Federal Maritime Commissioner Mario Cordero is pressing terminal operators to justify a recent increase in PierPass fees, which they claim still do not fully pay for night and Saturday operations.
PierPass Inc. is marking the 10-year anniversary of its OffPeak Program, which established regular night and Saturday work shifts at the Port of Los Angeles and Port of Long Beach.
While the program, which was created by terminal operators in the two ports to ease traffic congestion and reduce pollution, is being praised by local officials, Mario Cordero, the chairman of the Federal Maritime Commission, is pressing terminal operators to justify a recently announced increase in PierPass fees.
PierPass said since July 23, 2005, OffPeak has taken 34 million truck trips out of daytime Southern California traffic and diverted them to less congested nights and weekends. It said roughly half of the 150,000 weekly truck trips to the two ports occur at night and on Saturdays.
Trucks coming to terminals during the day pay a traffic mitigation feed (TMF) that is then used to subsidize the operation of the 13 terminals at the two ports at night and on Saturday. The fee is not charged during the evening and Saturday off peak hours in order to provide an incentive for truckers to use the terminals at those times.
On June 30, PierPASS announced a four percent increase in its TMF, from $66.50 to $69.17 per TEU, effective August 1, 2015. In 2005, when the program was first implemented, the TMF was $40 per TEU.
The anniversary comes days after Mario Cordero, the chairman of the Federal Maritime Commission issued a statement saying, “In light of this fee increase, I believe that PierPASS and the thirteen terminals at the Ports of Los Angeles and Long Beach should justify the continued need for the TMF, as well as the sustainability of annual TMF increases.”
PierPass says OffPeak was created “as a private sector solution to what in 2005 was then a critical public problem: drayage trucks causing severe congestion on the roads, highways and neighborhoods around the ports, while thousands of idling trucks caught in this traffic every day added to air pollution.”
“Heavy-duty trucks are the largest source of smog-forming nitrogen oxide emissions in our region,” explains South Coast Air Quality Management District Executive Officer Barry Wallerstein. “By decreasing the time that trucks are idling and stuck in traffic, the OffPeak program has helped to significantly improve air quality.”
“The OffPeak program has facilitated the continued growth of the Port of Long Beach,” Long Beach Mayor Robert Garcia said of the program, “while lowering the adverse environmental impacts of their operations.”
PierPass said the program has effectively doubled the capacity of the Ports of Los Angeles and Long Beach “without taxpayer money and without waiting for new infrastructure to be built.”
Cordero, who is a former Port of Long Beach Commissioner, said, “To avoid dissatisfaction from customers due to increased fees, PierPASS must be more transparent about the cost to operate off-peak shifts and the revenue collected from the TMF.”
He called on PierPASS “to critically self-assess its performance along five key dimensions: sun setting, service levels, fairness, transparency, and performance metrics.”
Cordero said the marine terminal operators indicated that they would sunset the TMF after a critical mass of container cargo off-peak shifts. “Ten years later, the TMF is still being imposed and increased even though nearly 55 percent of the container cargo subject to the fee now moves during off-peak shifts.”
But John Cushing, the president of PierPass said there is no plan to sunset the program. If the TMF was ended, there would be no way to fund the additional cost of night shifts, and he said port truck traffic would once again snarl local roads and freeways.
PierPass says introduction of off-peak shifts in 2005 roughly doubled the labor cost to handle the same amount of cargo, and that with the great recession, container volumes in 2014 are only 6 percent higher than in 2005.
Cushing noted that the TMF increase going into effect on August 1 is not retroactive — terminal operators will not recover the higher labor expenses they incurred from last July to this July under the recently concluded contract with the International Longshore and Warehouse Union (ILWU).
Cordero also said that when the PierPASS program was first launched, the terminals promised five off-peak shifts per week. “However, only four of the thirteen terminals currently provide five off-peak shifts a week, and one of them has announced that it plans to drop its weekend shift effective July 25th. Despite reduced service, the TMF continues to increase. PierPASS should justify why it is necessary to increase the TMF when the costs of off-peak gates should have decreased because most MTOs are no longer providing five off-peak shifts per week.”
Cushing said although some terminals publish schedules that only show they are operating four shifts, when, in fact, they sometimes operate five or even six shifts depending on demand. He said the PierPass website is being updated to reflect the hours they are actually operating.
Cordero said less than twenty percent of all containers moving through the Ports of Los Angeles and Long Beach are assessed the TMF. In addition to the containers moving in and out of terminals at night and on Saturday, empty containers, transshipped containers, and intermodal containers that are subject to a fee imposed by the Alameda Corridor Transportation Authority are exempt from the fee.
“PierPASS should justify why such a small portion of container traffic bears the burden of paying for the off-peak shifts,” said Cordero.
Cushing said the fee is not charged on empty containers, in part, as a way of simplifying bookkeeping, rather than charging a fee twice – once on an empty container as it leaves a terminal and then again when it returns to a terminal loaded, for example.
Cordero also called for more transparency at PierPass. He said in Vancouver, British Columbia, port officials have independently audited how a truck reservation fee was calculated to ensure that the estimated revenue collected from the fee was not more than the estimated cost to operate the off-peak shifts.
“Perhaps it is now time that officials at the two San Pedro Bay Ports also independently audit the PierPASS program,” he added.
PierPass has posted a 2014 financial report on its website that says ”while the cost of off-peak gates was $104/TEU, the TMF charged to cargo owners was only $66.50/TEU during the period. In other words, the Program was not fully compensated for its costs during Q4-2014.”
PierPass marks 10-year anniversary, but FMC questions recent rate hike
