Transportation Secretary Pete Buttigieg and California Gov. Gavin Newsom announced a strategic partnership on Thursday, Oct. 28, to help finance and facilitate infrastructure projects in the state which has seen its seaports clogged and caused the supply chain disruptions.

According to Los Angles Times, Buttigieg and Newsom will provide $5 billion in loan money to help modernize California’s seaports.

The money would come from existing Transportation Department programs that offer easy terms, including low rates of interest, loan guarantees and long payback periods, as well as some state money and public-private financing.

In a press release, the Department of Transportation said that the agreement would allow California to expedite work on a network of related projects—rather than using a piecemeal approach—that collectively will help grow the economy, protect the environment, facilitate the movement of imports and exports, and bring supply chain processes into the 21st century.

“California’s ports and infrastructure system is key to the country’s supply chain. Thanks to our collaboration with the Biden-Harris Administration, this innovative federal-state partnership will help us fast-track those projects that will make our ports and infrastructure even more efficient,” Newsom said in the press release.

“This partnership 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 governor added.

Some projects that could receive support from the agreement include: port-specific upgrades; expanding capacity for freight rail; developing inland port facilities for increased warehouse storage; railyard and truck electrification; highway upgrades to improve truck travel times; grade-separated crossings to reduce the number of rail-street intersections; land ports of entry to expand trade capacity; other projects of critical importance identified by the California State Transportation Agency (CalSTA).

“Our supply chains are being put to the test, with unprecedented consumer demand and pandemic-driven disruptions combining with the results of decades-long underinvestment in our infrastructure,” Buttigieg said.

“Today’s announcement marks an innovative partnership with California that will help modernize our infrastructure, confront climate change, speed the movement of goods and grow our economy,” the secretary added.

Both sides have made clear that infrastructure projects must be considered based on their potential for strengthening supply chain resilience. However, details about the project, how and to whom the loans are going to be reimbursed remain unknown.

California has recently enacted a state budget plan, that includes $250 million for ports, $280 million for infrastructure projects at and around the Port of Oakland, and $1.3 billion over three years for zero-emission trucks, transit buses and school buses.

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