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California To Get Billions In Federal Loans To Upgrade L.A.-Area Ports Amid Supply Chain Crisis

Under a partnership announced Thursday, the U.S. Department of Transportation will help line up billions of dollars in loans to modernize the infrastructure of the Los Angeles and Long Beach seaports, which are currently facing backups of dozens of ships waiting to offload cargo, though the money will not solve the current congestion.

The announcement refers to the loans as a “longer-term solution” that will work in tandem with short-term solutions that have been set in motion, such as the executive order signed by Newsom last week.

Newsom said in the statement that the funding 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.”

The money would come from existing U.S. Department of Transportation credit finance programs, as well as from the state and public-private financing, according to the Los Angeles Times.

WHAT WE DON’T KNOW

Exactly how the $5 billion will be used remains unclear, as John D. Porcari, former U.S. Deputy Secretary of Transportation and current Port Envoy to the Biden-Harris Administration Supply Chain Task Force, said at a press conference Thursday that the program will be similar to a “hunting license,” per the Los Angeles Times. The USDOT statement cites “port-specific upgrades,” “expanding capacity for freight rail” and “developing inland port facilities for increased warehouse storage” among others as projects that “could receive support through this agreement.”

KEY BACKGROUND

The executive order signed by Newsom last week directed state agencies to “continue coordinating with the Biden-Harris Administration Supply Chain Disruptions Task Force to address state, national and global supply chain challenges” and to identify locations that could act as short-term storage for the for the goods once they are unloaded. About 40% of container traffic entering the United States passes through the two ports, according to CNN.

BIG NUMBER

That’s the record number of ships waiting to enter the ports of Los Angeles and Long Beach as of Oct. 19, according to ABC7.

WHAT TO WATCH FOR

Beginning Nov. 1, shipping companies whose cargo containers sit for longer than nine days at either of the ports will be charged “$100 per container, increasing in $100 increments per container per day,” according to a statement from the Port of Long Beach.
Source: Forbes by Mason Bissada

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