SoCal terminals to cut one off-peak shift

SoCal terminals to cut one off-peak shift    When marine terminals in Long Beach and Los Angeles announced in January that they were going to end Saturday hours, it created such uproar among truckers and shippers that the industry shelved the plans.
   Thursday terminals decided on a modified plan, with each terminal operator opting to eliminate either a Thursday night or Saturday shift beginning April 9 or April 11.
   The industry decided to go ahead with plans to reduce the number of hours they remain open because of sharply falling cargo volumes. Container traffic at the ports of Los Angeles and Long Beach in the fourth quarter of 2008 was 32 percent below the same levels in 2007, said Richard Wargo, president of PierPass, a program that helps the industry underwrite off-peak shifts at the terminals. He said the drop is even more precipitous in early 2009, though he did not give precise figures.
   “The cargo decline is dramatic,” he said. “We have to find a way to address this issue.”
   He said that before making the announcement on Thursday, the industry held extensive conversations with shippers, truckers and other stakeholders to get a better understanding of what their needs were.
   Under the PierPass program, a $50-per-TEU fee on shipments moving through terminal gates during the regular Monday through Friday day shifts is used to subsidize night shifts from Monday through Thursday and during the day on Saturday at terminals in Los Angeles and Long Beach. In a normal business environment that provides about $125 million to $140 million, which is divvied up among terminal operators. But revenues for the program have plunged as cargo volumes have dropped.
   Seven of the terminals have decided to close on Thursday nights and will remain open on Saturdays, and six will close on Saturdays but will be open on Thursday nights.    A list of which terminals are closing on which days will be released in the next week.
   “Taking this approach of closing some terminals on Thursday night and some on Saturday day should make the most people happy in that they should have an off-peak opportunity,” he said.
   “There were some terminals that wanted to be open on Saturday, they do more business on Saturday,” he said. “We were trying to balance the desires of importers and exporters against the high cost of the program and especially the high cost of Saturday,” which he said exceeds Thursday, the slowest night of the week. He said the number of gate moves at terminals on Saturday have fallen from about 13,000 to about 9,000.
   He said the terminal operators did discuss possibly increasing the PierPass fee to offset the decline in revenue instead of eliminating a shift, but he said “as you can imagine, in this climate, raising the rate is probably the last thing people want to hear, although there were some selected cargo owners who said a modest increase might not be bad. But the fact of the matter is that a modest increase probably would not get us anywhere where we need to be.”
   PierPass said revenue from the $50 per TEU fee — which the group calls a “traffic mitigation fee” — has not fully recovered the added costs of operating the five off-peak shifts since the program was initiated in 2005.
   PierPass said in the fourth quarter, the actual cost of off-peak gates was $79 per TEU compared to the fee it collects of $50 per TEU. Eliminating one of the shifts each week should produce a savings between $17 per TEU and $25 per TEU, PierPass said. ' Chris Dupin