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Newsom, Buttigieg announce $5 billion in loans for California’s clogged ports

The money won’t help unclog the severe congestion that’s creating seaport chaos at present, but the two say that modernizing the ports and the truck and rail systems that serve them can prevent logistics nightmares in the future.

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Dozens of container ships sit off the ports of Los Angeles and Long Beach, waiting to be unloaded. Allen J. Schaben/Los Angeles Times/TNS
TNS

WASHINGTON -- Not content to wait for Congress to pass a big infrastructure spending bill, California Gov. Gavin Newsom and Pete Buttigieg moved on Thursday to inject $5 billion in loan money to help modernize that state’s seaports.

The money won’t help unclog the severe congestion that’s creating seaport chaos at present, but the two say that modernizing the ports and the truck and rail systems that serve them can prevent logistics nightmares in the future.

“Our supply chains are being put to the test, with unprecedented consumer demand and pandemic-driven disruptions combining with the results of decades-long underinvestment in our infrastructure,” said Buttigieg, the U.S. Secretary of Transportation. “Today’s announcement marks an innovative partnership with California that will help modernize our infrastructure, confront climate change, speed the movement of goods and grow our economy.”

What the money would be spent on remains vague. The California State Transportation Agency, also known as CalSTA, listed port upgrades, more freight rail capacity, increased warehouse storage, truck and rail electrification, highway upgrades and other general categories as possibilities.

At a news conference Thursday, John Pocari, President Biden’s point person for addressing supply chain problems, and CalSTA Secretary David S. Kim each likened the program to “a hunting license.”

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The loan money would come from existing U.S. Department of Transportation programs that offer easy terms, including low rates of interest, loan guarantees, and long payback periods, as well as some state money and public-private financing.

CalSTA said the agreement “allows California to expedite work on a network of related projects — rather than using a piecemeal approach — that collectively will help grow the economy, improve the environment, facilitate the movement of imports and exports, and strengthen supply chain resilience throughout the U.S. and California’s critical trade corridors, including around San Pedro Bay and the Inland Empire.”

No details were offered on what constitutes that network, nor was it clear how the loans will be dispersed, or to whom.

Earlier in October, Newsom ordered state agencies to develop longer-term proposals to support ports operations and movement of goods, to be considered for his January 2022 budget proposal.

This year, the state budget included includes $250 million for ports, $280 million for infrastructure projects at and around the Port of Oakland, and $1.3 billion over three years for zero-emission transit buses, school buses and trucks, including more than 1,000 port drayage trucks.

The current logistics tie-ups aren’t unique to California. Ports around the world clogged as demand surged for shipped products over the past year, in large part due to the availability of COVID-19 vaccinations that pushed economic activity back toward normal.

But longer-term issues plaguing California ports threaten not just the state but the entire U.S. economy. The San Pedro Bay ports — Los Angeles and Long Beach — move about 40% of all containerized cargo entering the U.S. each year and about 30% of containerized exports.

The ports are under tremendous strain as overall container traffic in the nation’s largest ports has increased by 47% since 2010, according to Logistics Management magazine.

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Meanwhile, delays at the ports of Los Angeles and Long Beach have been increasing at least since 2014, according to data from the Harbor Trucking Association.

California’s ports face increasing competition from southern and eastern U.S. ports, some of which are making big investments in port modernization, prompted by an expansion of the Panama Canal in 2016 that widened capacity and boosted import traffic from China and other Asian nations.

The Port of Houston recently widened its channels and added taller cranes, while adding new automation systems for routing containers and managing inventory.

©2021 Los Angeles Times. Visit at latimes.com. Distributed by Tribune Content Agency, LLC.

Related Topics: TRANSPORTATION
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