Opponents say the fee drives port costs higher and those costs are difficult to pass on to shippers.
Shipping lines opposed to a “cargo facility charge” implemented by the Port Authority of New York and New Jersey in 2011 are continuing their two-pronged challenge to the charge.
Maersk Line, in a press release issued earlier this week, noted that a bill in the New York State Senate to eliminate the charge was was approved by its Corporations, Authorities, and Commissions Committee on Feb. 2 and referred to the Senate Finance Committee. A similar bill has also been introduced in the New York State Assembly as A2070.
In 2014, New Jersey Governor Chris Christie signed a similar bill S2747/A4170 into law to eliminate the fee. To be effective, both states would have to approve a law to repeal the fee.
Meanwhile, ”K” Line, which had a challenge to the law at the Federal Maritime Commission dismissed last November, filed a petition for review of that decision in the U.S. Circuit Court of Appeals for the District of Columbia on Jan. 14.
The cargo facility charge amounts to $4.95 on 20-foot containers, $9.90 on 40-foot containers and $1.11 per unit for vehicle cargo. With 5,529,908 TEUs of containerized cargo handled at the port and 393,931 automobiles in 2014, the port receives about $29 million from the fee.
When it announced its cargo volumes for the year on Monday, the Port Authority said ”The port’s road, rail and security projects are now funded by portwide Cargo Facility Charges.” It added that “The agency’s investment of more than $600 million in ExpressRail – and its upcoming plans to build a new ExpressRail facility in Greenville Yard in Jersey City – has been critical to addressing the need for on-dock rail to improve port efficiency, competitiveness and reduce emissions.”
Maersk said the “per container charge is the only one of its kind in U.S.” and “impacts global competitiveness, regional employment and growth and exports.
”The Port of NY/NJ is the most expensive port in the United States to process a container. These fees drive the cost of using the Port even higher,” Maersk contended.
Kevin Lyons, a professor of supply chain management at the Rutgers Business School, notes that the Port Authority has argued that the charge — which would amount to less than two cents for even a bulky item like a 32 inch flat screen or 2 hundredths of a cent for a smaller item such as pair of athletic shoes — ”could just be passed on to the cargo owners that ship their goods through the port.” But Maersk says it is difficult to pass the fee on to shippers.
Lyons says “This fee has negatively impacted the ocean carrier industry already. Ocean carriers have delayed improvement/green initiatives….since cash flow has been negatively impacted from the fee.”
Tim Simpson, a Maersk spokesman, said “This fee is costing ocean carriers $30 million a year, which exacerbates the extremely challenging financial environment ocean carriers have faced in recent years. Only three carriers have made a profit the last couple of years. We are optimistic that the NY State Senate and Assembly will recognize how critical removing these fees are to local businesses, the economy and the maritime industry as a whole.”
Port of New York/New Jersey cargo fee challenged on two fronts
