PierPass President John Cushing said he suspects marine terminal operators at the two ports will make a decision within the next few weeks.
Container terminal operators at the ports of Los Angeles and Long Beach are slated to meet next week to discuss changes to the current PierPass OffPeak program.
PierPass charges a traffic mitigation fee (TMF) to companies that have cargo trucked to and from terminals at the two Southern California ports during “peak” hours, which are considered Monday through Friday from 3:00 a.m. to 6:00 p.m.
Empty containers, loaded containers that move in and out of terminals by railroad, or containers transshipped through the two ports (a container may arrive on a ship at one terminal, but then be shipped out through another) are exempt from the fee.
The fee partially compensates terminal operators for “off-peak” operations and provides an economic incentive to shippers to have their containers drayed during night shifts (6:00 p.m.-3:00 a.m.) and on Saturday (8:00 a.m.-5:00 p.m.).
A 2017 report revealed that about 44 percent of trucked containers were moving on nights and weekends.
Since the program was implemented in 2005, it has helped alleviate congestion from trucks on roads and highways near the two ports and helped reduce pollution.
However, shippers concerned about continuing congestion at the ports, as well as the rise in the TMF charge, which currently stands at $72.09 per TEU, have called to reform the program.
Two different paths. Last November, PierPass hired two consulting companies – the Tioga Group and World Class Logistics (WCL) Consulting – to evaluate two possible reforms to the program. One option was to charge shippers a flat-fee, regardless of when they pick-up cargo at the port.
Traffic in and out of the port would be regulated with appointment systems. Instead of encouraging shippers to pick up cargo at night or Saturdays by waiving the TMF at those hours, shippers would have to have an appointment for their truckers to pick up cargo.
In recent years, nine of the 12 container terminals in the two ports (all but the three terminals operated by SSA) have started using appointment systems.
Meanwhile, the second option examined by Tioga and WCL was a port-wide “peel-off” program for containers.
“Conventional” peel-off programs are offered today at individual terminals on a limited basis for a limited number of shippers.
Instead of drayage truck drivers submitting an order for a specific container they want to pick-up, shippers ask the terminal to put their containers in a large stack. Each container in the pile is then taken off in the fastest and most convenient way for the terminal and loaded on the next truck in a queue, which takes the container to its destination.
The peel-off operates very similar to the way that taxi drivers at an airport just pick-up the next passenger waiting at a taxi stand and then takes them to where they want to go, without knowing who they are or what their destination is before they get into the cab.
PierPass has been considering whether such a peel-off system could be used for handling all containers moving through the dozen container terminals at the two ports. If that was done, John Cushing, the president of PierPass said there would be some accommodations for truckers and beneficial cargo owners.
For example, containers would be sorted into piles according to how long it would take to move the cargo to its destination, that way a trucker whose workday is regulated by hours of service rules promulgated by the Federal Motor Carrier Safety Administration would not be given a container to a destination four hours away, for instance, when that driver is only allowed to work another two hours. In addition, shippers might pay a fee to have containers put in a pile where they could order a specific box at a specific time.
Under review. Tioga and WCL interviewed about 40 companies and surveyed another 140 for the study they performed for PierPass.
Last week, PierPass met with more than 60 supply chain leaders, including BCOs and truckers, to discuss the survey.
Cushing said that terminal operators like the idea of a port-wide peel-off program for all containers moving through the ports of Los Angeles and Long Beach because it would make terminals highly efficient and provide near zero turn times for trucks.
However, Cushing did say the idea of the port-wide peel-off “did not get much traction from others in the supply chain,” such as truckers and beneficial cargo owners.
BCOs want to work with their regular truckers and also want control of their inventory.
For example, Cushing said a retailer may want a container load of pants delivered to its warehouse as soon as possible, but under a port-wide peel-off, might end up with a container load of shirts because that was the next container pulled from a pile at a terminal and delivered to its warehouse.
Daniel Smith, a principal at Tioga Group, said one of the things terminal operators, BCOs and truckers were unanimous about was how productivity was lost and trucks were delayed at around 3:00 p.m. to 6:00 p.m. when terminals switched over from charging the TMF to no longer charging a fee.
Truckers sometimes come into the terminal hours before the switchover and linger so they don’t get changed the fee, which is assessed based on when the truck leaves the terminal.
Smith said assessing the fee on arrival time would not solve the problem as truckers would just line up at the terminals before the changeover.
Adding to the issue is the fact that the changeover coincides with a shift change by the longshoremen who work at the terminals and the evening rush hour when local highways are already congested.
Smith said there is growing acceptance of the appointment systems at the terminals.
Whether or not the businesses Tioga and WCL surveyed were happy with the current variety of the appointment systems, appointments were seen as “a more flexible and more adaptable tool to manage the truck flow than simply the 6 o’clock changeover with a monetary incentive,” Smith said. “Pretty much everybody sees it as a workable concept in principle,” he said, adding that, “over the next few years, the industry needs to progressively improve the appointment system.”
He also noted that while a TMF is not charged at night, operating at night is not cost free. Night shift workers are generally paid more, and businesses may have to stay open longer.
Tioga also found that in many cases, truckers who pull containers at night are staging boxes – taking them to an off-dock facility where truckers can pick them up during the day. That allows truckers not to get caught-up in terminal congestion, but it is also adds cost.
Smith noted that when the terminals first started operating at night, there was “a lot of wringing of hands over whether distribution centers would be open to receive boxes at night. What we found is by now, most of the major ones are running 24/7. There are still others where, even if the loading docks aren’t working 24/7, the parking lot is open 24/7. So if I’m a trucker, I can come in, I can drop my box and pull out an empty in the middle of the night, even if there’s nobody there but a security guard.”
The Tioga/WCL survey found the most popular option was a flat fee charged around-the-clock, combined with an appointment system and a conventional peel-off system similar to what terminals are using today for some of their customers.
“Both customers and truckers and terminals that have used peel-off options have generally been pleased with them. The terminals see them as a way to lower costs; the truckers do get faster turn times,” he said. “Like appointment systems, there are still a lot of details to be worked out.”
On the horizon. The members of the West Coast MTO Agreement (WCMTOA) – the 12 marine terminals at the ports of Los Angeles and Long Beach – will now review the Tioga/WCL report and the feedback they received at the March 8 meeting and determine how to proceed. “I can’t answer for them,” said Cushing, “but I suspect within the next few weeks, some kind of decision to be made.”