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Aug 31, 2018

U.S. ports fear tariffs could reduce ship traffic and jobs

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Ports and ground terminals in nearly every state handle goods that are now or will likely soon be covered by import tariffs. Port executives worry that this could mean a slowdown in shipping that would have ripple effects on truckers and others whose jobs depend on trade.

The Associated Press analyzed government data and found that from the West Coast to the Great Lakes and the Gulf of Mexico, at least 10 percent of imports at many ports could face new tariffs if President Donald Trump’s proposals take full effect.

Since March, the U.S. has applied new tariffs of up to 25 percent on nearly $85 billion worth of steel and aluminum and various Chinese products, mostly goods used in manufacturing.

President Donald Trump has argued that the tariffs will help protect American workers and force U.S. trading partners to change rules that the president insists are unfair to the United States.

Trump proclaimed a trade victory for his hard-nosed policies just this week, working out a preliminary deal Monday with Mexico to replace the North American Free Trade Agreement

“We just signed a trade agreement with Mexico, and it’s a terrific agreement for everybody,” the president said. “It’s an agreement that a lot of people said couldn’t be done.”

Trump applauded Monday’s surge in stock prices, which was fueled in part by the apparent breakthrough with Mexico.

In New Orleans, port officials say a tariff-related drop in shipments is real, not merely a forecast. Steel imports there have declined more than 25 percent from a year ago, according to the port’s chief commercial officer, Robert Landry.

The port is scouting for other commodities it can import. But expectations appear to be low.

“In our business, steel is the ideal commodity,” Landry said. “It’s big, it’s heavy, we charge by the ton so it pays well. You never find anything that pays as well as steel does.”

The port of Milwaukee imports steel from Europe and ships out agricultural products from the Midwest. Steel imports haven’t dropped yet because they are under long-term contracts, said the port director, Adam Schlicht. But there has been “an almost immediate halt” in outbound shipments of corn because of retaliatory duties imposed by the European Union on American products.

Much of the corn, he said, “is just staying in silos. They are filled to the brim.”

Many other ports have been humming along and even enjoyed an unexpected bump in imports during June and July as U.S. businesses moved up orders to ship before the new tariffs took effect. That started with manufacturing goods and is now spreading to retail items for back-to-school and Christmas.

“Some of my retail customers are forward-shipping the best they can to offset proposed tariffs,” says Peter Schneider, executive vice president of T.G.S. Transportation, a trucking company in Fresno.

Port officials were encouraged by this week’s announcement that the United States and Mexico had reached a preliminary agreement to replace the North American Free Trade Agreement, hoping it might lead to reduced trade barriers. Canada’s participation in any new deal to replace NAFTA, though, remains a major question mark.

The port officials continue to worry, though, that Trump will make good on a plan to expand tariffs to an additional $200 billion in Chinese imports — a list that includes fish and other foods, furniture, carpets, tires, rain jackets and hundreds of additional items. Tariffs would make those items costlier in the United States. And if Americans buy fewer of those goods, it would likely lead to fewer container ships steaming into U.S. ports.

The impact will be felt keenly at West Coast ports like Los Angeles and Long Beach.

Los Angeles Mayor Eric Garcetti, relying on information from his port officials, said his port — the biggest in the United States — could suffer a 20 percent drop in volume if the additional $200 billion in tariffs are imposed against Chinese goods.

Jock O’Connell, an economist in California who studies trade, said he doubts a downturn would be so severe — that would match the slump that accompanied the global recession of 2008 — “but we will see a definite impact.”

Here are some of the key findings from the AP analysis:

  •  U.S. tariffs will cover goods that are imported at more than 250 seaports, airports and ground terminals in 48 states.
  •  At 18 of 43 customs districts — including those representing ports around Los Angeles, San Francisco, New Orleans and Houston — at least 10 percent of their total import value could be covered by new tariffs if all Trump’s proposals take effect.
  •  Retaliatory duties by China and other countries cover $27 billion in U.S. exports.

Eugene Seroka, executive director of the Los Angeles port, worries that “if tariffs make it too expensive to import, there will be an impact on jobs.”

Seroka and others don’t expect layoffs on the docks. Union longshoremen — whose average pay last year on the West Coast was $163,000, according to the Pacific Maritime Association, which negotiates for the ports — often have contract provisions ensuring that they are paid even if there’s no work. And there are fewer of them than there were a few decades ago because the advent of shipping containers has reduced the need for people on the docks.

Dwayne Boudreaux, an International Longshoremen’s Association official in Louisiana, said, though, that his stevedores are handling about 10 percent less steel from Japan because of the new tariffs.

“We don’t think it’s going to (get) worse,” he said. But, he added, “who knows — that could change from the next press conference.”

The impact might be greater on truck drivers and warehouse workers. Fewer will be needed, according to O’Connell.

Less shipping means less revenue for the ports — something that could limit their ability to pay for expansion and improvement projects, according to Kurt Nagle, president of the American Association of Port Authorities. He said U.S. ports are in the midst of a planned $155 billion in infrastructure spending from 2016 through 2020.

The current trade war was foreshadowed in January by steep U.S. tariffs on imported solar panels and washing machines. It exploded with the U.S. tariffs of 25 percent on imported steel and 10 percent on aluminum. Then came two rounds of duties targeting about $50 billion in imports from China — punishment against that country for pressuring U.S. companies to transfer technology and intellectual property to Chinese companies.

