Environmental and antibusiness regulations in the deep blue state are backing up port traffic.
By
Nov. 4, 2021
Container ships wait near the Ports of Los Angeles and Long Beach, Calif., Oct. 1. Photo:
alan devall/Reuters
The backup of container ships at the Long Beach and Los Angeles
ports has grown in recent weeks despite President
Biden’s
intervention to get terminal operators to move goods 24/7. The
ports said last week they would fine shipping companies that let
containers sit at terminals too long. But consumers will end up paying
the fines, and shippers aren’t to blame for the delays. Who is?
The two Southern California ports handle
only about 40% of containers entering the U.S., mostly from Asia. Yet
ports in other states seem to be handling the surge better.
Gov. Ron DeSantis
said last month that Florida’s seaports had open capacity. So
what’s the matter with California? State labor and environmental
policies.
Some 20 business groups recently asked
Gov. Gavin Newsom
to declare a state of emergency and suspend labor and
environmental laws that are interfering with the movement of goods.
Opening the Port of Los Angeles 24 hours a day “alone will do little
without immediate action from the state to address other barriers that
have created bottlenecks at the ports, warehouses, trucking, rail, and
the entire supply chain,” they wrote.
One barrier is a law known as AB5. Before its enactment in
2019, tens of thousands of truck drivers worked as independent
contractors, which gave them more autonomy and flexibility than if they
were employees. As contractors, truck drivers can work for multiple
companies, which allows them to nimbly respond to surges in demand.
The International Brotherhood of Teamsters, however, has long
wanted to organize truck drivers, including those serving California’s
ports. Since the National Labor Relations Act prevents unions from
organizing independent contractors, Democrats passed AB5, sponsored by
Assemblywoman
Lorena Gonzalez,
a Teamsters member.
Trucking companies warned that the law could put small carriers
out of business and cause drivers to leave the state. They want the
U.S. Supreme Court to review a legal challenge to AB5, but many are
complying after defeats in lower courts. It’s hard to quantify how much
AB5 has contributed to the shortage of truck drivers. But there’s little
doubt the law hinders efficiency and productivity.
Another problem: a shortage of storage space. “There is
absolutely no available capacity in the warehousing sector due to the
difficulty in developing any new capacity,” the businesses noted in
their letter. The vacancy rate for warehouses near the Los Angeles and Long Beach ports was a mere 1%, compared with 3.6% nationwide.
If warehouses don’t have space in their facilities or parking
lots to unload goods, drivers can’t make deliveries. Some truck drivers
are leaving container boxes along with the chassis outside storage
facilities and are picking them up later, but that results in a shortage
of chassis at the ports. (About half of chassis are leased to truckers
from a common pool supplied by private companies.)
Inland California cities, where land is abundant, flat and
relatively inexpensive, have had enormous warehouse growth over the past
decade amid the boom in e-commerce. The number of inland “big box”
distribution centers increased 54% between 2009 and 2020 to 711, according to Statista.
Some cities encouraged development because warehouses provide
relatively high-paying jobs for less-educated workers, including
immigrants.
But in California warehouse growth ignited opposition from
environmental groups, which complain of pollution and noise. Many cities
have limited new logistics facilities. Colton, in San Bernardino
County, has imposed a moratorium on new warehouses and truck facilities
through early May 2022.
One trucking company this year withdrew a plan for a
54,000-square-foot warehouse and parking facility for 475 trucks and
containers atop a former landfill in Carson amid political opposition.
Some cities have limited the hours when trucks can unload containers at
stores, which makes it harder to free up warehouse space—another reason
Mr. Biden’s 24/7 call has had little effect.
State officials have also pressed localities to attach green
mandates to permits for new warehouses, which can be poison pills.
Former Attorney General Xavier Becerra
issued guidance with a long list of “best practices and mitigation
measures” for warehouses to comply with the California Environmental
Quality Act. Among them: “prohibiting off-road diesel-powered equipment
from being in the ‘on’ position for more than 10 hours per day,”
“forbidding idling of heavy equipment for more than two minutes,”
“requiring on-site equipment, such as forklifts and yard trucks, to be
electric with the necessary electrical charging stations provided,” and
“constructing electric truck charging stations proportional to the
number of dock doors at the project.”
This July Mr. Becerra’s successor,
Rob Bonta,
sued the city of
Fontana for approving a 205,000-square-foot warehouse with 22 truck
docks. Mr. Bonta complained the city didn’t adequately consider
strategies to mitigate air pollution, such as requiring low-emission
construction equipment and green building standards.
This followed a rule from South Coast Air Quality Management
District in May that will require some 3,000 warehouses in Southern
California to mitigate truck diesel emissions—for instance, by
installing solar panels or employing electric vans and trucks for
deliveries. Yet the state Air Resources Board has already mandated
squeaky-clean engines for heavy-duty trucks.
This boatload of regulations is making it more expensive and
difficult to store goods arriving at California ports. As the business
letter to Mr. Newsom notes: “We have floating warehouses idling off the
coast, wasting fuel. Inaction has—and will continue to have—far more of
an environmental impact than the requests contained in this letter.”
Mr. Biden last month threatened to call out companies if they
didn’t “step up” to ease supply-chain bottlenecks. He should instead
call out California Democrats.
Ms. Finley is a member of the Journal’s editorial board.