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California ports face major challenges with high energy costs

A RECENT meeting of the Port of Los Angeles Harbour Commissioners heard that California ports were not only paying more for diesel fuel, but were also dishing out more mony on electricity compared to other states in the US

13 December 2019 - 19:00

A RECENT meeting of the Port of Los Angeles Harbour Commissioners heard that California ports were not only paying more for diesel fuel, but were also dishing out more mony on electricity compared to other states in the US.

Speaking at the meeting, Commissioner Diane Middleton pointed to what she felt were 'shocking figures' in a recent article in the November issue of the West Coast Trade Report of the Pacific Merchant Shipping Association that reported the average price of diesel fuel in California in October was 37.8 per cent higher than the average for the rest of the US.



The disparity in electrical prices was even higher. The article said that California's average commercial price for electricity in the 12 months ending in August was 16.56 cents/kWh, 63.6 per cent higher, and the average industrial price in the same period was 13.25 cents/kWh, 102.9 per cent higher than the average for states other than California.



'When I looked at those numbers, particularly on energy, that's a tough factor in terms of attracting (cargo),' said Ms Middleton. 'No matter how much you talk to someone about what great a port this is and how they should come here.'



Executive director of the port, Gene Seroka, told Ms Middleton that 'as we move forward to our goals and aspirations of being a zero emissions port and having zero emissions heavy duty trucks, the energy numbers you have quoted are going to be a strong deterrent to reaching those aspirations.'



He said the port does not 'sugarcoat things' when discussing the competitiveness of the port, saying that has been called into question for a generation.



'The criticism around what we do is that we are very pricey, we tend to be overregulated and some people believe that the folks that go to work here every day are a little bit finicky,' said Mr Seroka. 'That's unfortunate, but that is the perception today.'



Mr Seroka said the port is trying to reverse market share erosion and improve efficiency with the help of labour, private-sector businesses and companies that decide how to route cargo, reports American Shipper.



'All of that is a work in progress and I will attest to you today that it is like moving mountains on some occasions,' he said.



'We've got supply chain participants that compete fiercely with each other, but we are asking them to work together. We have a labour force that is absolutely the best in the world, but they have their own politics and their own issues they must solve.'



He said the presidents of International Longshore and Warehouse Union locals have done outreach to cargo owners and other stakeholders and have committed to working with the port on areas such as digitisation and supply chain efficiencies.



'We've not had a major congestion issue in three years here and that is because everyone has pulled together,' he said.



'I like the momentum we have, but we are still losing share,' said Mr Seroka. He contended that if the port had 'simply kept up with organic growth in the marketplace over the past 17 years, we would have earned an additional US$1 billion in top-line revenue that would have been invested directly in our communities, our supply chain and our endeavours to be strong environmental stewards. We also would have created an additional 200,000 work hours.



'That's the real question here: Can we create enough value here that people choose us as their gateway in the United States and can that be shared with this community?' he added.



Mr Seroka told Ms Middleton that the higher cost of energy in California will be challenging as the Port of Los Angeles and neighboring Port of Long Beach pursue goals in their Clean Air Action Plan.


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