NRDC: Container fee wouldn’t cause diversions from L.A.-Long Beach
A new study by two maritime transport and energy experts and funded by two environmental groups has found that a container fee at California’s three largest ports would have minimal to no impact on business.
A state bill authored by California legislator Alan Lowenthal would assess a $30 fee on all containers moving through the ports of Los Angeles and Long Beach, with the revenue going toward emission reduction, port security and infrastructure improvement projects.
The bill has been decried by maritime advocates and shippers’ groups as unconstitutional, as it would essentially place the state of California in a position to impose a tariff on international trade. The other argument against the bill, which is nearing final passage in the state Assembly, is that an extra fee on cargo headed toward Southern California would cause shippers to divert cargo to other ports.
But the study, “Cargo on the Move Through California: Evaluating Container Fee Impacts on Port Choice,” by James Corbett of the University of Delaware and James Winebrake of the Rochester Institute of Technology, finds that a $30 container fee at the Long Beach and Los Angeles ports would not adversely affect business.
The report asserts that:
* Projected cargo growth would far exceed potential ship diversions, and as a result, future ship diversions would be “virtually unobservable.”
* A port user fee or container fee at the Los Angeles-Long Beach ports would result in ship diversions of less than 1.5 percent.
* The $30 container fee would increase total ship voyage costs to Southern California by only 1.5 percent to 2.5 percent on average.
* A key factor for the minimal ship diversion is a strong preference for California ports due to their access to a lucrative market (roughly half of goods that enter Los Angeles and Long Beach remain in Southern California), extensive port infrastructure and cargo handling logistics.
* Little diversion would be expected for the Port of Oakland as well, because nearly three-quarters of the ships docking at Oakland are on multi-leg voyages that include a prior stop at Los Angeles and Long Beach — based on voyage costs alone, diversion of ships due to a fee at the Port of Oakland was estimated at 2 percent to 4.7 percent.
“The study is a smokescreen to divert attention from the simple fact that a container tax is illegal and unconstitutional,” said John McLaurin, president of the Pacific Merchant Shipping Association, in a statement.
“The shipping industry welcomes the opportunity to participate in viable user fee programs, supports the infrastructure bonds on the November ballot, and welcomes the creation of public-private partnerships. Our industry has routinely proven that we are willing to invest in programs that deliver results such as PierPass and the Alameda Corridor program,” he said.
The PMSA represents U.S. and foreign flag ocean carriers and marine terminal operators that do business on the West Coast. PierPass is a program run by terminals in the Los Angeles and Long Beach twin ports that charges $50 per TEU for weekday cargo moves during business hours to encourage shippers and truckers to pick up and drop off cargo during non-peak hours. The Alameda Corridor is a below-grade, consolidated high-speed freight rail expressway connecting the ports and rail yards 20 miles inland that is funded by a user fee.
The PMSA argued that cargo diversion is a real threat if a container user fee is imposed.
“A $30 fee per container will add up to $250,000 to $400,000 per vessel, just for the privilege of calling at a port. Even now, without the imposition of new taxes on cargo, railroads and port authorities in Mexico, Canada and other coastal states are currently developing new terminals and rail lines that will provide a cheaper option for long-haul and intermodal freight than California,” McLaurin said.
California ports do not receive state assistance for infrastructure construction, having self-financed more than $12 billion in facilities and with plans to invest $3.6 billion in terminals and related infrastructure through fiscal year 2008, PMSA said. The ports continue to meet their needs through normal revenue sources and user fees. Less than 0.02 percent of investments in port infrastructure have been financed using taxpayer dollars, the trade association said.
However, Lowenthal’s bill places a large emphasis on intermodal infrastructure projects to reduce highway congestion. Intermodal projects typically include rail ramps and yards for container transfers, which are often the responsibility of railroads, and road projects that are under state jurisdiction.
Southern California environmental leaders have for years considered the ports of Long Beach and Los Angeles to be the largest fixed source of diesel pollution in the region. The California Air Resources Board estimates 2,400 Californians die prematurely each year due to pollution from the transportation of goods. Goods movement alone puts nearly 3,000 residents in the hospital and causes more than one million school absence days annually.
The study was jointly funded by the national environmental group Natural Resources Defense Council and the Los Angeles-based Coalition for Clean Air.