Importers aren’t shifting U.S-bound containers through Canadian ports because they want to avoid paying the Harbor Maintenance Tax, according to the majority comments of made in a Federal Maritime Commission inquiry.
Since February the commission has been looking into what effect the HMT has on shippers' decisions to land their cargo at a U.S. ports, or move it into the U.S. by way of a Canadian port that collects no harbor tax. The inquiry was spurred by complaints from West Coast ports and their congressional representatives.
FMC commenters said the HMT, a 0.125 percent tax on the value of imported cargo, played an insignificant role in shippers’ choice of ports. More important was the two-day shorter transit times from Shanghai to Prince Rupert or Vancouver and to market, compared to a route via Seattle.
“I hope you realize it’s not the taxes, it’s the transit times. So unless you’re going to change the curvature of the earth, I will continue to import my U.S. goods through the port of Prince Rupert,” wrote Aron Finn, who identified himself only as “port user.”
Finn said the Canadian ports are “doing something better than us” by more efficient delivery to the U.S. market.
“If the FMC finds that U.S. law provides incentives to move cargo through foreign gateways, we believe the commission should recommend that U.S. law be modified to ensure all U.S. containers are treated equally,” said Tay Yoshitani, executive director of the port of Seattle. He noted that Washington is the state most dependent on international trade, and the loss of cargo threatened 200,000 jobs in the region.
The Seattle Metropolitan Chamber of Commerce agreed with Yoshitani, but outside the Puget Sound region, most others disagreed. Businss chambers from several Midwest cities argued they would lose jobs without import and export access through Canada.
Several comments called for reform of the HMT, noting that revenue is accruing in the Harbor Maintenance Trust Fund – more than $6 billion, but it’s not being used to dredge harbors and channels.
Groups also said a U.S. national freight transportation strategy was the best way to make American ports more competitive with their neighbors in Canada and Mexico.
“America needs a national freight transportation system that serves as the backbone to the economy by making U.S. freight gateways more efficient, reliable and sustainable, “ wrote Geraldine Knatz, executive director of the port of Los Angeles.