The Threepercent Opera
Boston Consulting Group spokesman Simon Goodall was quoted as saying, “Higher prices (at the Port of Los Angeles) will cause diversions as high as 3%,” and he stated further that this 3% estimate would probably rise if the neighboring Port of Long Beach follows through in adopting a plan that businesses could find more palatable. Substantial diversions of the Los Angeles port’s volume would probably shift to Long Beach as well as to other ports because of those higher prices, the consulting group’s study indicated.
Mr. Goodall was commenting on the heavy cost of L.A.’s intention to require shipping companies to employ short-haul truck drivers rather than continue to engage their services on a contractual basis. Central to the issue is the pollution caused by older diesel trucks, and in an effort to improve the air quality in and around the port complex, authorities in both ports had agreed upon a $ 1.6 billion plan for removing some 17,000 of these vehicles from service beginning on October 1st and replacing them with newer and cleaner vehicles. In an about-face, however, the Long Beach Harbor commission now refuses to go along with the plan’s requirement that shipping companies use only employed drivers.
The shift was brought about when Long Beach Mayor Bob Foster and the Long Beach board were advised that the employee mandate and subsequent driver unionization would be impossible to defend in court. One way or another, however, this comic opera will be played out in court because a coalition of environmental groups and unions has now threatened to sue the Port of Long Beach for adopting this new stance. On second thought, this opera is more tragedy than comedy.
Wealth is what matters here, not health. If this were some other type of warehousing operation, or a publicly-held corporation, you can bet your bottom dollar that goods would be logically and profitably spread out in order to avoid congestion, delays and any form of goods movement that could be considered life-threatening . The stockholders would insist upon it. Company officials would do all in their power to achieve efficiency and profitability or they’d be history.
Not so in container ports. Officials in this business answer to no one. Numbers to them mean increasing annual TEU volumes to be flashed to the media, not bottom line dollars to be shown to stockholders.
To make room for further volume increases, expansion programs are highly publicized and kept on a front burner. Port officials know that unwitting governors and gullible taxpayers are intimidated by the enormity and the mystery of port operations, and tax money, therefore, rather than annual port profits, will be provided for this programmed “growth”. Everyone’s afraid to say “no”.
It wouldn’t do to “spread the risk” and to “run to daylight”, you see. Annual TEU volumes have a way of fattening the paychecks of port officials, but if “growth” is sensibly directed to other ports, what then? As for congestion, pollution-caused illnesses, underpaid drivers, multiple container fees, and higher prices … let ‘em stay on a back burner. And as for the taxpayers … let ‘em eat cake!