Long Beach city sets a risky precedent

Long Beach city council seems to be opening up new and unfriendly dimensions, at least for ports and shipping lines with its treatment of the municipality’s port reports Maritime Reporter & Engineering News.

Although a final vote has yet to be taken, the municipality wants to take 5% of gross revenue, as opposed to the traditional 10% of net revenue. This follows the Port previously refusing to make what amounted to a double payment this year, although it did agree to make the payment three months earlier than normal, rather than the six months that was asked for.

Allegedly Long Beach had gross revenues of US$311m and a net income of US$124m for the last financial year which would mean an unacceptable 26% percent increase for the Port.

There is little doubt that other cities throughout the US think this is a splendid idea but as with all new ideas, others will come up with improvements. Given the current fervour in Washington to bring in retroactive laws over the BP saga, it will not be long before at least one city will attempt to jump on the bandwagon and backdate payments.

However, as many have pointed out over the years, the legal and administrative connections between ports and cities need to be overhauled. Critics say there is a clash of interests between what City Hall tells a port to do in acting as a private corporation to make a profit, and what it actually expects, which is a handy source of ready cash when times get tough.

No matter what the container volumes might say, the economic situation is still not good. The Port of Long Beach budget this year, for example is down almost 20% to US$715mand while staffing levels will be reduced, other expenses will be cut. Development projects will take up US$475m and US$230m will be taken out of reserve funds to help balance the books.

The question many are asking is whether the city council will follow suit in being prudent about its own expenditure: most are not holding their breath!

Meanwhile the Port is moving ahead aggressively with environmental initiatives such as its Clean Trucks Program, which, it claims, has reduced air pollution from harbour trucks by nearly 80%, two years ahead of schedule. The Port banned trucks with 1993 and older engines from January 1, 2010, as well as nearly all trucks with 1994–2003 engines. Trucks that do not meet 2007 emission standards will be banned by 2012.

Despite the proposed municipality ‘revenue grab’ the Port sees its key challenge for the year ahead as competing for market share as the economy rebounds. While all North American ports are scrambling to increase their business, Long Beach believes that it is well placed as it already has a large base on which to build, together with the financial resources to make improvements to help it to grow its market share.
(Source:www.container-mag.com)