Terminal operators in Los Angeles-Long Beach will increase the traffic mitigation fee charged during daytime hours to $60 per TEU from $50 beginning July 4.
PierPass Inc., the entity established under the West Coast Marine Terminals Operating Agreement to manage the extended gates program at the Southern California ports, announced the fee increase.
Although harbor trucking companies are concerned about the fee increase, which comes when the trade is still recovering from the economic recession of 2008-09, motor carriers could support the increase if it results in improved operations at the terminals.
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“If it translates to better truck turn times, we could find a way to be supportive,” said Alex Cherin, executive director of the Harbor Trucking Association.
Terminal operators established the PierPass program in 2005 after the Southern California ports went through a period of severe congestion the previous year. The terminal operators added five extended gates each week, four night gates during the week and a Saturday day gate.
In order to encourage greater usage of the off-peak gates, terminal operators began charging a fee, known as the traffic mitigation fee, during the 8 a.m. to 5 p.m. peak hours. Also, revenue from the traffic mitigation fee was intended to help pay the extra costs terminals incur when operating night and weekend gates.
PierPass from the beginning was quite successful in changing traffic flows in the harbor. Congestion dissipated as cargo interests shifted some of their traffic to the off-peak gates in order to avoid paying the traffic mitigation fee during the daytime hours. The fee is charged directly to importers and exporters.
Today, 55 percent of cargo movements take place during the off-peak hours, and this has helped to reduce congestion in the harbor and on area roads. However, even with a fee of $50 per TEU, terminal operators still experienced a shortfall of $52.3 million between fee revenues and off-peak costs, said Bruce Wargo, PierPass president.
Terminals have held the $50 per-TEU fee steady since 2006. However, if they are to stem their losses and maintain the off-peak gates, terminals must increase the fee to $60, Wargo said. Also, terminals beginning in mid-2012 will adjust the fee annually based on maritime labor costs as reported by the Pacific Maritime Association. Wargo said longshore wage and benefit costs normally increase about 2 to 3 percent per year.
Cherin said truckers will pay close attention to terminal operations and report back to cargo interests if the fee increase does not result in improved turn times and shorter lines at terminal gates.