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Thoughts about the relationships between transport and the urban area it serves

Archive for October 28th, 2008

Auto makers want a bail out

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The news at 6 on CBC tonight conflated these two stories. Autoparts makers say they need help from the Ontario and Canadian governments. And on the other side of the line GM and Chrysler want a $10 billion rescue package.

On boith sides of the border are Conservative administrations who have been advocating policies that favour businesses. That have repeteadly stuck to the line that the private sector is better at predicting markets, serving demands and being more efficient than government. In the case of the North American banks and the automobile business it is now plain that this was not the case. If government departments has made errors on the scale of the credit crunch or the failure to predict the demand for fuel efficient vehicles, there would be outrage and demands for heads on platters. So far, the financial geniuses who brought the world’s financial system to almost complete collapse have actually been rewarded for their efforts. Bankers have been telling their staff that their bonuses are safe. Now the least competent auto makers want some for them too.

The answer, of course, must be “no”. Because what is happening to GM and Chrysler is the judgement of the free market. Customers have looked at what they have been offered and decided that other makers have better products. And it is not as if this outcome had not been predicted. The Big Three have been busily fighting CAFE standards – or working their way around them – for years. They refused to try to meet California emissions standards and preferred to fight them in court. Meanwhile, other more intelligent companies built cars that better meet the needs of a world rapidly running out of cheap oil.

Yes this will be tough on those with jobs at these companies. Just as the collapse of ENRON was tough on their employees. Just as the closure of many small businesses by the onslaught of big box retailers has been disastrous – especially for “small town America” now being so eagerly courted by the Republican Party. There were no bailouts then. Chrysler has been bailed out once before by the US government. Maybe there needs to be a “three strikes and you’re out” clause for people who make bad management decisions.

GM has been working hard for many years to persuade people they needed bigger cars – and especially big trucks – for their personal transportation. Pressed by governments to provide more fuel efficient vehicles they grudgingly produced a car which they said nobody wanted. Meanwhile other, foreign owned makers, found that they could sell all kinds of small cars. GM deserves to go to the wall. It did not make what the market wanted and was slow and ineffective at changing. It has also shown itself to be utterly contemptuous of the people who made their cars, bought their cars and paid taxes used to prop up their business. GM has a long and generally reprehensible history – right back to the times when they shut down successful streetcar and interurban transit companies having bought them up so they had to buy GM buses. They have shown how addled the adage “what is good for GM is good for the USA” has turned out to be. And not just in the wasteland of Flint, Michigan.

If governments are considering making investments in transportation it must be in products that meet future needs better than Hummers. Public transportation, bicycles and walking all need significant support and that can only come from taxes. The auto industry has been innovating – just not the Big Three – and the Canadian government has just got in the way of new products getting to market. Low speed electric vehicles being an obvious solution to many urban journeys and deliveries. Governments have also been disastrously wrong in their support for alternative transportation fuels, which have not delivered anything like the benefits claimed for them.

We do not need to prop up automobile industry. What we need to do is rethink how we are going to face a future post peak oil, and in the face of rising sea levels and other impacts of climate change which are all around us. Keeping the companies going that are largely responsible for the mess we are now in makes no sense at all.

Written by Stephen Rees

October 28, 2008 at 7:51 pm

You still think we need a Gateway?

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My thanks to Donna Passmore and Rita Dawson for supplying the following

“The slump in traffic to the West Coast of the United States is hitting the massive Yantian container terminal operated by Hutchison Whampoa. It is suffering volume declines for the first time. A majority of Yantian’s traffic is from shipping lines servicing routes to North America, where demand has been driven down by the American property slump and dwindling consumption of household consumer goods. It is expected to report a drop in volumes for the first half, having declined for five consecutive months.”

source: The Times

“Orders for new container ships are drying up as vessel charter rates and ocean freight rates tumble and volume growth slows on key liner trade routes. The collapse in orders, which has affected all ship sizes, follows five straight years of historically high deliveries. Only 179 container ships were contracted in the first eight months of this year, down 49 percent from the same period last year, Clarkson said. This compares with a record 566 contracts in 2005, 479 in 2006 and 530 in 2007. Container ship contracting has been hit by “a good old double whammy” of slowing trade volume and rising shipyard prices.”

source: Supply Chain

“Container ships are idle because of lowered U.S. demand for goods.

Commodity carriers are going to be hit the hardest with the tightening credit markets, along with dry bulk, where many of the vessels ordered were going toward.”

source: ETF Trends

Ship Rates Plunge as Credit Freeze Strands Cargo, Demand Slumps

By Alaric Nightingale and Chan Sue Ling

Oct. 15 (Bloomberg) — Commodity shipping rates plunged to the lowest in more than five years as a lack of trade finance left cargoes stranded and the global economic slowdown limited raw material demand.

