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CA Governor Looks to Pump $2.3B into Supply Chain

California Gov. Gavin Newsom talked up transportation and infrastructure budget spending Thursday as he seeks to aggressively tackle the state’s greenhouse gas emissions and supply chain challenges.

Newsom was in Santa Clara to discuss the $9.1 billion allocated for the transportation sector as part of his proposed 2022-2023 state budget, which was released Monday.

“California continues to lead; we’re not playing in the margins,” Newsom said during a press conference addressing the ambitious long-term plans to green the state’s transportation sector.

“We understand deeply the challenges that we face as a state as it relates to extremes. Extreme drought. Extreme weather. The ravages and realities of climate change, and so much of this transportation focus … is framed in the context of resiliency, is framed in the context of our climate agenda,” Newsom said.

The timeline for California’s 2022-2023 budget includes a May revision to account for the latest economic data, with the governor expected to sign off on it this summer.

Of note for shippers is the $2.3 billion specifically proposed for supply chain spending. That works out to $1.2 billion for the ports, freight and goods movement projects and $1.1 billion for worker training and zero-emissions vehicles.

Port of Los Angeles executive director Gene Seroka and Port of Long Beach executive director Mario Cordero applauded the budget proposal.

“The governor’s proposed budget includes significant and targeted investments in the state’s seaports that will improve the efficiency, sustainability and velocity of goods movement,” Cordero said in a statement Tuesday. “The COVID-19 pandemic has underscored the importance of the state’s ports and supply chain, so these investments are very well timed.”

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The capital infusion would come as the federal government is also looking to address supply chain disruptions, with U.S. Secretary of Transportation Pete Buttigieg saying during a visit to the Port of Long Beach Tuesday the Biden administration is “not waiting one minute to address supply chain disruptions.”

Long Beach and the Port of Los Angeles said Monday their facilities have trimmed a combined 45 percent of aging cargo since Oct. 25 in announcing a decision to hold off for another week on consideration of a container dwell fee.

Newsom’s budget, named The California Blueprint, aims to cement the state’s status as a green leader in an attempt to “future-proof this state,” he said.

“There is no state in America that comes close to a commitment of radically changing our system of transportation by cleaning and greening it,” Newsom said, “particularly as it relates to incentives across the spectrum and the capacity now through grants programs, matching and otherwise, to begin the process that we have long been advancing around converting our drayage trucks, converting our diesel trucks, converting our passenger vehicles.”

The state’s electric vehicle sector has been rapidly growing on both the commercial and passenger vehicle side, driven in part by the regulatory environment.

Newsom signed off on an executive order in 2020 that will phase out gas-powered cars and trucks for consumers and drayage trucks by 2035. Medium- and heavy-duty vehicles would have an extra 10 years before the zero-emission order applies to those segments.

Electrified commercial fleets are expected to play a big part in last-mile delivery as express and same-day options continue to ramp.

The buzzy electric vehicle maker Rivian Automotive Inc., which went public in November in the largest IPO of 2021, relocated its headquarters from Michigan to Irvine, Calif. in 2020. The company has an exclusivity agreement with Amazon to produce 100,000 electric delivery vans to be used for last-mile fulfillment. Amazon was also a pre-IPO backer of Rivian, which had a recent market cap of $70.9 billion.