Along the way, China, the European Union, Turkey, Canada and Mexico imposed retaliatory duties on U.S. goods including farm products and Harley-Davidson motorcycles.

This week, the U.S. Trade Representative’s office finished six days of hearings on a plan to hit another $200 billion in Chinese imports with 10 percent duties. Trump has said that if China continues to retaliate he could eventually add tariffs on $450 billion in Chinese goods, nearly 90 percent of that country’s 2017 exports to the U.S.

Trade wars are usually temporary. President George W. Bush abandoned his steel tariffs after less than two years.

Milwaukee’s port director worries, however, that damage from the current trade dispute could linger. Canada is increasing corn exports to Europe, and Brazil is trying to pick up the slack in soybean exports to China.

“Others are already picking up that business,” Schlicht said.

Online Edition

Ports and ground terminals in nearly every state handle goods that are now or will likely soon be covered by import tariffs. Port executives worry that this could mean a slowdown in shipping that would have ripple effects on truckers and others whose jobs depend on trade.

The Associated Press analyzed government data and found that from the West Coast to the Great Lakes and the Gulf of Mexico, at least 10 percent of imports at many ports could face new tariffs if President Donald Trump’s proposals take full effect.

Aug 31, 2018

Legislature passes bill that penalizes retailers hiring rule-breaking trucking companies

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A bill that would penalize retailers that hire trucking companies which have legal judgments against them for labor law violations is now a signature away becoming law after it was passed by the California legislature on Friday, Aug. 31.

Senate Bill 1402, authored by state Sen. Ricardo Lara (D-Bell Gardens), was passed by a majority vote in the Senate on Friday afternoon – right at the start of Labor Day Weekend — after being approved by the state Assembly the day before and sent along to Gov. Jerry Brown.

“The bill seeks to end the exploitation of port truck drivers who are being left behind, even though America’s economy could not run without them,” Lara said. “Senate Bill 1402 will clean up our port trucking industry in a way that is fair for absolutely everyone and protect some of our most vulnerable workers.”

Under the legislation, when retailers hire trucking companies that have unpaid legal judgments against them, those retailers become jointly liable should the trucking companies commit new violations of state labor and employment laws.

Such violations could include  failure to pay wages, imposing unlawful expenses on employees, failure to provide worker’s compensation insurance and misclassifying employees as independent contractors.

SB 1402 also mandates that port trucking companies have access to a list of trucking companies that failed to pay final judgments, with the list prepared and maintained by the state Division of Labor Standards Enforcement.

Although the state’s major seaports took no position on the legislation after it was introduced by Lara earlier this year, the mayors representing California’s three largest ports — Long Beach’s Robert Garcia, Los Angeles’ Eric Garcetti and Oakland’sr Libby Schaaf – all publicly supported SB 1402.

More than 40 percent of U.S. shipping-container traffic moves through L.A., Long Beach and Oakland, according to statistics from the ports. The about 25,000 port truck drivers in the state routinely face wage theft and illegal pay deductions, according to Lara’s office.

“Port truckers are delivering for the world’s biggest brands, but working for poverty wages. California’s economic engine does not go without them, and they need to share in the benefits,” said Lara, whose district includes the Port of Long Beach.

Lara introduced the bill following a 2017 investigation by USA Today, which found that some Southern California port trucking companies were “forcing” drivers to finance their own trucks by taking on debt they couldn’t afford and that in some instances, where drivers were cheated out of wages by their employers.

The bill was sponsored by the Teamsters and the California Labor Federation, which consists of more than 1,200 labor unions. It was also supported by the Natural Resources Defense Council and multiple community and social justice groups.

“Truckers power our economy forward every day — they deserve a living wage and benefits that enable them to provide for themselves and their families,” Garcetti said in a statement after the bill’s passage. “This bill will help us hold bad actors accountable for wage theft, and I’m pleased that our legislature has passed it today.”

The Senate approved the bill 26-12, while the Assembly passed it on a 53-26 vote. It is now awaiting the governor’s signature.

“We are grateful for the leadership of Sen. Lara for introducing this landmark legislation,” Fred Potter, Vice President, International Brotherhood of Teamsters and Director of the Teamsters Port Division said after the bill’s passage. “We urge Governor Brown to sign SB 1402 to restore dignity to the hard-working men and women in the driver’s seats by cleaning up our port trucking industry.”

Online Edition

A bill that would penalize retailers that hire trucking companies which have legal judgments against them for labor law violations is now a signature away becoming law after it was passed by the California legislature on Friday, Aug. 31.

Senate Bill 1402, authored by state Sen. Ricardo Lara (D-Bell Gardens), was passed by a majority vote in the Senate on Friday afternoon – right at the start of Labor Day Weekend — after being approved by the state Assembly the day before and sent along to Gov. Jerry Brown.

Aug 31, 2018

Tariffs could hit L.A., Long Beach ports hard, analysis and experts say

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If the latest salvos in an escalating trade war between the United States and China take effect, the resulting economic shock waves would likely hit Los Angeles and Long Beach ports the hardest, local officials fear.

The latest round of tariffs, threatening $200 billion worth of Chinese products the U.S. imports each year, stands to affect tens of billions of dollars worth of consumer goods – such as food, paper and handbags – coming into the L.A. area’s sprawling trade network, according to a Southern California News Group analysis of trade data.

