Goods grief: infrastructure bond's collapse puts shipping industry in bind.

THE collapse of a multibillion-dollar infrastructure bond package in the state Legislature earlier this month is unwelcome news for shipping, logistics and trucking companies--and their customers--looking for congestion relief around the ports of Los Angeles and Long Beach.

With the bond not making the June ballot and iffy at best for the November vote, the nearly $2 billion that had been earmarked for improvements to the state's goods movement network--including up to $1 billion for highways, rail lines and bridges out of the local ports--is for now off the table.

"It's very disappointing that this bond is not on the June ballot. The congestion gets worse every year," said Robert Krieger, president of Krieger Worldwide, a logistics provider in Rancho Dominguez. "Those shippers and end customers that can, will route cargo to other ports. Those that can't, will have to put up with longer delays in getting their products."

Krieger and other port funding advocates said that it won't take much to repeat the nightmarish congestion that virtually shut down port operations two years ago. That's when labor shortages created bottlenecks in the rail lines leaving the port, which in turn left cargo sitting on the docks and led to ships waiting for nearly two weeks to get into the Port of Los Angeles.

To head off just such a scenario, port interests, business groups and local elected officials made a big push with frequent trips up to Sacramento to ensure that significant funds for port-related infrastructure would be included in any bond package.

Cobbling together an infrastructure bond was front-and-center in Sacramento ever since Gov. Arnold Schwarzenegger proposed a massive $68 billion bond deal in his January State of the State address.

But the infrastructure bond got caught up in Sacramento politics as various interest groups each pushed for funding. The powerful teachers unions sought funds for more schools, local government officials wanted funds for affordable housing, tanners and Central Valley officials lobbied for monies to shore up aging levees and water agencies wanted monies for massive water storage projects.

And just when a deal on a $48 billion bond proposal seemed close at hand in early March, some Republican lawmakers balked at the expense, while others tried to get their pet projects in and the negotiations hit another impasse. Finally, on March 15 the deal collapsed completely.

As of late last week, negotiators from the Democratic leadership and the administration of Gov. Arnold Schwarzenegger were still trying to hammer out some sort of infrastructure bond package for the November ballot.

"While I'm still optimistic we'll get a bond on the November ballot, the longer we delay in reaching a deal, the harder it's going to be," said State Sen. Alan Lowenthal, D-Long Beach, who represents much of the area around the ports. "The closer we get to November without a deal, the more likely it is that politics will come to the fore."

If a deal is reached, the consensus last week was that this bond would be much smaller, and there would probably be less funds dedicated to relieving congestion for goods movement.

Dire need

Local business leaders expressed dismay last week at the turn of events, saying that the region's economy could suffer if a substantial bond package is not put before voters in November. Without state funding, it could be another five years before significant federal funding becomes available.

"The goods movement infrastructure at the ports is in dire need of repair," said Brendan Huffman, legislative affairs director for the Los Angeles Area Chamber of Commerce, which has pushed hard for ports and other transportation funding.

Perhaps no segment at the port is in more disrepair than the Gerald Desmond Bridge in the Port of Long Beach. Caltrans has put nets underneath the bridge to catch concrete blocks that fall.

Local port and government officials sought $300 million from Congress for an urgent repair and realignment job for the bridge, which conveys trucks from the port. Beskles shoring up the bridge, port officials wanted to raise it to accommodate larger cargo ships. But Congress allocated only $100 million last year; the rest of the funding for the $800 million total project cost must come from other sources.

It's not just the ports themselves, but the highways, bridges and rail lines extending for miles out from the ports that need expansion and repair. Among these: widening of the Long Beach (710) Freeway and extension of the Alameda Corridor grade-separated rail line into the San Gabriel Valley.

"There are so many choke points, where if one little thing goes wrong, it can ripple throughout the entire goods movement system," said Fran Inman, chair of the L.A. Area Chamber of Commerce's transportation committee and senior vice president at City of Industry-based Majestic Realty Co.

In addition, local residents, environmentalists and elected officials are demanding emission reductions at the ports, which are the top polluters in the Los Angeles region. Hundreds of millions of dollars would be needed to convert diesel truck engines to cleaner-burning fuels, to set up ship-to-shore electric power links and reduce other emissions sources.

User fees

With infrastructure bond money from Sacramento questionable and additional federal dollars a long way off, the pressure is building to find other funding sources. "We are going to have to use revenue bonds with a dedicated revenue stream," Lowenthal said.

This would appear to give a boost to Lowenthal's legislation to impose a fee of up to $30 on every container that comes through the ports. That could generate upwards of $500 million a year for infrastructure and environmental improvements.

Of course, such a fee would be passed on to the end customers, namely the retailers that import goods through the ports.

"The business community could accept some container fees, but there must be assurances that they would be used strictly for infrastructure or environmental projects," Inman said.

But shippers flatly reject the notion of container fees, saying they amount to an illegal tax on international commerce. "It will lead to years of litigation," said Mike Jacob, vice president of the Pacific Merchant Shipping Association, which represents shippers.

Jacob said that shippers would prefer to see solutions like truck-only toll lanes, especially on the crowded Long Beach Freeway. "If the state and federal government won't contribute in the short run, then user lees are the answer," he said.

But the California Trucking Association has in the past opposed any such tolls, saying truckers are already charged weight fees. Association officials did not return calls seeking comment.