L.A. port commissioners grill PierPass chief
Port of Los Angeles Harbor commissioners questioned the head of an industry-created off-hours gate program May 15, raising concerns about overcharging in the $125 million-a-year program.
Bruce Wargo, president of the PierPass non-profit that runs that OffPeak program, appeared before the commission to report on the status of the three-year-old program that collects a daytime $50-per-TEU fee to pay for keeping terminal gates open on nights and weekends.
Wargo reported that the program collected $125.5 million in 2007. More than 92 percent of the program's revenue, or $116 million, went to terminals to compensate them for keeping off-hour gates open. The remaining $9.5 million, or nearly 8 percent of total revenues, went to the administration of the program.
While Wargo did not give specific terminal financial breakouts, he said labor represented 89 percent of the costs to keep the gates open during off-hours.
Commissioners, however, interrupted Wargo's financial presentation with questions about where the collected fees go and how they are spent.
'We need to see some numbers to justify the $50 or else we need to consult with our attorneys and find out what authority we do have,' said S. David Freeman, the commission president.
Freeman and three of the other four board members repeatedly pushed Wargo on how much of the collected money was being passed on to each terminal.
'What we don't understand is,' said Commissioner Douglas Krause, 'is PierPass covering (terminal) costs or is it part of making profits' for the terminals?
Expenses in the program, said Wargo, continue to exceed revenues, but fee increases for daytime moves from $40-per-TEU when the program started in 2005 to $50 per TEU today have helped bring the program's accounts closer to break even.
Wargo also added that perhaps in the future, the fee might go down.
'I guarantee it may go down,' interjected Freeman.
The commissioners also asked pointedly why the port board, and the board of the neighboring port of Long Beach, have not been provided the full financial accounts of the program.
'We cannot sit here without some justification for a $50 container fee being maintained in the future,' Freeman said.
Wargo said he would need the approval of the participating terminal operators to release some of the information.
PierPass was born in 2004 as an industry response to threatened state legislation aiming to reduce heavy daytime truck congestion on port-area highways. Long Beach and Los Angeles terminal operators put up $15 million to start the program. Eight months of software and hardware development allowed the program to launch in mid-2005 with four extra nighttime gates being open and an extra weekend gate. According to Wargo, the program has recorded more than 8 million off-hour moves and nighttime gates in the program are now recording 12,000 to 15,000 moves per night, a 44 percent increase over volumes at the start of the program.
Wargo was scheduled to give a presentation to the Long Beach port commission Monday.