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Institutional Considerations in Freight Movement in Port of Los Angeles/Long Beach

With the increase in global trade, the Southern California region has seen increasing congestion associated with increase in intermodal movement of cargo routed through the Port of Los Angeles (POLA) and the Port of Long Beach (POLB). This growing congestion has resulted in increase in the costs of freight transport and greater concerns regarding environmental externalities affecting the local communities. Given the predicted tripling of cargo movement through the ports in the next two decades, as well as the fiscal and planning complexities associated with infrastructure improvement projects, it is essential to devise immediate alternative arrangements for freight management. Efficiency gains in cargo movement need to be obtained from better operational management of intermodal transport. To this end, a few terminals have implemented increased hours of operation and an appointment system for truckers to encourage off-peak movement of cargo and to reduce queuing up at terminal gates. Initial reports indicate that there is a mismatch in the business practices of shippers, ports, truckers, terminal operators, and other actors in the freight distribution network. For instance, increased hours of operation fit the norms of some of these constituencies but not all of them. This poses significant barriers to successful implementation and leads to sub-optimum solutions. Some of these practices demand technical solutions while others demand changes in institutionalized practices. An entire body of scholarship called the "new institutionalism" helps us to analyze some of the reasons for these barriers and can be adapted to suggest ways of overcoming them. It also helps us to understand the conditions under which negotiated agreements between various actors, public and private, become feasible. This literature uses the idea of "transaction costs" to explain how customs, practices, and conventional wisdom emerge in a field. Using this perspective of transaction costs we propose to document the transaction costs that are preventing more cooperative private-private and public-private partnerships in the transport of goods traffic from the POLA and POLB. Our method consists of four steps. (a) Categories of transaction costs will be identified by extrapolation from the literature and by the help of experts drawn from port operations, logistics, engineering, transportation, and others using the Delphi technique. (b) Selected in-depth interviews, organized by transaction cost categories, will be used to document incentives and disincentives for cooperation between truckers, terminal operators, warehouse and ship operators, shippers, and port administration. (c) The data will be analyzed for patterns of institutional response - positive and negative -- to negotiation, bargaining, public policy, and other regulatory approaches. (d) The final step in our analysis consists of policy recommendations for intermodal transportation and operations for POLA and POLB.