Washington State’s two U.S. senators have asked the U.S. Federal Maritime Commission to investigate the extent to which the federal Harbor Maintenance Tax (HMT) and “other factors” are causing U.S.-bound cargo to be routed through ports in Canada and Mexico.
In a letter to FMC Chairman Richard A. Lidinsky Jr., Sens. Patty Murray Sen. Maria Cantwell say “shippers can avoid paying the HMT by routing cargo through non-U.S. seaports. Although the HMT has existed since 1986, it has become a more significant competitiveness issue with the development of new Canadian and Mexican seaports along the West Coast, and it appears that the HMT may be a key factor causing U.S. ports to lose a growing share of imported container cargo from Asia.
“A growing number of containerized U.S. imports from Asia move through the West Coast Canadian container ports of Vancouver and Prince Rupert en route to the U.S. Midwest (i.e. Chicago and Memphis) through cross-border rail. Additional volumes enter U.S. markets via Mexican ports. As a result, non-U.S. ports are able to claim a substantial per-container cost advantage over U.S. seaports based on the HMT alone. The results of this unfair disparity are increased cargo diversion and lost U.S. jobs.
“In addition, the HMT is not collected at the land border, resulting in decreased revenue for the Harbor Maintenance Trust Fund (HMTF). As a consequence, our country’s capacity to handle international trade growth is adversely affected. It is imperative that we level the playing field between international ports and domestic ports so that the U.S. can continue to compete for cargo,” they add.
The senators asked the FMC to investigate and “offer legislative and regulatory recommendations to address this concern.”
Lidinsky has said for some time he was anticipating such a request. In July he told members of the International Longshoremen’s Association that cargo diversion is “a complicated issue involving the harbor maintenance tax, weaker container inspections, and possible subsidy of cargo rail moves through Canada to the U.S. border near Chicago.” He added, “this issue will someday have a dramatic impact on the East and Gulf coasts as well.”
He said he has been told that shippers can realize an average $137 per container savings moving cargo through Canada an avoiding the HMT.
Lidinsky’s interest in the issue is long lived. Back in 1984 the Journal of Maritime Law and Commerce published an article he co-authored entitled, “American-Canadian Cross Border Container Traffic: Innovation or Cargo Diversion?”