Traders are finding it harder to get letters of credit that guarantee payments for goods, shipping executives said. Together with a slowdown in trade, that has contributed to this year’s 82 percent drop in shipping costs for grain, coal and other commodities. Rates are so low that Zodiac Maritime Agencies Ltd., the line managed by Israel’s billionaire Ofer family, announced today it may idle 20 of its largest ships.

“Letters of credit and the credit lines for trade currently are frozen,” Khalid Hashim, managing director of Precious Shipping Pcl, Thailand’s second-largest shipping company, said in Singapore yesterday. “Nothing is moving because the trader doesn’t want to take the risk of putting cargo on the boat and finding that nobody can pay.”

The Baltic Dry Index fell 11 percent today to 1,615, the lowest since February 2003. Rates for larger ships of the type Zodiac intends to idle fell 17 percent today, taking this year’s plunge to 85 percent, according to the London-based Baltic Exchange.

Banks are leery of financing commodities and shipping transactions. Rio Tinto Group, the world’s second-largest aluminum producer, may delay the planned sale of $10 billion of assets and Sterlite Industries (India) Ltd. shelved its $2.6 billion purchase of Asarco LLC. Ship owners can’t find cash to finance the construction of new ships.

The reaction so far to the news of the impact of recession from our provincial government is that they intend to accelerate the building of infrastructure projects. Which might make sense as a stimulus package except that these projects are not now justified. It was the government that said we needed more roads to grab more Asian trade – but there is no more to grab. Perhaps if they had been honest and said, ‘we would like to promote a new rash of low density commercial and residential development in some of the most ecologically sensitive parts of the region and rip up the LRSP’ then they might have a case. But they chose not to do that. They stuck to a story that looked thin two years ago, and is totally absent now. The port expansion will be a massive white elephant. The landside development will doubtless be changed swiftly to match the new reality. It is always easy to make money by changing zoning. Though even then I suspect that it will be a while before the property market picks up again.

Recession is being viewed as bad news, but actually it might be our salvation. We have a very short time to make drastic reductions in our ghg emissions. 80% is the target that the UK has picked, though they are giving themselves until 2050 to do it. It is abundantly clear that the path of ever increasing growth is not sustainable. In fact that has been clear ever since the Bruntland Commission. This region is also on the edge. While Metro tries its best to talk a good story. the BC Liberals seem determined to drive us over it. But surely if we are being driven solely by business, common sense would dictate at least a little hesitation before committing us to what now looks like folly. It is not good business to try to increase your share of a declining market when there is already spare capacity.

Written by Stephen Rees

October 28, 2008 at 7:15 pm

Posted in Gateway

Transport: City faces fork in road on tackling congestion

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Sean Ross Financial Times

Los Angeles “lacks a convenient citywide alternative to travelling by car, such as a subway or light rail system, so gridlock is common. Despite years of worsening congestion, city authorities have had little success in alleviating the problem.”

So they are going to vote on a proposal to raise the sales tax – to build a subway (among other things) and congestion charging is also on the table. It they process LA will get the federal funds that would have gone to New York if they had not ducked out.

Pointing to Los Angeles as the fate we wanted to avoid has been the common touchstone of planning in this region. It was not enough that Vancouver fought off the downtown freeway, we also created an alternative strategy, called the Livable Region Strategic Plan. The trouble is that although it is the legally mandated growth strategy, and the revision slowly grinding its way through the process (the Sustainable Region Initiative) looks like building on the LRSP, not scrapping it, that is precisely what is happening here now. And mainly because of the actions of the province and a few unelected “professional” boards at key transportation providers.

Please click on the link and read what is happening in LA. It is a pretty good indication of what will be happening here in future. For after the Green Zone has been hacked to bits to satisfy developers, the ALR reduced to a minor inconvenience to sprawl, and the “Gateway” and the Golden Ears Bridge have done the intended jobs and allowed for low density suburban growth across the outer parts of the region, then we will have to deal with the problem LA has had since they cut up the last of the Big Red Cars fifty years ago. Building freeways did not make Los Angeles livable – and it won’t here either. “Get Moving BC” and the BC Liberal Party are well aware of this. Both Gordon Campbell and Kevin Falcon are on record as stating “We cannot build our way out of congestion” yet there is no funding for the “transit plan” (which anyway has very little for the growth areas). They are also determined to push ahead as fast as they can with the SFPR and the Highway #1 widening and Port Mann twinning, but refuse to even consider congestion charging.

I have been called to task for stating that I think that this plan is “stupid”. So perhaps I should reconsider. How about deceitful and wicked? That probably fits better. Stupid implies that these people do not know any better – but it is clear they do. But they think that developers profits are much more important than a compact urban region with complete communities, a protected green zone and increased transportation choice.  But they can get away with it since regional plans in BC are just like our environmental assessments. Toothless and useless.

Written by Stephen Rees

October 28, 2008 at 10:04 am