Los Angeles port to pay China Shipping for berth delay
The port of Los Angeles has agreed to pay $22.2 million to China Shipping to compensate the Chinese ocean carrier for lengthy delays it incurred trying to develop a container berth in the port since 1997.
The harbor commission of the Californian port Wednesday approved a permit amendment that paves the way for the city of Los Angeles to settle the damage claim filed by China Shipping Holding Co. Ltd. The claim stems from a 2001 lawsuit filed against the city, port and harbor commission over the permit for China Shipping to operate a container terminal at berth 100.
The harbor commission’s settlement decision will lead to a payment by the city of Los Angeles to reimburse the carrier for financial losses related to court-ordered delays in construction and operations at the berth 100 facility, the port said in a statement.
Under the settlement, the port will also reimburse certain costs that China Shipping incurred to fund environmental mitigation measures required by an amended stipulated judgment resulting from a Los Angeles Superior Court case filed by the Natural Resources Defense Council Inc., et al against the city.
Subject to Los Angeles city council approval, the $22.2 million settlement will include an upfront $10 million reimbursement to China Shipping “for costs associated with the delay in delivering terminal operations on schedule,” the port of Los Angeles said. The environmental mitigation costs also covered by the reimbursement include the purchase of alternative fueled yard (dockside) equipment. The port also will credit China Shipping prospectively with an additional $12.2 million in
rent-related compensation.
Since mid-2004, China Shipping has operated under a nonexclusive berth assignment as an interim agreement with the port until the settlement of its claim for damages could be reached. Permit no. 999 grants China Shipping use of berths 97-109 for operation as a container terminal for a 25-year period, with the possibility for three five-year extensions.
As both a tenant and shipping line calling at the port of Los Angeles, China Shipping paid the port wharfage and rent fees of more than $18 million during 2004, the port of Los Angeles said.
China Shipping has bought environmentally friendly yard equipment as a term of the amended stipulated judgment in the Natural Resources Defense Council lawsuit and has agreed to retrofit vessels to allow them to use shore-side power while in port (a method known as alternative maritime power) instead of their more polluting onboard diesel engines.