July 14, 2020

Dear Members of the State Legislature,

The undersigned trade associations, organizations, and businesses altogether represent a broad cross-section of the California economy, including such industries as retail, manufacturing, agriculture, aerospace, and warehousing. The importance of a robust goods movement sector throughout the state cannot be understated. The sector services the states critical industries, supports 1 in 3 jobs in California and 1.6 million trade-related jobs in Southern California, and generates direly needed tax revenue. Moreover, the sector ensures that critical supplies can be available during the current crisis. We are requesting that Governor Newsom and the Legislature consider the importance of California's goods movement industry sector and take action to reverse the decline in market share before California permanently loses jobs and direly needed state revenue.

West Coast Ports Face "Significant" Continual Decline in Market Share.

• A recent analysis, prepared for the Pacific Merchant Shipping Association (PMSA) by international trade economist Jock O'Connell found that West Coast ports' market share has declined 19.4 percent since 2006.

• Dropping from 46.8% market share in 2006 to 37.7% in 2019, the impacts of these factors resulted in approximately 5.6 million fewer containers traveling through West Coast Ports versus competing gateways had West Coast ports maintained their market share.

  
  

  Loss of Market Share Impacts the State's Largest Employers, Increases Costs for Consumers, and Deprives the State of Infrastructure Investment, Environmental Benefits, and Tax Revenues.

• The loss of market share impacts many of California's leading employers, including retail, trucking, warehouse and distribution centers, ports, railroads, marine terminals, and export industries such as agriculture and aerospace.

• Infrastructure improvements and operational costs will be borne by California residents, as discretionary import cargo is diverted to East and Gulf Coast Ports.

• Trade routes are established over time and around infrastructure such as rail, warehouses, and distribution centers. Loss of market share means that investments in infrastructure are happening in other states, not California, resulting in more jobs and higher state and local tax revenues elsewhere and fewer jobs and state and local tax revenue here.

  
  

  We propose that you take the following steps to address the major causes of the loss of market share:

• Promote California ports as the most efficient and environmentally progressive ports in the nation.

• Meet the challenge from East and Gulf Coast states whose governmental leaders promote and invest in their ports and goods movement industries.

• Re-examine the state and regional regulations that are creating a disincentive to use California gateways. Determine whether the policies, particularly in environmental areas, are backfiring and encouraging more greenhouse gas emissions by sending more business to ports that are far behind California's climate program.

• Reconcile state laws encouraging environmental and efficiency mandates with the need to re-train workers to adapt to a changing work environment.

Thank you for your consideration of this request and please contact me if you have any questions or need additional background on the issues raised.

Sincerely,

Signatories:

Pacific Merchant Shipping Association Pacific Maritime Association California Trucking Association

NAIOP California

San Pedro Chamber of Commerce Harbor Trucking Association

San Gabriel Valley Economic Partnership California Business Properties Association Harbor Association of Industry & Commerce Inland Empire Economic Partnership Industry Business Council

Customs Brokers Association of Northern California California Railroad Association

Propeller Club of Los Angles & Long Beach