A new discussion agreement filed with Federal Maritime Commission by ocean carrier group OCEMA and the Port Authority of New York and New Jersey would allow the parties to discuss matters involving the port authority’s much-debated cargo facility charge.
The Port Authority of New York and New Jersey and Ocean Carrier Equipment Management Association Agreement (OCEMA)—a group most major container shipping companies belong to—have filed an agreement with the Federal Maritime Commission (FMC Agreement No. 202-011284) that would allow them to “discuss, collect and exchange information, and reach agreement” on matters involving the port authority’s cargo facility charge (CFC).
PANYNJ established the CFC in 2011 to help pay for infrastructure around the port. According to the port authority website, the CFC is currently $5.512 per TEU or double that amount for containers that are 40 feet or longer. The fee for vehicles is $1.238 per vehicle and the fee for bulk, general, heavy lift, breakbulk, and other “special cargo” is $0.156 per metric ton.
Beth Rooney, assistant director of the Port Commerce department at PANYNJ, said the agency collects about $38 million a year from the CFC for all sorts of cargo. She characterized it as a “cost recovery fee,” saying the funds are used to increase capacity and capabilities at the port and for capital projects related to increased security needed at marine facilities after the 9/11 terrorist attacks.
In the past, the funds have been used for roadway improvements, and the port authority also said in December that $56 million it will collect with the CFC will be used to reimburse Global Container Terminals to partially fund construction of an intermodal container transfer facility being built adjacent to the GCT Bayonne terminal.
Rooney noted the CFC funds are only tapped once a project is completed. She said some of the improvements are being made to help the port accommodate the larger ships that are calling the port, but noted the CFC is not being used to fund dredging or the raised roadway that has been built on the Bayonne Bridge so large ships can pass underneath it on their way to container terminals in Newark and Elizabeth, N.J. and Staten Island, N.Y.
Under the newly filed agreement, the port authority and OCEMA would be allowed “to explore other means of billing and collecting” the fee, including, “the amount and nature of the charges, responsibility for payment, and alternatives and possible modifications to the current CFC.”
The two parties would be able “on a voluntary, non-binding basis, to agree upon and jointly announce policy positions, initiatives, operating objectives and goals, and general approaches” and communicate them to the public, regulators, legislators, and other government officials, according to the FMC filing.
Rooney explained that the way the fee is collected today from container carriers is that terminals report container volumes that are handled, the Port Authority generates an invoice to the terminals, and the terminals, in turn, collect fee from the ocean carrier and remit it to the port authority.
Don J. Kassilke, an attorney at law firm Cozen O’Connor, which represents OCEMA, said the agreement was being proposed so carriers “can talk to the port authority about the cargo facility.
“The lines have not been terribly fond of this charge and they are trying to find ways to mitigate it,” said Kassilke. “In order to do that, under the Shipping Act for the lines to discuss this with the port authority, we have to have an agreement in place.”
The CFC has been a sore subject with some carriers since it was introduced.
Industry leader Maersk Line, for example, complained in 2015, “The Port of NY/NJ is the most expensive port in the United States to process a container. These [CFC] fees drive the cost of using the port even higher.”
Originally, nine carriers challenged the fee by filing a complaint with the FMC. Eight of the carriers dropped out of the complaint, but “K” Line pressed on, contending the fee violated the Shipping Act. In February 2014, the complaint was dismissed by an administrative law judge, and in January 2015 the dismissal was upheld by the FMC.
When “K” Line appealed the ALJ’s dismissal, it said, “Obviously, everyone who uses the Port directly or indirectly benefits from the roads, reduced truck traffic and police protection. The Shipping Act, in tune with the Tonnage Statute and the Constitution, forbid singling out the vessel operators to pay the Port for providing those ‘benefits.'”
Rooney said the most fundamental reason the fee is collected through the terminals and carriers is that the PANYNJ “does not have a relationship with the shippers.” This differs from operations at the ports of Los Angeles and Long Beach, which charge shippers for certain costs and have terminals hold cargo until those fees are paid.
“We are not interested in doing anything that inhibits the productivity and efficiency of the port,” she said.
Rooney also contended there was a big difference in the number of shippers moving cargo through New York when compared to the ports of Los Angeles and Long Beach. Her estimate was that there over 100,000 individual shippers moving cargo through the six container terminals in the Port of New York and New Jersey compared to about 30,000 shippers using the 13 container terminals in Los Angeles and Long Beach, where there are many “big box” retailers shipping very heavy volumes of cargo though Southern California. In the Port of New York and New Jersey, many of those big shippers are moving smaller volumes, but there are also a great number of small shippers moving just a few containers, she explained.
Legislation has also been introduced to eliminate the CFC in the New Jersey and New York State legislatures. In New Jersey, Gov. Chris Christie signed a bill to scrap the fee in 2014. Legislation in New York has not proceeded past the committee level and was reintroduced this year as Assembly Bill A4702 and Senate Bill S3710.
Rooney said that legislation, as written, would eliminate all cargo fees that the PANYNJ collects, including dockage – the fee paid by a ship to tie up in a port -and wharfage – the fee that a port collects for cargo moving across its docks.
PANYNJ, carriers seek okay to discuss contentious cargo fee