President Donald Trump’s administration defends the tariffs as a difficult but necessary step to level the trade imbalance between the U.S. and many of its trading partners, particularly China.

Related: U.S. ports fear tariffs could reduce ship traffic and jobs

When these tariffs would go into effect, and the extent to which they could harm trade, is still unknown. But officials in Washington, who have held several hearings in recent weeks, will allow public comment until Thursday, Sept. 6, so nothing can happen before then.

The president has said a tough trade stance will bring back jobs, inspire new, more balanced trade deals and create stronger protections for America’s intellectual property. This week, the administration reached a preliminary deal with Mexico to replace the North American Free Trade Agreement and was working to include Canada in the deal.

Trump said in a recent tweet, “Tariffs are working big time.”

As part of the strategy, U.S. Trade Representative Robert Lighthizer was tasked with identifying the $200 billion worth of Chinese goods to set tariffs on.

“The Trump Administration continues to urge China to stop its unfair practices, open its market, and engage in true market competition,” Lighthizer said in a statement earlier this month.

Still, experts say, the negative consequences of further tariffs could be wide-ranging – hitting everything from the ports themselves to the trucking industry, American manufacturing and consumers.

Los Angeles ports, with the highest value of imports last year, would be among the hardest hit by new tariffs on Chinese goods

Source: Census U.S. Trade Online database via AP (Graphic by Ian Wheeler, SCNG)

“We’ve seen standoffs in international commerce before, and there’s still time to resolve differences,” said Mario Cordero, the executive director of the Port of Long Beach, who this week called the trade dispute unfortunate. “But recent tit-for-tat measures aimed at imports and exports could cause long-term damage and harm American consumers and businesses.”

At the Port of Los Angeles, Executive Director Gene Seroka has said the new tariffs could impact up to a quarter of the cargo traveling through the docks, enough to fill more than a million 20-foot cargo containers. Los Angeles Mayor Eric Garcetti added that the port could suffer a 20 percent drop in volume.

“That equals 1.4 million (units), about $43 billion of trade value,” port spokesman Phillip Sanfield said this week. “That roughly equals containers lined up from L.A. to New York and back again to L.A.”

The proposed tariffs are set to burden some of the L.A. port’s top imported commodities, including auto parts, computer parts and accessories, machinery, and appliances, according to port data; top exported commodities that could be hit by Chinese retaliation include cotton, waste paper, plastics and scrap aluminum.

Still, experts and industry insiders disagree on how quickly the tariffs will land on the backs of consumers and whether it will hamper spending.

“The demand for some goods could outweigh any increases in price resulting from tariffs,” said Noel Hacegaba, the deputy executive director for the Long Beach port. “And that’s assuming the shipper passes on 100 percent of the tariff to the end consumer.”

But Clayton Dube, executive director of USC’s U.S.-China Institute, said, as an example, consumers can expect to see increases in the prices of goods manufactured from steel, since the tariffs have raised the price of the imported metal from China and elsewhere.

“Business customers will see higher prices for engine parts, for some kinds of construction equipment, for scales, for imaging equipment, for parts for printers and other electronic equipment,” Dube said. “Some types of farm equipment have been targeted.”

And, Dube noted, the likelihood of retaliatory tariffs from China could hit a number of American exporters, including California’s sizable agriculture industry.

That’s why officials for both the L.A. and Long Beach ports have gone on the offensive against the tariffs, even sending out tweets blasting the proposal.

“Tariffs could bring a significant reduction in cargo economic activity and ultimately jobs,” read one tweet the Port of L.A. sent this week. “Manufacturing and associated U.S. jobs could be at risk with current tariffs.”

Meanwhile, at the adjoining Port of Long Beach, internal data show that 10 percent of all loaded containers coming through the port have been impacted by the tariffs implemented last week.

The $200 billion of additional proposed tariffs – and a proposed $60 billion worth of U.S. exports to China – would raise that to 28 percent of all loaded containers moving through Long Beach, port figures show.

A wide spectrum of goods and materials moving through the port would be hit: aluminum, chemicals, machinery and parts, appliances, and electronics, said port spokesman Lee Peterson.

But it’s not just the ports that are worried about the tariffs – businesses are too.

On Monday, in fact, the Office of the U.S. Trade Representative held its final public hearing on the proposed tariffs, during which officials from hundreds of companies spoke about the effect the levies could have on their businesses.

Among those criticizing the tariffs were representatives from several Southern California businesses, including Ultra Wheel Company, a Fullerton manufacturer.

“The proposed tariffs would cause a severe harm to us, our distributors, and U.S. consumers,” Ultra Wheel president Fred Dobler said at the hearing, noting he would likely have to cut jobs. “The tariff would force us to increase the price of our products to our customers.”

The tariffs could also hurt one of the most volatile group of port-related workers, truck drivers. Many of the truckers are independent contractors who, if trade volume decreases, may lose work, said Weston LaBar, CEO of the Harbor Trucking Association in Long Beach.

“It’s hard to retain drivers,” he said. “If we don’t have work for those drivers, we’re worried they will leave for some other segment of the trucking business or go into another business, like construction.”

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The tariffs’ impacts could also extend far beyond the L.A.-Long Beach port complex – reaching into every trading hub in the Southland.

