This is start of what will be a series of posts describing steps taken by federal, state, and local officials to compound the supply chain problem we are experiencing. Other policies, deliberately imposed, have the foreseeable consequence of being a drag on the economy. There are lots of recent articles pointing out policies, intentional policies by supposedly intelligent bureaucrats, which have the effect of making it more difficult to get things done.
A few policies that come to mind:
- Tax on every container not pulled by a zero-emission truck.
- Only a fraction of the trucks in the country allowed to pick up a container in California.
- Owner/operators not allowed at the ports.
- Fines on shipping companies who can’t get their containers out of the port because of congestion in the supply chain.
Additional tax on non-zero-emission trucks picking up cargo
Port Technology – 11/5/21 – Port of Los Angeles accelerates zero-emissions truck efforts – The Los Angeles Board of Harbor Commissions approved a requirement for trucks picking up cargo at either Long Beach or Los Angeles ports to be zero emission starting 4/1/22. Or else.
Cargo shippers will be charged $10 per TEU, which will be $20 for one of those long 40 foot containers and $10 for one of those short 20 footers.
Trucks that meet the ultralow emission standards in California will be exempt until 12/31/27.
The “Clean Truck Fund” is estimated to generate $45 million of penalties on shippers each year until the tax expires in 2035.
Any guesses on what small fraction of that amount will actually be raised?
Only new trucks can pick up cargo
California also has a requirement that only new trucks can pick up cargo. Trucks older than 2011 can’t get a container at the port. In fact, those trucks are not allowed to operate on California freeways.
The effect is to ban most trucks in the United States from coming into California.
This produce the phenomenon that some trucking companies use their new, very expensive trucks to pick up containers and drop them just on the other side of the Nevada border. There, one of the massive number of non-California compliant trucks pick up the container and deliver it somewhere in the country. The impact is the new trucks run a shuttle from the ports to the Nevada border.
Defacto ban on owner/operators at the ports
Yet another impact of the now infamous AB-5 law, which has the intention and goal of shutting down independent contractors, is to close owner/operators out of picking up containers at the port. Any independent contractor with more than 35 contracts or deals with a company becomes an employee under California law.
This means that an owner/operator of a big rig essentially cannot pick anything up at the port because if they get more than 35 pickups with one shipping company said owner/operator becomes an employee. The result is the shipping companies only work with larger companies and won’t work with any owner/operators.
The eliminates a large sector of the trucks which use to pick up containers at the ports.
Penalize companies that cannot get their containers out of the port because of congestion further along in the supply chain
KCAL 9 Los Angeles – 11/1/21 – Fines To Begin Monday For Unmoved Containers At Ports Of LA, Long Beach – There are not enough trucks to move containers out of the port, there’s not enough drivers for the trucks that are available, each shipping company has unique containers that fit on specific chassis and those chassis are spread all over the port so it is hard to find a chassis that fits the container, and storage is so tight at the ports that it takes extra time to find the specific container to go on a specific chassis to go with a specific driver.
Fine shipping companies who cannot get their containers out of the port because of all the above constraints. That’ll do the trick.
Nine days after a container is ready to be shipped the shipping company will incur a fine of $100 per day per container for the delay. Because you see, the shipping companies out there are obviously just dawdling because they don’t feel like getting stuff shipped out. A $100 per day per container fine will get them off her duffs and motivate them to start loading containers.
Penalties will be levied by the Long Beach and Los Angeles ports.
Think of it this way: Ponder the last time you were sitting on the freeway moving a mere 2 or 4 miles an hour.
Why were you wasting gas and needlessly generating all those greenhouse gases? Because a solid block of vehicles ahead of you is also moving a mere 2 or 4 miles an hour.
The state Department of Transportation should fine you one dollar for every minute you’re traveling less than 5 miles an hour. That should provide you plenty of motivation to start moving quicker.
That will surely get you to stop goldbricking in your car on the 210 or 101 or 5 when you could be sitting in your recliner at home if you actually wanted to be home.
All those containers waiting to be shipped? Problem solved.
Update 11/6/21: Shortly after I published this article, I read an article in the Wall Street Journal which made the same points I discussed and added a few more.
Wall Street Journal – 11/4/21 – California Is the Supply Chain’s Weakest Link – Article points out that ports and other states which handle about 60% of the imports to the US aren’t having the same problems that exist here in California.
Article also mentions the $100 penalty per day for containers that stay too long, with said penalty ultimately being paid by consumers, of course. AB5, which shuts out independent owner/operators is another factor.
Storage of containers is another major issue, with major space limits in the immediate area around the ports. There is a lot of land in the inland Empire which can be used for storage and transshipment. Opposition from the state and environmentalists has been making that more difficult for quite some time. There is growing opposition from cities, with Colton as an example having imposed a moratorium on new warehouses. Cities are limiting hours.
The state of California is imposing green mandates, such as prohibiting an individual diesels being in operation for more than 10 hours a day and prohibiting any diesel from idling more than two minutes. This increases costs and complicates operations.
Article describes a number of other steps that state officials, individual cities, and environmentalists are taking to disrupt warehousing, further restricting the supply chain.