SB 927 and Container Fees

Interestingly enough, yesterday's link to the Trib SB 927 editorial on container fees seems to have prompted a rush of traffic redirected from Google and Blogger searches for the topic (thank you SiteMeter!). In the spirit of this public interest, I thought I would throw in a few thoughts on why our good Governor should sign this landmark legislation:

1) Creating a dedicated trade infrastructure (goods movement) funding stream is imperative. Out of the $30/TEU fee (that's $60 for the box on most trucks you see), $20 will go to support trade infrastructure projects. This is a huge policy landmark, and puts California way out in front of the feds on a key issue. Hopefully this will spur action in DC, or at least help California compete for category funds by demonstrating that the impacts are bad enough to require localized fees.
2) This should be seen as part of a broader investment package including Props. 1A and 1B. Although this legislation would be terribly unfair if it occured by itself and placed all fiscal responsibility on the beneficial owner of cargo (ie: retailers), the public is also making a costly investment in similar project categories using income and sales tax revenue. In this light, this seems like a fair distribution of financial responsibility.
3) As shown by SCAG's Port and Modal Elasticity study by Rob Leachman, if investment is done right, the returns will be extremely cost efficient. Even if no improvements are made, volumes will decline slightly while trans-loading will increase a bit (trans-loading generates far more economic benefits for our region than cargo simply passing through on the freeways). Also, given capacity restraints at other ports, diversion doesn't seem to be a significant future problem. Do you think the port of Seattle will tolerate 5 million TEUs in volume say five years from now?
4) The $500 million or so in fees SB 927 represents seems to be a relatively low cost given the total value of imports. According to the USDOT, the West Coast imported about $226 billion in goods in 2003, or which nearly 70% came in through San Pedro Bay, totalling as much as $186 billion in goods. In that light, $500 million is about a quarter of a percent increase in cost.
5) This proposal has been around at least 18 months by my reckoning, during which different shippers and importers have talked about putting together a voluntary MOU. While this would be vastly preferable and would probably have eliminated the siphoning off of dollars to pay for port security and air quality mitigation, it hasn't happened. Given the length of time involved, something would need to have at least started coming together for this to be a plausible alternative.
6) About 2/3rds of the goods coming in through the goes to consumers spread across the nation who are not contributing to impact mitigation at our ports. Since retailers will pass this cost increase along, it represents a way of getting around that problem.

OK, well that's all for now.