The Southern California News Group analyzed trade figures collected by the Census’ U.S. Trade Online database and prepared by the Associated Press.

The Census groups the nation’s ports of entry by land, air and sea into customs districts. Last year, the Los Angeles district, which includes LAX and Las Vegas’ McCarran International Airport, handled the highest-valued volume of goods in the U.S., worth $303 billion.

If passed, the new levies would affect at least 14 percent of that volume. With the tariffs on foreign steel and aluminum already in place, 18 percent of the district’s total imports would be subject to taxes.

The districts of New York City and Laredo, Texas, were second and third in import worth behind Los Angeles last year, valued at $228 billion and $117 billion, respectively. Adding proposed tariffs to those already in place, 8 percent of goods headed to New York would be affected, as would 2 percent of goods headed to Laredo.

The difference is the huge volume of Chinese goods Los Angeles receives compared with other shipping centers; the proposed round would hit $43 billion worth of goods headed to the Los Angeles area compared with $13 billion for New York and $2 billion for Laredo.

These nine import categories face tariffs targeting over $1 billion worth of goods bound for Los Angeles

Source: Census U.S. Trade Online database via AP (Graphic by Ian Wheeler, SCNG)

Locally, the looming tolls stand to hit the most valuable category of imports hard: electric machinery, equipment and parts – such as vacuum cleaners, electric razors, and various components for cars and home appliances.

In 2017, $55 billion worth of these products were shipped to Los Angeles, and the district is on track to bring in at least that amount by the end of this year. (By comparison, Apple has about $1.6 billion worth of iPhones, Macbooks and other merchandise on hand in its inventories.)

Tariffs imposed earlier this year already affect $4 billion of that total; if the Trump administration makes good on its latest threat, another $12 billion would be added, totaling $16 billion – a little under a third of the annual value.

The tariffs come at a bad time for the L.A.-Long Beach port complex, the busiest in North America. Last year, L.A. moved 9.3 million containers, an all-time record. Long Beach also set its own record, moving 7.5 million cargo containers – and it’s on pace for 4 percent more cargo this year.

“Modern supply chains are very complicated and by messing with their components, follow-on consequences are very likely,” said marketing professor Terrence Witkowski, director of Cal State Long Beach’s international business program at Cal State Long Beach and a harsh critic of President Trump’s trade policies. “I strongly suspect that the Trump administration’s crackpot trade policies will harm the ports of L.A. and LB.”

Online Edition

If the latest salvos in an escalating trade war between the United States and China take effect, the resulting economic shock waves would likely hit Los Angeles and Long Beach ports the hardest, local officials fear.

Aug 20, 2018

$35 million investment lets Uber-like Cargomatic hire more in Long Beach

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Cargomatic, a Long Beach technology company that just two years ago had been struggling to raise funds and had reportedly laid off more than a third of its staff, is now looking to “significantly” beef up its Southern California staffing after recently receiving a $35 million cash injection from a group of investors, the company’s CEO said Monday.

The company, located not far from the Port of Long Beach, uses technology to pair up people and companies with cargo to ship with cargo carriers who have space available, earning it the nickname the “Uber for trucking” not long after it debuted in 2013.

The way it works is that through its mobile application, Cargomatic connects shippers, receivers and carriers and eliminates the phone calls, emails and faxes traditionally needed to book a transaction. The company’s technology enables users to, among other things, access or list unused trucking space, plus view cargo pick up times and delivery rates.

“We’re more than just an app, we’re an entire end-to-end solution for local pick up and delivery,” Chairman/CEO Richard Gerstein said. “What the app does better than anything I’ve ever seen is it tracks the trucks in real time.”

The company was originally based in Venice Beach, but a series of missteps including financial mismanagement, led to the company laying off more than a third of its staff in April 2016, as well as its CEO stepping down the following month. The company’s comeback began after it moved to Long Beach in late 2016 and when Gerstein came aboard to head the company in early 2017.

The $35 million new funding comes primarily from global private equity firm Warburg Pincus and also includes venture capital firm Canaan, short line railroad Genesee & Wyoming, venture firm Xplorer Capital, and investor Muse Family Enterprises.

“We see meaningful opportunity to continue delivering value for customers and expanding the platform to new cities,” Warburg Pincus Vice President Parag Gupta said. “We look forward to partnering with (Cargomatic) in this new phase of the business.”

Gerstein said Monday, Aug. 20, that this round of funding will go toward expansion and adding employees.“We’re going to be hiring significant numbers of engineers, software engineers, customer service people,” Gerstein said. “Many of the key hires will be in Southern California, out of our Long Beach office, and we are going to be expanding our capacity significantly in and around Southern California. You will see significant growth in Cargomatic emanating from Long Beach over the next year.”

Cargomatic has 50 workers in Southern California, about 30 of whom work out of the company’s downtown Long Beach office on Ocean Boulevard. The company is looking to beef up that number “immediately,” Gerstein said.

“I don’t have a number to give you, but we are significantly going to expand our head count in Long Beach, he said.”

“We’re very committed to Long Beach,” he continued. “The LA-Long Beach-Southern California market is by far our largest market and we’re grateful for the blessings that we’ve gotten out of that market, and we’re going to keep pursuing growth there. It’s a really amazing market for us.”

