Port of Los Angeles says reforms are a “step in the right direction.”
While a proposal by a dozen marine terminals operating in the Port of Los Angeles and Port of Long Beach to modify the PierPass OffPeak system has been criticized by several shipper groups, two organizations that represent drayage truck drivers, as well as the Port of Los Angeles itself, say they are “generally supportive” of it.
Currently, a traffic mitigation fee (TMF) is imposed on shippers for containers that are picked up and delivered at the terminals during the day. That fee has encouraged shippers to do container transactions at night and on Saturdays, while providing funds to the terminals to offset the cost of operating for longer hours. By shifting about half of the truck traffic at the nation’s two busiest ports to off-peak hours, the PierPass program has reduced traffic congestion and air pollution.
But with shippers critical of the growing amount of the fee and trucks gathering outside terminals around the time the TMF is waived, the terminals are planning to modify the PierPass program. Under what some are calling “PierPass 2.0,” the TMF would be about halved but charged around the clock. Pickups and deliveries of containers would continue to be spread out by requiring truckers to have an appointment to enter the container terminals.
The terminals were able to cooperatively create PierPass using the antitrust immunity they obtained by filing the West Coast Marine Terminal Operating Agreement (WCMTOA) with the Federal Maritime Commission and on April 13 they amended the agreement so that they can make the proposed changes to PierPass. Unless the FMC objects, requests modification or additional information, the changes go into effect in 45 days, on May 28.
In a joint letter, the Harbor Trucking Association (HTA) and the California Trucking Association’s Intermodal Conference (CTA), said, “We see the efforts to smooth out truck traffic between day and night shifts, the reapplication of the TMF to all cargo at a lower price and the emphasis on appointments to ensure smooth operations at the ports’ container terminals generally constructive.”
The two trucker groups, which said they represent the vast majority of drayage truck operators in the two ports, also praised WCMTOA’s outreach efforts.
Gene Seroka, the executive director of the Port of Los Angeles, also wrote to the FMC to “express general support” for the effort by the terminals “to improve efficiency, productivity and service at our port facilities” and called the proposal “a step in the right direction.”
“We are furthermore encouraged by the terminals’ desire to sustain the stakeholder feedback process by holding an advisory committee session in October. In addition, to enhance transparency and accountability, we would recommend more regular meetings to review and assess the implementation of the flat-fee and appointment system with special attention to the impact on performance, congestion reduction and overall competitiveness of the gateway.”
The HTA and CTA encouraged the FMC to address the inclusion of language to encourage the use of “peel-offs,” in which truckers work to remove a large group of containers from a terminal rather than pick up a particular container.
“What we are trying to do is work at leveraging technology and seeing how we can work on peel-off where it makes sense,” Weston LaBar, the chief executive officer of HTA, told American Shipper.
He noted one of the big concerns of organizations representing retailers is that under the new program some are going to see increased costs, while others will benefit.
But if fees were reduced or waived for shippers agreeing to use peel-offs, that could help some lower costs and ease congestion at terminals and make them more efficient.
Increased use of peel-offs could even encourage steamship lines to do more “block stowage” on their ships, placing containers going to the same destination in the same location on the ship, saving terminals additional money as they would not have to allocate as much labor to searching for individual containers and reducing dwell time for containers at terminals.
The National Industrial Transportation League (NITL) told the FMC that its members are “concerned about the lack of transparency as to whether the revenue projected to be collected under the proposed container fee bears a direct relationship to the costs of the L.A./Long Beach off-peak terminal operations or if the new users fees will simply become a new operating revenue stream for the terminal operators.”
But John Cushing, president of PierPass, said the proposed new TMF of $31.52 for a 20-foot container and $63.04 for 40-foot or other large containers was set so that it would bring in about the same amount of money as the current PierPass program. Those fees pay for about 81 percent of the extended hours at the terminals, and he said past increases in the TMF have been tied to increases in wages for the longshoremen work at the terminals.
He said the terminals intend to use appointments to continue to operate in the same fashion they do today, moving about half the cargo at day and half at night.
Cushing noted PierPass financial information is posted on its website, has been given to the FMC and reviewed by the accounting firm KPMG.
“Everything is in order and we continue to display everything,” he said.
Some members of the port community question why shippers are charged the fee when the ocean carriers are the primary customers of the terminals.
Lynnette Keffer, chief executive officer of J&K Fresh, a customs brokerage company specializing in providing services to importers of fresh produce, told the FMC in a letter, “JKF and its clients do not understand why POLA/POLB is the only port in the nation subject to this additional fee.”
However, SSA Marine’s Oakland International Container Terminal also charges a $30 per container fee on all containers, which helps defray the cost of extended hours.
Keffer said when the PierPass fee “was originally implemented, shippers and importers were advised that the fee would be beneficial because there would be more hours to pick up the containers with both night gates and Saturday gates. The reality is that the fee is cumbersome, an accounting nightmare, and there are no regular, reliable terminal hours.”
HTA and CTA say they would prefer a flat fee regardless of container size and a whole or round number to ease accounting.
NITL said in its letter to the FMC that “no direct commercial relationship exists between the terminal operators on the one hand and importers and exporters on the other. Thus, importers and exporters have no commercial means for negotiating fair and reasonable charges that are directly related to the quality of terminal services they receive.”
NITL said, “Terminal operators should seek to recover their general operating costs, including the proposed truck appointment system, from their commercial dealings with their ocean carrier customers, rather than from collectively established user fees imposed on importers and sanctioned by the federal government.”
Cushing said, “But other ports don’t have a program where all of the terminal operators are working together to have scheduled open extended gate shifts to collectively address a common issue impacting the freeways and roadways as we do to serve the ports of Los Angeles and Long Beach.
“The 12 container terminal members within WCMTOA are addressing common issues collectively and that is why the rate they are using is a common rate to address the expanded gates — we’re working together under a single program,” he added.
Port of Los Angeles says reforms are a “step in the right direction.”