SEAL BEACH, Calif. Los Angeles-area ports, which already have the reputation of being among the most expensive U.S. arrival points for imported steel, are due to get a lot more costly, according to local shipping industry executives.
New environmental, security and safety regulations planned for the ports of Los Angeles and Long Beach, Calif., represent a heavy burden that threatens to make these ports less competitive, local firms serving the ports said at an Association of Women in the Metals Industries (AWMI) meeting late last week.
"You are seeing costs go up exponentially," according to Wray Bartling, terminal and procurement manager at Wilmington, Calif.-based Pasha Stevedoring & Terminals LP, whose terminals are among the largest handlers of break-bulk steel to the West Coast.
If all the regulations now being enacted for the local ports take effect, Pashas costs over the next five years could go up by 15 percent, not including increased labor costs, Bartling said. This includes requirements for yard trucks, new fork lifts and new engines for gantry cranes that cost $2 million to $3 million apiece.
Its already comparatively expensive to bring steel into local ports, sources have said. A manufacturer in the AWMI audience with facilities in both California and Texas said he was recently "stunned" to learn from a trader that the Asian steel plate he has been bringing into Los Angeles could also be shipped to Houston for $20 per ton less.
Tony Firth, general manager at Rancho Dominguez, Calif.-based Ancon Transportation, which hauls steel and other materials from both ports, said air-quality regulations are forcing companies like his own and Pasha to replace equipment "thats well within its operating life."
These costs include fitting fork lifts with particulate filters that carry price tags of about $20,000 or even more with new motors, often opting for the purchase of new fork lifts altogether. These are seen as huge investments in a business where it typically costs $175,000 for a forklift that is used to load and unload metal products from a ship, he said.
One of the most costly regulations coming into play is a "cold ironing" requirement mandating that by 2014 half of the vessels in port must plug into power supplied by the Los Angeles Department of Water and Power rather than the low-sulfur diesel generators now employed by all ships, Bartling said.
The ongoing price tag of this obligation for the local ports is $50 million, he said, pointing out that companies such as his own will have to foot some of the bill.