It automatically manages extra charges like wait times, extra services that area required to fulfill a shipment. Traditionally the charges are calculated manually.

“We’ve put a lot of effort into automating the process,” Gerstein said. “And that’s a very big deal, especially in the port environment where there is a lot of waiting and it’s really designed to give more transparency to the entire process.”

Although Cargomatic benefits from being in relatively close to the Long Beach and Los Angeles seaports and the hustle and bustle of trucks constantly taking goods to and from the harbor area, Gerstein said there’s more to his company’s strategic location.

“It’s a good thing to be near the ports, but I think for us it’s not just that; we just like the feeling better,” he said. “It’s more of a transportation town: people in Long Beach speak our language. I’m from Chicago originally and I just feel like I’m back in the Midwest when I’m in Long Beach. I like that feeling.”

Online Edition

Cargomatic, a Long Beach technology company that just two years ago had been struggling to raise funds and had reportedly laid off more than a third of its staff, is now looking to “significantly” beef up its Southern California staffing after recently receiving a $35 million cash injection from a group of investors, the company’s CEO said Monday.

Aug 23, 2018

Los Angeles, Long Beach ports say emissions keep falling, even as cargo skyrockets

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Although the amount of cargo moving through the Los Angeles and Long Beach seaports has continually risen over the years, the pollution created at those shipping hubs has steadily decreased, according to annual air emissions reports released this week.

The reports show Long Beach and Los Angeles both had record-setting emissions reductions last year, with some of the most notorious pollutants dropping by more than half.

The 2017 data are compared with 2005 levels, the first year the ports began testing as part of their joint Clean Air Action Plan, a series of environmental initiatives aimed at reducing port-related pollution; those steps included using zero-emissions cargo handling equipment and newer, cleaner engines for trucks that haul goods to and from the ports.

At the Port of Los Angeles, data from its report show, emissions of nitrogen oxides, a key component of smog, are at their lowest level to date – down 60 percent since 2005.  Meanwhile, at the Port of Long Beach, that pollutant has fallen 56 percent during that time.

A second major pollutant, sulphur oxides,  is down 97 percent from 2005 levels at the Port of LA and 98 percent at the Port of Long Beach, the dual studies show.

The Port of Los Angeles also said that diesel particulate matter – microscopic particles emitted from diesel engines – fell 87 percent between 2005 and 2017. The Port of Long Beach saw an 88 percent decline over the same time period, according to its study.

The ports “compile that (information) and show (how) much of each pollutant was produced in a given calendar year,” said Port of Long Beach spokesman Lee Peterson. “Results and methodology are reviewed by” regulatory agencies.

Starcrest Consulting Group, a private firm, created both of the annual studies with information provided by tenants and operators at the ports. The ports and Starcrest coordinated their efforts with three air regulatory agencies: the U.S. Environmental Protection Agency, California Air Resources Board and the South Coast Air Quality Management District.

The Los Angeles port publicly released its pollution inventory Thursday, Aug. 23. Long Beach port officials will present their findings at the Monday, Aug. 27, harbor commission meeting.

Starcrest and the California Air Resources Board did not return calls and emails requesting comment.

As part of each ports’ methodology, emissions from five sources were evaluated: ocean-going vessels, harbor craft, cargo-handling equipment, rail locomotives and heavy-duty equipment.

The decrease in pollutants has coincided with double-digit increases in the amount of cargo that’s gone through the ports.

In 2017, the Port of Los Angeles moved a record 9.3 million containers, up 25 percent from 2005. At the Port of Long Beach, 7.5 million containers were shipped last year, a 12 percent jump.

In a statement, Los Angeles Mayor Eric Garcetti said that the Port of LA is “showing the world how we can produce record-breaking growth and protect the environment at the same time.”

“Our progress on reducing emissions to just a fraction of our 2005 levels – while we ship more cargo than ever – is proof that our Clean Air Action Plan is working and exceeding expectations.”

Last November, the two ports adopted an update to the Clean Air Action Plan that includes new components, such as shifting the cargo handling and trucking industries away from fossil fuels and toward near-zero and zero-emissions technologies. The plan also anticipates that cleaner engines will power future container ships.

The updated plan is estimated to cost as much as $14 billion to implement, according to the ports.

Online Edition

Although the amount of cargo moving through the Los Angeles and Long Beach seaports has continually risen over the years, the pollution created at those shipping hubs has steadily decreased, according to annual air emissions reports released this week.

The reports show Long Beach and Los Angeles both had record-setting emissions reductions last year, with some of the most notorious pollutants dropping by more than half.

Aug 11, 2018

‘Chinafornia’ and global trade in age of Trump

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One of the last regions settled en masse by Europeans, California’s trajectory long has been linked to its partners across the Pacific. Yet these ties could be deeply impacted by President Trump’s immigration and trade policies, as well as resulting blowback by the authoritarian regime in Beijing.

In recent decades, California has become something of a China junkie. With China on the route to what some predict will be hegemonic power, there’s a set who eagerly wish to promote the idea of “Chinafornia.” The pattern of dependency can be seen in how our industries depend on China for their production. For some companies, like Apple, China provided the capacity to produce products cheaply without suffering heavy GHG impacts in state. China’s coal-based pollution allowed these congenitally “virtue signaling” firms to retain their “green” street cred.

