Dive Brief:
- The Harbor Performance Enhancement Center (HPEC) is suing the Port of Los Angeles over the termination of an agreement in which the company would develop a $130 million, 5.5 million-square-foot container facility on Terminal Island within the port, according to The Los Angeles Times.
- The lawsuit suggests the port is canceling the project, meant to ease congestion at the port facility, after HPEC was unable to gain support from the local union. HPEC is asking a judge to overturn the port's decision.
- HPEC claims to have already spent four years and $2 million on the project.
Dive Insight:
HPEC is described in a press release from last year as a staging ground for containers after leaving terminals and before they arrive at their final warehouse destination. The company said its "hub and spoke" model would reduce transportation costs, improve cycle times and reduce inventory.
"HPEC will increase productivity at the Port by 10% or more," HPEC CEO Jonathan Rosenthal said last year.
However, the International Longshore and Warehouse Union wanted to ensure its members were the only drayage drivers for the site. The LA Port then told HPEC it could only move forward if it got support from the union. Rosenthal claims efforts to work with the union were "continually rebuffed," according to Freightwaves.
This suit highlights a dichotomy that can plague ports: the desire to speed up freight with innovative projects while keeping the union on board.
It's not clear why HPEC struggled to get the union's approval for this project — the union has made no public statements on the matter — but Rosenthal told the Los Angles Times the requirement for union approval was an "unexpected curveball."
The union at the LA port has shown its strength in recent months as it successfully fought a permit at the facility's largest terminal. The LA City Council voted last week to side with the union and not issue a permit to APM Terminal that would allow automation to move forward.
