California regulators granted two more shippers the right to deliver freight to Catalina Island, but questions remained about whether there would be enough competition for the vital service.
Licenses for Avalon Freight Services and Curtin Maritime Corp. were approved by the California Public Utilities Commission at its Thursday meeting in San Francisco.
A third shipper, Catalina Freight Line, is the current freight carrier to the island and its primary city, Avalon, located 26 miles off the California coast.
The PUC’s action was the latest development in a yearlong battle over who will control the crucial commercial pipeline for Catalina. Bottled water, groceries, fuel, construction goods and a myriad of other essentials must be shipped from the mainland.
Santa Catalina Island Co., the island’s largest landowner and employer, owns the dock space where the bulk of the island’s goods come ashore.
The Island Co., as it’s known, has chosen to transfer freight delivery to Avalon Freight Services, a newly formed venture run in part by the owner of the island’s primary passenger line, Catalina Express.
Amid concerns that the deal could mean higher shipping prices ahead, Catalina Freight and Curtin objected and asked the regulators to step in. But even with three operators now licensed, the question is whether the Island Co. will entertain the idea of having more than one shipper use its docks.
PUC Commissioner Liane Randolph, who wrote the motion approved by the commission, told the hearing that on the issue of having more than one shipper, the Island Co.’s “response to that is, 'Well, we physically don’t think we have the ability to do that, we don’t think that’s practical.'”
“Whether that’s true or not, the reality is that the Island Co. is a private land owner and they control the dock and they control the land in that area, so we don’t have the authority to require them to open their facilities up to other companies if they choose not to do so,” Randolph said.
However, “what we do have authority over are the rates,” she said.
Avalon Freight Services “has committed to a minimum of two years under the current rates,” Randolph said. “So in two years, if they come back for an application for increased rates, we have the ability to analyze those rates and determine if they are just and reasonable.”
Another commissioner, Catherine Sandoval, also said that “if indeed Avalon Freight were to basically collude with the dock owner in a way to deny reasonable access” to rival shippers, “that is an issue that should trigger an investigation by this commission and as well it would raise antitrust issues.”