An Opportunity for Leadership
By Thomas Jelenić, Vice President, Pacific Merchant Shipping Association
Over the next 24 months, the San Pedro Bay ports and their tenants will need to come to terms on how the ports will operate over the next two decades. Rather than responding to organic growth and fluctuating global trade, this reckoning will be forced by two new significant factors. One is the recent action by the California Air Resources Board’s (CARB) to dramatically expand the At-Berth (cold-ironing) Regulation and to mandate the adoption of zero-emission cargo-handling equipment. The other factor will be how the San Pedro Bay ports respond to that action. As PMSA president John McLaurin’s observed in a recent op-ed in the Journal of Commerce, CARB acted without any input, without any technical analysis, without any examination of feasibility, and without examination of cost. In effect, the California Air Resources Board lifted the aspirational, if technically unfounded, goals of the San Pedro Bay Ports Clean Air Action Plan Draft Discussion Document and turned them into a regulatory directive.
As the ports and terminal operators consider compliance with a zero-emissions mandate, there are two possible pathways to meet CARB’s requirements. One would involve cloning the Port of Long Beach’s Middle Harbor solution and extending it across the entire port complex. But that’s out of the question because neither the ports nor industry have the financial wherewithal to finance that solution by 2030. The tens of billions of dollars needed as documented by the Moffat & Nichol study is simply out of reach for all parties. The other supposed pathway would rely on electrifying existing equipment. Ignoring that the ports have been trying to demonstrate an electric yard hostler for over a decade without success and that no electric top pick has ever been built, this is neither an inexpensive nor an assured route. On the technical side, we are two to three years from the completion of the first demonstration of an electric top pick (and, again, keep in mind no demonstration of an electric yard hostler has been successful) – a technology that will be an order of magnitude more difficult than a yard hostler. But even assuming something entirely preposterous (namely, that we can wave a wand and make this technology available by 2030), the ports and terminals would still face billions in electrical infrastructure, billions in new equipment, and billions in charging infrastructure.
The San Pedro Bay Ports will need to make these investments with a decade of declining market share in the rear-view mirror and uncertainty ahead. But they will also need to make these investments while answering the question of what these ports should look like 10 years from now and 20 years from now. The level of investment required, regardless of the pathway, is nothing short of full-scale redevelopment of every marine terminal in San Pedro Bay. How will the ports of Long Beach and Los Angeles invest for capacity and competitiveness for the future? Or will their investment lock in today’s mode of operating and capacity?
Now that CARB has taken the regulatory field, the other factor in planning for the future will be the ports’ response. Today, it is unclear what that response will be. The ports face two choices. The instinctual choice will be to double down on aspirational goals in the hope of forestalling or shaping CARB regulatory action. However, CARB made clear in both word and deed that they are California’s regulator. However far the ports push, CARB will push farther. The other option is to work with industry to plan for the future needs of this gateway in a manner that preserves its competitiveness and achieves real emission reductions that are not founded on a faith-based system of speculative technology.