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CONTAINER FEE IMPACT ON STATE TRADE TO BE MINIMAL

New Study Reveals Ships Would Still Continue to Prefer California Ports

A newly completed study by two maritime transport and energy experts (Cargo on the Move Through California: Evaluating Container Fee Impacts on Port Choice; by professors James Corbett, University of Delaware, and James Winebrake, Rochester Institute of Technology) found that a container fee at California's three largest ports would have minimal to no impact on business. Most significantly, the study finds that a $30 container fee at the Long Beach and Los Angeles ports would not adversely affect business.

For almost two years, state and regional leaders have discussed a container fee as a viable funding source to invest in infrastructure enhancements, security improvements, and strategies to reduce air pollution at California ports and truck and train corridors. While opponents say the $30 fee, collected on each container that enters the ports, will cause businesses to divert their ships to ports outside the state, this new study finds these diversion fears to be unfounded.

The report asserts that:
  • Projected cargo growth would far exceed potential ship diversions, and as a result, future ship diversions would be "virtually unobservable."
  • A port user fee or container fee at the LA/LB ports would result in ship diversions of less than 1.5 percent. This, the authors note, is a conservative estimate, so diversion would likely be even less.
  • The $30 container fee would increase total ship voyage costs to LA/LB by only 1.5% to 2.5% on average.
  • A key factor for the minimal ship diversion is a strong preference for California ports due to their access to a lucrative market (roughly half of goods that enter LA/LB remain in Southern California), extensive port infrastructure and cargo handling logistics.
  • Little diversion would be expected for the Port of Oakland as well. Nearly three-quarters of the ships docking at Oakland are on multi-leg voyages that include a prior stop at the LA/LB ports. Based on voyage costs alone, diversion of ships due to a fee at the Port of Oakland was estimated at 2% to 4.7%.

The shipment of cargo containers to the ports -- and across the state -- uses an interconnected network of ships, trucks and trains. Nevertheless, while goods movement is vital to the California economy, it exacts a costly health and safety toll on communities from the coast to the valleys.

The ports of Long Beach and Los Angeles are the largest fixed source of diesel pollution in the South Coast region. The California Air Resources Board estimates 2,400 Californians die prematurely each year due to pollution from the transportation of goods. Goods movement alone puts nearly 3,000 residents in the hospital and causes more than one million school absence days annually.

In this post-9/11 era, shipping containers remain a highly vulnerable target. More than 90% of the millions of cargo containers that enter U.S. ports are never inspected. Hong Kong, China is scanning all of its shipping containers; the ports of Long Beach and Los Angeles should settle for no less. Improving the ports' security standards will help make Southern California the safest gateway to the U.S., while protecting the neighboring communities and the thousands of local workers in the trade and shipping industry.

A new July poll released by the Public Policy Institute of California, found that 71% of all adults surveyed (Republican and Democrat, in all regions of the state) were willing to support tougher air pollution standards for ships, trucks and trains that transport goods, even if it resulted in higher costs to business. (For the complete PPIC Survey, go to www.ppic.org/content/pubs/survey/S_706MBS.pdf)

Cargo on the Move Through California was jointly funded by the Natural Resources Defense Council (NRDC) and the Coalition for Clean Air (CCA).

Click here to view/download the full report. Prof. Corbett is available Aug. 14 for media interviews after 9 a.m. (PST).

The authors:
James J. Corbett, P.E., Ph.D., is an Associate Professor in the Marine Policy Program of the College of Marine and Earth Studies at the University of Delaware. Dr. Corbett's experience includes work as a licensed officer in the U.S. Merchant Marine, industrial operations, and energy and environmental consulting supporting industry and government. He is a principal in the consulting firm Energy and Environmental Research Associates, LLC.

James J. Winebrake, Ph.D., is a Professor and Chair of the STS/Public Policy Department at Rochester Institute of Technology in Rochester, NY. Dr. Winebrake is an award-winning teacher and researcher who studies the impact of marine and landside transportation technologies on the environment and the economy. He is also a principal in Energy and Environmental Research Associates, LLC.

For more than 35 years, the non-profit Coalition for Clean Air has worked to restore clean air to California. With offices in Sacramento, Los Angeles and Fresno, it is focused on reducing pollution, protecting natural resources and strengthening the California environmental community.

The Natural Resources Defense Council is a national, nonprofit organization of scientists, lawyers and environmental specialists dedicated to protecting public health and the environment. Founded in 1970, NRDC has 1.2 million members and online activists nationwide, served from offices in New York, Washington, Los Angeles and San Francisco.

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