Yet as a trade war looms, California could find itself without key markets, investment capital and sources of supply for its increasingly de-industrialized economy. Any reduction in immigration, and related investment flows, could dent real estate values, particularly in such speculator-driven markets as Irvine, downtown Los Angeles and Koreatown. There could be political ramifications as well given the close ties between China and California officials, including an alleged spy working as a driver for Sen. Dianne Feinstein.

California’s historic ties

Asia has always been a kind of ace in the hole for California. The state’s economic emergence in the early 1900s was tied directly to rising trade with Japan, China and the country’s new imperial outpost, the Philippines. These connections, wrote the Los Angeles-based journalist Harry Carr, changed our region from “a hick town” and turned it “into a city.”

Of course, some of our early entanglement with the Pacific was profoundly oppositional. Deep-seated fears of Asian immigrants engendered harsh racial restrictions, including bans on property ownership. The massive buildup against Japan during the Second World War sent tens of thousands of Japanese residents, including citizens, to concentration camps, but also initiated the region’s first great wave of industrialization.

Since the war California has benefited from its Asia ties in generally more positive ways. Asian importers, such as car companies, tended to use the Port of Los Angeles and set up their local headquarters here. Investors, particularly from Japan in the 1980s, buoyed the state property market. New immigrants from China, Korea, south Asia and Vietnam brought a tremendous work and entrepreneurial ethos to the state, helping to revitalize communities from the San Fernando and San Gabriel valleys to wide swaths of Orange County.

The challenge of Trump

Over the past half century, both parties have tended to be friendly both to globalization. Yet now the state’s establishment is being rocked by Trump’s assault on both generous immigration policies and China’s unfair trading practices. China’s mercantilism alone has been linked by labor-aligned groups with the loss of millions of jobs. There’s a stark class division here; the upper classes have largely benefited while many higher-wage job opportunities for middle- and working-class Californians have disappeared.

The current Trumpian policies could change this, forcing companies to rely more on citizen workers and local capital. Silicon Valley tech firms, now dependent for 40 percent of its workforce on largely Asian imports, will have to compete for domestic labor with regions and companies that operate in more reasonably priced markets. This could benefit local workers and sub-contracting firms.

To be sure, some California exporters — notably in the Central Valley, Hollywood and Silicon Valley — could find some markets shut off to them. Yet, in the longer run, China will likely suffer more in a trade war, given its almost four times larger volume of exports than come from the U.S., weaker domestic markets and massive indebtedness. Trump’s approach could force it to compromise on key trade issues in ways that benefit our exporters.

Can we benefit from the new reality?

Given the extraordinary anti-Trump mood in the state, it may seem discordant to see any good in Washington’s trade stance. California is home to nearly 40 percent of all Chinese home purchases in the U.S. These investors are one primary cause for the insane property-price inflation that has effectively chased young American families from the state. Would it be a tragic loss to lose the capital expended by non-resident foreigners who buy property largely as a kind of safe deposit box? Some two-fifths of these investors, according to a one real estate study, do not intend to live in their homes.

Policies discouraging shifts of work to China also could help reorient our business from just originating ideas to making products. This could prove a potential boon to the state’s suffering working class and for the environment, by shifting production to relatively clean California from coal-dependent China.

We are right to be offended by the xenophobia associated with the Trump policies. But if a crisis in Chinafornia spurs the state to think about decreasing our dependence on China, perhaps we can begin to promote development that helps not just speculators, investors and oligarchs, but ordinary Californians.

Online Edition

One of the last regions settled en masse by Europeans, California’s trajectory long has been linked to its partners across the Pacific. Yet these ties could be deeply impacted by President Trump’s immigration and trade policies, as well as resulting blowback by the authoritarian regime in Beijing.

Aug 13, 2018

Toyota’s green terminal gets go-ahead from Port of Long Beach

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Port of Long Beach officials on Monday moved forward on a green terminal plan being proposed by Toyota to better serve its hydrogen-powered clean vehicle line.

The renewable energy power plant would power the private terminal that imports Toyota vehicles at the port and be designed to reduce air pollution.

A hearing held before the unanimous vote to accept and approve permitting for the plans by the Toyota Logistics Services facility drew no comments from the public.

The major renovation on the terminal would add a self-contained fuel-cell power plant and a fueling station to the Toyota Logistics Services facility at Pier B. Each would help reduce air pollution by using renewable energy and eliminating the emissions of harmful gases that could potentially drift over neighboring areas.

The project would reconfigure the facility to streamline operations and reduce on-site vehicle movement and enhance and modernize the facility for safety, seismic and environmental purposes.

Heather Tomley, director of environmental planning, gave commissioners an overview of the project and said that mitigation measures were sufficient to send the terminal plans forward.

“Fugitive dust” was among the potential impacts but studies determined that could be mitigated with increased watering on the premises, Tomley said.

There also will be safeguards in place in the event of archaeological finds on the property.

“All potentially significant impacts will be mitigated to less than significant,” she told commissioners.

The property is located in the northeast part of the Long Beach Harbor and most of the area is within the city of Long Beach. A small northwest corner of the property is located within the city of Los Angeles.

Cars are delivered by ship to the site and are then processed to be shipped via truck and train to car dealerships in the western United States.

Toyota has been producing the fuel cell cars, banking on hydrogen power automobiles becoming a bigger share of the electric vehicle market in the future.

