inherent in the governor’s executive order between environmental goals and economic realities can be successfully massaged.

In short, can policymakers come up with an action plan that yields cleaner air, especially on an accelerated timetable, but that does not saddle seaports, airports, trucking lines, steamship companies and railroads with costs that undermine their competitiveness and deny them the profits to invest in expensive new technologies and equipment needed to make their operations more environmentally benign?

As Brown’s order says, the state’s freight system is responsible for one-third of California’s economy and jobs, accounting for more than $700 billion in revenue and 5 million jobs in 2013.

Much of the attention over the next year will be focused on trade corridors that link California’s seaports, airports and border crossings with markets throughout the state and nation. Last year, these gateways handled $702 billion in trade. Even with congestion and labor disputes, the three major ports – Los Angeles, Long Beach and Oakland – handled 43 percent of all containerized imports entering U.S. ports.

All that international trade creates tens of thousands of jobs in California along supply chains that reach out through the Inland Empire counties of San Bernardino and Riverside and into the Central Valley. The gateways also serve the state’s manufacturers and farmers, who last year shipped more than $170 billion in merchandise abroad. And crucially in a state with ever-widening income disparities and that ranks 48th in the percentage of adults with no more than a high school education, the freight industry almost uniquely continues to offer large numbers of unskilled blue-collar workers a chance to earn middle-class wages.

But California’s ports are under siege. Substantial volumes of trade are being diverted to ports elsewhere, a trend likely to worsen once the new locks at the Panama Canal open for business next April.

Given the ardor with which Brown has embraced the issue of climate change, no one should be surprised if his appointees are uncompromising in their zeal to minimize the environmental impact of freight movement. That much was foreshadowed at a July 28 meeting of the California Freight Advisory Council during which a state Air Resources Board official said it was unrealistic to understand how proposed air-quality regulations might affect the economics of the freight industry.

So those who move goods for a living have every right to doubt that the more stringent environmental regulations already in the pipeline will be offset by public money for anything more than a pilot transportation project here and a university research grant there.

So while we continue to pray for rain, let’s also put in a word for sensible, sustainable freight transportation strategy.

Jock O’Connell is a Sacramento-based international trade economist affiliated with Beacon Economics.