Bills Address Drought, Gas Emissions and More

The California State Legislature is back in session - the beginning of a two year session.  Any bill that didn’t make it through both the Senate and the Assembly last year is dead.   So everything starts over and potential new laws must be reintroduced again with a new bill and a new bill number.

In order to make the process work, there are deadlines for introducing, hearing and passing bills.  One of the most important deadlines is the one for introducing bills.  This year that deadline was February 27.

For the 2015 -16 legislative sessions, 2,297 pieces of legislation were introduced - 1,504 in the State Assembly and 793 in the State Senate.   In the Assembly there were more bills introduced than the prior year but for the Senate the number was lower.  That is probably in part due to three senate positions being vacant with their incumbents elected to Congress.

Surprisingly, more than half of the legislation introduced currently describes only an intended purpose with details to be added later.  Those are called “spot” bills.  More specificity will need to be added soon so these bills can be assigned to a policy committee for hearing.  All bills with fiscal impacts must be heard and reported on by a policy committee by May 1 - the next important deadline. 

If a piece of legislation doesn’t have a fiscal impact, it gets an extra two weeks to be heard in a policy committee.  By May 15 we’ll know how many of the 2,297 bills may still become laws.

There are a multitude of issues that the Legislature is looking at - education, child safety, veterans’ benefits, body cameras for police, and vaccinations for school age children.  But two issues that appear to be dominating the agenda this session are water and power.

California’s drought has forced the state to reexamine how we manage, distribute and protect water.  There are eighteen bills that look at the Delta and at least 20 bills related to the Groundwater Management Act passed in the last session.

There is a bill that recommends a process for public water systems to use in meeting the new chromium-6 drinking water standards; a bill that would allow the Los Angeles County Sanitation Districts to assist cities on storm-water and runoff management projects; and more than a dozen bills that call for conservation incentives, more water efficiency, plumbing retrofits, and requiring individual unit water meters for multi-unit residential buildings.

The Democratic leadership of the Senate and the Assembly released a comprehensive clean energy plan as called for in the Governor’s state of the state address.  It calls for decreasing greenhouse gas emissions in 2050 by 80 percent from the 1990 levels.

There is also legislation that would require California’s public retirement systems to divest in businesses related to coal combustion and several bills revisiting the California Global Warming Solutions Act of 2006.

No matter how you measure it, that is a lot of legislative activity. The Legislature has its work cut out for it, and you, your business, and your community are going to be affected.  Everyone should pay attention.

U.S. Falls Short in Equal Pay for Women, Minorities

March 8 was International Women’s Day (IWD) - a day meant to raise awareness about violence against women and the struggle for equal opportunities in economic, political and social arenas.  First celebrated in 1911, the founders of IWD fought for better pay, shorter hours and voting rights.  Over one million men and women attended rallies that year in Austria, Denmark, Germany and Switzerland to show support for women’s rights.

 In 1995, the United Nations recognized IWD by adopting its Declaration and Platform for Action, a blueprint for advancing women’s rights in all dimensions of life - 17,000 participants joined by 30,000 activists worked for two weeks to craft the Platform which was ultimately signed by 189 governments.

This year the World Conference for Women reflected on what the Platform has accomplished over the last 20 years.  UN Secretary-General, Ban Ki-moon, told the audience that “more girls have attained more access to more education than ever before, the number of women dying in childbirth has been almost halved, more women are leading business, government and global organizations but we must acknowledge that the gains have been slow and uneven, and that we must do far more to accelerate progress everywhere.”

No country has yet closed all aspects of the gender gap.  One area where the United States continues to fall short is equal pay. The American Association of University Women (AAUW) looked at how the gender pay gap affects U.S. women in different locales, with different educational attainments, at different ages, and with different jobs. 

They found that while gender pay gaps exist in every state, there are huge differences by location.  Jobs in Washington D.C. come closest to pay equity.  There, women are paid 91 percent of male wages.  The largest gap is in Louisiana where women are paid just 66 percent of male wages. California is tied for fourth with Florida and Arizona at 84 percent.

There are gaps in almost every occupation.  Women of color have higher pay gaps - the largest experienced by Hispanic women who make just 54 percent of white male earnings.  Women typically make about 90 percent of what men make until they are 35.  After that the gap increases as raises and promotions come more slowly to women than to men.

Education - once thought to be the equalizer - isn’t the full answer.  While women with higher educational attainments do make more money, they still make less than male employees at all levels of education.

The rate of closing the gap has slowed over the last decade.  At the current pace, the pay equity gap won’t be closed until 2139.  We can and must do better than that.

Port Crisis is over, but Challenges Remain

The labor crisis at the western U.S. Ports is over - pending ratification of the agreement by both parties.  As the dust settles after six+ months of bitter negotiations, there are new issues on the horizon.

There is never a good time for a major component of international trade to come to a screeching halt, but disruption could not have come at a worse time - just as the container shipping industry is going through a profound transformation worldwide.

Mr. James MacLellan, Director of Trade Development for the Port of Los Angeles recently attended the San Gabriel Valley Board of Directors meeting to update us on trends in the industry and how they affect our local ports.  These issues are especially significant to the San Gabriel Valley economy because of the high concentration of jobs in international trade - 6.7 percent compared to 5.3 percent in Los Angeles County.

Stiff competition and projected growth of only three to five percent per year means shipping companies are taking dramatic steps to reduce costs.  The first change is in the size of ships.

Ship capacity is measured in twenty-foot equivalent shipping units or TEUs.  A TEU describes the number of 20 foot long containers - the standard length of a cargo container - a ship can carry.  Between 1988 and 2013 the size of container ships has quadrupled from 4,500 TEU to 18,000 TEU.  Even bigger ships are coming - 53 ships with capacity of 13,300 TEU to 19,000 TEU will be added to fleets this year. 

Each container occupies a “slot” onboard the vessel and the cost per slot can be as much as 60 percent less on a ship with a minimum of 14,000 TEU.  Clearly scale is the way to reduce the bottom line.

Mega alliances between shipping companies are also forming similar to those we’ve experienced with airlines.  A reservation to export cargo on OOCL might just end up in a NYK Line ship.  Deploying fewer but larger ships to fewer ports also reduces costs. 

These mega alliances can exert more control in their relationships with gateway ports.  In order to keep costs down shippers want ample warehouse, distribution and transloading options including both rail and roadways.  To keep their attracting business, ports need to meet these demands.

U.S. ports are spending billions of dollars to prepare for the new market realities.  There is much more to planning for accommodating these larger ships.   Sorting the increased cargo from each vessel and moving it off the ships quickly will require revamping customs procedures and extending operating hours.

Improving drayage, the first transport of containers off the dock, will require improved communications technology and real-time data about routes and road conditions. 

Resolving chassis shortages (the locking devices that secure a container during shipping) means more land for storage and increased maintenance crews.

The good news is that the LA and Long Beach Ports are well positioned to compete.  Southern California offers few weather delays.  The Alameda Corridor and the Alameda Corridor East Project through the SGV provide efficient rail options for distribution with Union Pacific and BNSF offering access to 14 major freight hubs including Chicago, Atlanta, Dallas and Memphis. 

Reliability is the real key and improved labor/management relations will remain a critical variable. That must be a focus as we move forward.