Unlike American seaports along the East and Gulf Coasts, California’s maritime gateways are very seldom visited by violent weather. They just have other existential threats to deal with, like the burden of finding the billions of dollars it will take to adhere to draconian air-quality standards now being imposed by state and local politicians.
San Joaquin Valley residents have long taken a skeptical if not scornful view of goings-on up and down California’s long coastline. Politically and economically, the two regions are often described as being worlds apart. However, whatever cultural estrangement exists should not obscure how large a stake the Valley has in the state’s seaports.
First, consider exports. A detailed analysis of metropolitan area trade data by the U.S. International Trade Administration pegged the value of Bakersfield’s merchandise export trade at $2.7 billion in 2016. Farm produce and processed foods accounted for three-quarters of that total, while chemical manufacturing added a further half-billion dollars to the area’s export total. The great majority of those exports leave on ships sailing from the Ports of Long Beach and Los Angeles.
Imports are equally critical to job creation, especially for the Valley's blue-collar workforce. As the recent San Joaquin Valley Interregional Goods Movement Plan notes, the region’s “burgeoning logistics and distribution industry” thrives on its connections to those same ports and to the world beyond. All those warehouses and distribution centers being built throughout the Valley are largely filled with goods imported by sea.
This is why some recent politically driven proposals by state and local officials that could sharply diminish the role California’s ports play in global commerce should be of grave concern to Valley businesses and workers.
In July, the Ports of Los Angeles and Long Beach, under intense pressure from Gov. Jerry Brown’s California Air Resources Board and from the cities’ mayors (Eric Garcetti and Robert Garcia), agreed to encumber themselves with a Clean Air Action Plan (CAAP) without having a clue how the plan would be implemented, how much it would cost and who would pay.
The CAAP outlines a highly aggressive strategy to “ultimately achieve zero emissions” for trucks and other cargo handling equipment at the ports.
Cleaner air is a desirable goal. But contrary to claims peddled by environmental activists, the ports have been aggressively tackling air emissions. In fact, over the past 10 years, diesel particulate matter emissions have been slashed 96 percent for trucks and cargo-handling equipment. This leaves a mere 4 percent of remaining emissions that the CAAP proposes to reduce.
But the price tag for doing so could easily be more than the $14 billion the ports currently estimate. The fact is that exact costs are impossible to determine. The cost analysis commissioned by the ports featured such illuminating caveats as: “In many cases, assumptions have been made to estimate the cost of technology that is not commercially available.” Here’s another: “The variability in the emerging near-zero and zero-emission market creates large uncertainties in the costs of future equipment and related infrastructure.”
In short, the ports aim to embark on what promises to be an extraordinarily expensive plan to achieve remarkably modest air quality improvements without creating a parallel strategy for financing the project.
It’s clear that federal and state government will not be major financial contributors. The only real alternative is to saddle the owners of cargos passing through the ports with charges the ports concede are literally incalculable. That’s going to have repercussions that will be felt throughout all of California.
The state’s ports are already the nation’s most expensive gateways for conducting maritime trade. Adding new costs are likely to prompt shippers to take their business elsewhere, driving shipping away while undermining the ports’ finances and their competitiveness.
Were the San Joaquin Valley’s economic interests not so vitally at stake, it’s the sort of thing that might lead Valley residents to sit back and chuckle at the peculiar antics of folks over on the coast.
Jock O'Connell is an international trade economist based in Sacramento.