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Container Fee at LA/Long Beach Questioned by FMC Chair

Tuesday, August 04, 2015
Sandler, Travis & Rosenberg Trade Report

Federal Maritime Commission Chairman Mario Cordero recently questioned the continued need for a fee that has been imposed on cargo containers at the ports of Los Angeles and Long Beach for the past ten years and called for an assessment of specific issues concerning this fee.

The West Coast Marine Terminal Operators Agreement’s PierPASS Traffic Mitigation Fee is assessed on loaded containers entering or exiting any of the 13 international container terminals at the ports of Los Angeles and Long Beach during peak hours (Monday through Friday, 3:00 a.m. to 6:00 p.m.) to fund the operation of off-peak gate openings, which began in 2005 to address issues such as congestion, security and air quality. The TMF is currently set at $66.50 per 20-foot equivalent unit or $133.00 per 40-foot equivalent unit.

Cordero noted that the TMF has risen substantially from $40 per TEU when it was first implemented in 2005 and that another four percent increase, to $69.17 per TEU, is slated to take effect Aug. 1. Cordero said that PierPASS and the participating terminals “should justify the continued need for the TMF as well as the sustainability of annual TMF increases” and that PierPASS should “critically self-assess its performance” in the following areas.

Sun Setting. MTOs indicated that they would sunset the TMF after a critical mass of container cargo had moved from peak to off-peak shifts, but ten years later the TMF is still being imposed and increased even though nearly 55 percent of container cargo subject to the fee now moves during off-peak shifts.

Service Levels. When PierPASS was first launched the terminals promised five off-peak shifts per week, but only four of the 13 terminals currently provide such service and one planned to drop its weekend shift effective July 25. Cordero said PierPASS should justify why it is necessary to increase the TMF when the costs of off-peak gates should have decreased because most MTOs are no longer providing five off-peak shifts per week.

Fairness. Less than 20 percent of all containers moving through the ports of Los Angeles and Long Beach are assessed the TMF, and Cordero wants PierPASS to explain why such a small portion of container traffic bears the burden of paying for the off-peak shifts.

Transparency. Container terminals at Port Metro Vancouver recently started offering off-peak shifts that are partially paid by a $50 truck reservation fee, and port officials independently audited how this fee was calculated to ensure that the estimated revenue collected was not more than the estimated cost to operate the off-peak shifts. Cordero suggested that L.A. and Long Beach port officials independently audit PierPASS as well.

Performance Metrics. MTOs should seriously consider publishing their individual queue and dwell times so that truckers and shippers can better utilize their operations, a change that has been requested but so far rebuffed by the MTOs. Cordero noted that truck queue and dwell times at Vancouver’s four container terminals are made public, so there is precedent for making this information available.

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