Nearly all of the terminal’s existing facilities on 223,000 square feet would be demolished to make way for the new elements and terminal makeover.

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Port of Long Beach officials on Monday moved forward on a green terminal plan being proposed by Toyota to better serve its hydrogen-powered clean vehicle line.

The renewable energy power plant would power the private terminal that imports Toyota vehicles at the port and be designed to reduce air pollution.

A hearing held before the unanimous vote to accept and approve permitting for the plans by the Toyota Logistics Services facility drew no comments from the public.

Jan 18, 2011

TSA looks to expedite screening for air cargo on US-bound passenger planes

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The Transportation Security Administration is moving ahead, on a faster-than-expected timetable, to close a gap in security screening of international air cargo carried aboard US-bound passenger flights.

Air freight forwarders and members of the global shipping industry learned Friday that TSA appears poised to require them to screen, by year's end, 100 percent of such cargo bound for the United States. That would be two years sooner than expected.

Just last year, the TSA told Congress that screening 100 percent of international in-bound air cargo would be delayed until at least 2013. But TSA is looking to accelerate that timetable after the terrorist bombing attempt in late October, in which explosives were secreted inside printer cartridges sent from Yemen to Chicago – and were intended to blow up in cargo holds of passenger jets while they were in the air. [Editor's note: The last two paragraphs were changed post-publication to make clear that the requirement is not yet final.]

Carriers now have 45 days to comment on the proposed mandate, with TSA reviewing industry comments before it makes the rule final.

A push to screen all cargo was a response to "the latest threats and the considerable progress made by industry in screening international inbound cargo," James Fotenos, a TSA spokesman, wrote in an e-mail. "TSA’s mission is to ensure the safety of the traveling public.... After the thwarted attempt by terrorists to ship explosives aboard aircraft headed to this country last October, TSA immediately took a number of steps to enhance security by tightening existing air cargo."

Among those steps for US-bound international flights, TSA ordered a ban on any cargo designated as "high risk." Other safeguards, meanwhile, heavily restricted small packages sent by mail, which often travel in the cargo holds of passenger aircraft.

The policies, combined with bad weather, meant that some people in the US waited weeks to get their packages, especially over Christmas when there was a big jump in the amount of intercontinental mail. In some cases, the US Postal Service was forced to reroute US-bound mail, putting it on air-cargo-only flights and even ships.

"I had a batch of items sent to the US on the 26th November that took ages," wrote Chocolatecatgirl, an eBay seller in Britain who sells items in the US. "One customer got snotty after 2 weeks and I had to refund."

Delays have lessened as mail volume has dropped – and as postal systems abroad have become familiar with US requirements, say US Postal Service and air cargo experts.

But will new air freight requirements cause the same kind of disruption with air cargo that occurred with small mailed packages in December?

"TSA continues to work with the air cargo industry to implement the robust security measures with the least amount of impact on the flow of air cargo and mail inbound to the US," Mr. Fotenos wrote.

Freight forwarders, who use the cargo holds of passenger aircraft to move thousands of tons of freight each day, have long resisted a requirement of 100 percent screening, arguing that it would throw a monkey wrench into the finely tuned global supply chain.

"International aviation authorities ... suggest that screening all international cargo may not improve security and would likely cause economic damage to our slowly recovering economy," Brandon Fried, executive director of the Airforwarders Association, wrote in an e-mail. "TSA is aware of the challenges and criticisms of the Congressionally-mandated screening regime, and we are hopeful they will thoughtfully address these during the comment period.” [Editor's note: The original paragraph has been changed to make clear who suggests that comprehensive cargo screening may not improve security.]

Freight forwarders, he said, prefer "risk-based freight assessments," in which air cargo is evaluated for higher-risk items that are then screened, rather than requiring screening of all items. In November, Mr. Fried urged Congress to "reject additional calls for 100 percent screening of inbound cargo."

After 9/11, Congress approved the Aviation and Transportation Security Act of 2001. It required screening of "all passengers and property transported on passenger planes," including air cargo aboard those planes – about 7,500 tons per day.

By mid-2007, TSA had improved passenger screening but still wasn't doing the job with air cargo, the Department of Homeland Security Office of Inspector General said in a report titled "Transportation Security Administration’s Oversight of Passenger Aircraft Cargo Security Faces Significant Challenges." TSA oversight "does not provide assurance that air carriers are meeting congressionally-mandated goals," the report found. "Consequently, the process increases the opportunities for the carriage of explosives, incendiaries, and other dangerous devices on passenger aircraft."

To fix such problems, the 9/11 Commission Act of 2007 mandated that the Department of Homeland Security (TSA is an arm of DHS) physically screen at least 50 percent of passenger aircraft cargo on both domestic and incoming foreign passenger flights to the US by February 2009. All such cargo was to be screened by August 2010.

Now the 100 percent target for international incoming cargo is Dec. 31, 2011.

Of course, TSA could simply refuse admittance to flights that are not inspected to its standards. But that could also produce acute economic hardship for passengers who would have to pay more to fly to the US without the economic bonus of cargo in the hold beneath their feet.

[Editor's note: The original version of the headline and subhead was changed to reflect the fact that TSA's action is a proposal.]

Online Edition

The Transportation Security Administration is moving ahead, on a faster-than-expected timetable, to close a gap in security screening of international air cargo carried aboard US-bound passenger flights.

