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New Partnership Announced for CA Ports

Thursday, November 4, 2021

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Last week, California and the U.S. Department of Transportation announced a partnership to facilitate projects and financing opportunities for infrastructure improvements. The announcement is part of the ongoing efforts from the Biden-Harris Task Force on Supply Chain Disruptions.

“California’s ports and infrastructure system is key to the country’s supply chain. Thanks to our collaboration with the Biden-Harris Administration, this innovative federal-state partnership will help us fast-track those projects that will make our ports and infrastructure even more efficient,” said California Governor Gavin Newsom.

“This partnership will help us jumpstart and support multiple infrastructure projects to improve our supply chain, making sure goods get to where they need to go faster, cheaper and more environmentally-friendly.”

Newsom also recently issued an executive order for state agencies to identify additional ways to lessen congestion at California ports, to ease supply chain issues and identify short- and long-term solutions.

As part of the Emerging Projects Agreement, the Build America Bureau at U.S. DOT will support the California State Transportation Agency with multi-billion infrastructure improvements, including:

  • Port-specific upgrades;
  • Expanding capacity for freight rail;
  • Developing inland port facilities for increased warehouse storage;
  • Railyard and truck electrification;
  • Highway upgrades to improve truck travel times;
  • Grade-separated crossings to reduce the number of rail-street intersections and improve safety and efficiency;
  • Land ports of entry to expand trade capacity and cross-border commerce; and
  • Other eligible projects of critical importance identified by CalSTA.

“Our supply chains are being put to the test, with unprecedented consumer demand and pandemic-driven disruptions combining with the results of decades-long underinvestment in our infrastructure,” said U.S. Transportation Secretary Pete Buttigieg. “That’s why this administration is working around the clock to address both near-term and long-term challenges to our supply chains, including investments such as those in the bipartisan infrastructure deal.

“Today’s announcement marks an innovative partnership with California that will help modernize our infrastructure, confront climate change, speed the movement of goods and grow our economy.”

According to the press release, ports of Los Angeles and Long Beach, the ILWU, Union Pacific Railroad and retailers, including Walmart, Target, FedEx, UPS and Home Depot have committed to expanding hours.

“The COVID-19 pandemic put a spotlight on California’s ports and the importance of our state’s infrastructure in moving goods throughout the U.S. and around the world,” said CalSTA Secretary David S. Kim. “Today’s agreement will go a long way toward quickly upgrading infrastructure to support a more efficient and resilient supply chain that will flex California’s power in global trade. I am proud to work with the Biden-Harris Administration on long-term solutions to enhance California’s infrastructure and strengthen resilience throughout the supply chain.”

The U.S. DOT reports that California’s budget includes $250 million for ports, $280 million for infrastructure projects at and around the Port of Oakland and $1.3 billion over three years for zero-emission trucks, transit buses and school buses, including the deployment of 1,000 zero-emission port drayage trucks.

Recent Port Infrastructure

This time last year, the U.S. DOT announced the award of more than $220 million in discretionary grant funding to improve port facilities in 15 states and territories through the Maritime Administration’s (MARAD) Port Infrastructure Development Program.

The program provides planning, stakeholder engagement, operational and capital financing and project management assistance to ports and port stakeholders to improve their capacity and efficiency.

Through Law 111-84, the program authorizes the Administrator to:

  • Receive funds provided for the project from Federal, non-Federal, and private entities that have a specific agreement or contract with the Administrator to further the purposes of this subsection;
  • Coordinate with other Federal agencies to expedite the process established under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) for the improvement of port facilities to improve the efficiency of the transportation system, to increase port security, or to provide greater access to port facilities;
  • Seek to coordinate all reviews or requirements with appropriate local, State and Federal agencies; and
  • Provide such technical assistance and financial assistance, including grants, to port authorities or commissions or their subdivisions and agents as needed for project planning, design and construction.

The authorizing legislation also established a Port Infrastructure Development Fund for use by the Administrator in carrying out projects under the program. The fund is available for the Administrator to:

  • Administer and carry out projects under the program;
  • Receive Federal, non-Federal and private funds from entities which have specific agreements or contracts with the Administrator; and
  • Make refunds for projects that will not be completed.

According to the U.S. DOT, over $220 million in discretionary grants were awarded to 18 port facility projects, with eight located in Opportunity Zones.

The funding was made available after the U.S. DOT announced a Notice of Funding Opportunity in March. After receiving the applications, the Department evaluated the projects based on goods movement, federal funding leverage, net benefits, project readiness, domestic preference and geographic diversity, among other things.

Supply Shortages

In September, due to a variety of factors aside from the ongoing COVID-19 pandemic, the industry reported a shortage and price surge in coatings.

From the surge of demand by do-it-yourselfers stuck at home, to the strange freeze that took over Texas earlier this year and worsening supply chain issues, the coatings industry has been backed into a corner with no signs of when the market will improve, some experts say.

According to the Federal Reserve, the higher inflation is only “transitory” or temporary and appears to be showing signs of abating. The central bank’s report is backed by White House officials, who also state that while they’re sensitive to the rising prices, they foresee that supply chain issues will soon subside, having observed the slight downward trend in hardware, lumber and other building materials. Wall Street economists are also reported to side with the transitory position.

However, despite the opinions of some of the nation’s leading economists and financial advisors, many believe that the current situation could persist well into 2022, further burdening many of the small businesses that are already struggling to make ends meet.

Equity analyst firm, Morgan Stanley, reports that the inflation will continue through the first half of next year then veer into deflation for the second half. In specifically refencing the coatings industry, the firm said this represents “the peak of raw material availability issues/cost inflation, but just the early stages of price achievement against it.”

The major factors that will determine how persistent the inflation is in the industry, however, are how the nation will bounce back from Hurricane Ida and the functionality of global supply chains for the chemical industry. As mentioned, the Texas freeze earlier this year also affected the chemical industry, in that much of its petroleum production—a critical ingredient in paint—was slowed.

These shortages, seen mostly in epoxies and acrylics, as well as several types of solvents and additives, are the main issues the industry is facing now, according to the firm.

   

Tagged categories: Department of Transportation (DOT); Funding; Government; Government contracts; Infrastructure; NA; North America; Port Infrastructure; Ports; Program/Project Management; Supply and demand

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