Keep an eye on Sacramento

Keep an eye on Sacramento

If you are a shipper who uses California ports, the minefield you already tread in coaxing your cargo through congested marine terminals, roads and rail lines will almost certainly grow more treacherous this year. Forget more congestion - that's assumed. There's little conceivable way that backlogs can be avoided during this year's peak season. Shippers understand that they need to begin moving cargo earlier in the year and plan for longer transit times during peak months. They know that there's little to gain by complaining to their steamship line or 3PL. They usually are helpless victims of larger systemic shortcomings.

The additional complication this year will come from politics. There is a greater chance this year than in any in recent memory that major changes affecting the intermodal system will be legislated into being. The results could be costly to shippers and, worse, could fail to yield the long-term benefits the system needs. The action will not be in Washington but in Sacramento. The federal government, as we know, has been virtually silent on the growing crisis in intermodal transportation, and there's little to suggest that will change, other than the minor nod to freight in the federal highway bill reauthorization that's likely be passed this year - though when exactly is anyone's guess.

California is a different scenario entirely. The state is experiencing the consequences of rapid growth in intermodal volumes in direct and tangible ways, and there is growing pressure on the state government to act. Never before have so many state agencies and task forces been set loose to study and recommend solutions to freight-congestion problems. Agencies as diverse as the state Business, Transportation and Housing Authority, the Southern California Association of Governments and the Los Angeles Economic Development Corp. are studying problems related to the movement of goods. Legislators are making noises about new bills affecting harbor trucking and air quality.

The big question is where all of this could lead. One perspective is that it will lead nowhere, because there is simply too much diversity of opinion and too complicated a set of issues to produce any clear policy direction or the means to implement it. But while policy gridlock has contributed as much as real gridlock to the problems faced today, the problems are only getting worse, so something has to give.

The danger is that pressure for results may indeed produce results, but not the right ones. A case in point is the growing discussion in California about imposing a fee on cargo. Some who are familiar with transportation politics in Sacramento acknowledge that such a fee could win approval this year. Transportation interests do not like fees on cargo, but not for the obvious reasons.

When the federal government taxes cargo, it typically uses the money for programs that bear no relationship to cargo movement. The mother of all taxes is Customs duties, which are deposited into the general fund, much to the displeasure of shippers. One idea recently floated by a California legislator would assess a fee on containers and use the money for air-quality control, regional transportation projects and security. No, thank you.

A much more palatable idea is to create a project-specific, off-budget funding source to pay for such needed projects as improving rail infrastructure and widening the I-710 freeway with truck-only lanes. But how much sympathy there is to freight interests is an open question. Behind the drive toward a fee on cargo is the idea that the vast majority of cargo is captive to Southern California and won't be rerouted to escape a fee. Those who believe that may be right; other U.S. ports are gaining cargo but not market share at the expense of Los Angeles and Long Beach.

But a legislated fee is not the way to go. The Alameda rail corridor, by far the biggest response to congestion problems in Southern California, was financed by a dedicated funding source that had no possibility of being diverted to pay for a prison or a teacher pay raise. The current activity in California is being played out on a much bigger stage, and that raises the risk that politics will enter the picture. Let's hope that can be avoided.

Peter Tirschwell is vice president and editorial director of Commonwealth Business Media's Magazine Division. He can be contacted at (973) 848-7158, or via e-mail at ptirschwell@joc.com.