Air freight forwarders and members of the global shipping industry learned Friday that TSA appears poised to require them to screen, by year's end, 100 percent of such cargo bound for the United States. That would be two years sooner than expected.

Jul 30, 2018

Long Beach port shipper COSCO working to recover from last week’s cyberattack

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A week after a massive cyberattack hit COSCO Shipping’s U.S. operations, the Shanghai-based shipper’s Long Beach offices continued efforts to recover from the incident.

As of Monday, Cosco’s Long Beach offices as well as others in the U.S., were still conducting business using temporary Yahoo email addresses rather than company email, according to a notice released by the company.

As the business week opened, a scaled-down version of COSCO’s U.S. website contained only links to a handful of notices regarding the attack and measures the shipper has taken to restore service.

Company officials did not respond to media questions Monday, communicating only via prepared statements.

The July 24 attack took down the shipper’s U.S. network, the company acknowledged last week.

Related problems extended to COSCO’s communication to Canada and numerous Central and South American countries, including Panama, Brazil and Argentina, the company said in a July 30 statement.

“We are working … to process all the service requests received previously, and the service response is expected to be back on track within this week,” the statement said. “Global networks of COSCO Shipping Lines are safe and stable.”

COSCO officials have not said if they know who committed the attack or what steps it will take to prevent another.

Although the company’s phone lines and email have been down in Long Beach for the past week, Port of Long Beach spokesman Lee Peterson said that the port terminal that services COSCO vessels was not greatly affected by the attack.

That’s because, Peterson said, the property is a joint venture with SSA Marine, which uses a separate computer system from COSCO.

““Pier J has been up and running, and they’ve been able to keep the cargo moving,” Peterson said.

SSA Marine did not return a phone call and email requesting comment. Craig Merrilees, spokesman for the International Longshore & Warehouse Union that assigns Pier J’s marine-desk clerks, also did not respond to queries.

The latest cyberattack, while significant, does not appear to be as large or harmful as the June 2017 incident during which Danish shipper AP-Moller Maersk was forced to shut down its Port of Los Angeles terminal for three days.

The ransomware attack temporarily crippled the company’s operations on a global scale and cost the shipper an estimated $300 million in lost productivity.

Online Edition

A week after a massive cyberattack hit COSCO Shipping’s U.S. operations, the Shanghai-based shipper’s Long Beach offices continued efforts to recover from the incident.

As of Monday, Cosco’s Long Beach offices as well as others in the U.S., were still conducting business using temporary Yahoo email addresses rather than company email, according to a notice released by the company.

Jul 25, 2018

Long Beach’s port and city college partner to help students get jobs in the maritime industry

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Students eyeing maritime jobs will get their own training program at Long Beach City College, with workshops beginning as early as this winter.

The community college will open a special center dedicated to training students for careers as middle managers, supervisors and clerks throughout the multi-trillion dollar shipping industry, after the Board of Harbor Commissioners this week approved a one-year contract between the Port of Long Beach and the school.

Under the contract – which goes into effect Wednesday, Aug. 1 – the global shipping hub will give the college $60,000 to develop the Port of Long Beach Maritime Center of Excellence. The center’s goal will be to bring more young workers into a booming maritime transportation industry, which in 2016 was projected to grow 8 percent by 2026, according to the U.S. Bureau of Labor Statistics.

The program, City College and port officials said, will be mutually beneficially – allowing the shipping industry to replenish its pool of talent and providing well-paying jobs to typically disadvantaged communities. The industry’s median salary, according to the Bureau of Labor Statistics, is $55,590 annually.

“This will no doubt address the need for training skilled workers for in-demand, high-paying jobs in the maritime, transportation and goods movement industry,” said Kathy Scott, the college’s vice president for academic affairs. “This program will benefit our most disproportionately impacted students, including our African American and our Latino students.”

The program will likely roll out in stages, beginning with a boot camp in the winter session. That workshop, lasting a few weeks and not worth any credits, would give students a taste of the various industries and office jobs at or around the port, such as supervising distribution, or doing clerical work for shipping and receiving companies.

“What’s been identified is a need for workforce training and development on these middle skills occupations,” said port spokeswoman Kerry Gerot said. “This, for us, really helps to close the gap in what we have in our educational program umbrella at the Port of Long Beach.”

But full classes could take longer to get going.

Officials have not yet worked out all the details of the program, such as whether it should offer a certificate or a two-year degree, or what the curriculum will be. And any courses that give students credit for completion will have to go through a months-long approval process, starting with the curriculum committee and ending with City College’s Board of Trustees.

That process could take 18 months, said Harbor Commission President Lou Anne Bynum,  meaning full classes wouldn’t begin until at least the spring 2020 semester – more than half a year after the contract between the port and the college is set to end.

The port could extend the contract, Bynum said, but it’s too soon to tell if that might happen. In the meantime, But, the partners will look for grants and other funding to support the program.

“If it’s successful,” she said, “I think the port would want to continue to support it.”

Online Edition

Students eyeing maritime jobs will get their own training program at Long Beach City College, with workshops beginning as early as this winter.

The community college will open a special center dedicated to training students for careers as middle managers, supervisors and clerks throughout the multi-trillion dollar shipping industry, after the Board of Harbor Commissioners this week approved a one-year contract between the Port of Long Beach and the school.