Responding to Increasing Port-related Freight Volumes

Rapid growth in international trade over the last two decades has generated both benefits and costs. Costs have become increasingly visible in metropolitan areas -- growing congestion, air pollution – and local communities are demanding solutions. Congestion and air pollution associated with increased international trade have become so severe in the Los Angeles region that port-related trade is facing increased regulation by both state and local agencies. Historically US ports have been remarkably autonomous. Their role as economic development engines is wellrecognized by local leaders. Thus recent regulatory efforts represent a significant change in public policy. This report begins with an overview of trends in port-related trade and its impacts on US metropolitan areas, and discusses changing public perceptions of port-related trade as impacts have increased. Using Southern California as a case study, the report examines responses by the ports, terminal operators, and allied industries to a changed regulatory regime. Two examples are discussed in detail: 1) a state regulation requiring appointments or extended hours at terminal gates, and 2) the OFFPeak extended gate hours program. We use a political economy framework to explain outcomes. I describe the main economic actors and their competitive positions, and we explain the key aspects of the US regulatory system affecting these actors. Those with significant market power within the international trade supply chain were successful in staving off several regulatory attempts to force changes in operating practices. When regulations were imposed, they were able to structure responses to protect their economic interests. Results suggest that “dominant actors” – ports, terminal operators, steamship lines, and their major clients – will continue to be a strong influence in efforts to solve trade-related environmental problems.