Terminal operators in Los Angeles-Long Beach on Aug. 1 will increase the PierPass traffic mitigation fee 2.5 percent, or $1.50 per 20-foot container unit, to cover higher costs tied to the longshore labor contract.
Cargo interests that deliver or receive shipments during the peak daytime hours beginning Aug. 1 will pay $61.50 per TEU, or $123 per 40-foot container unit, which is up from $60 per TEU and $120 per FEU being charged at present.
PierPass President Bruce Wargo noted that this is a smaller increase than the $10 per-TEU hike last year and is in response to feedback from cargo interests that incremental rate hikes on a more predictable basis are better for planning purposes.
Marine terminal operators in Southern California represented by the West Coast MTO Agreement established PierPass in 2005 to address truck congestion in the harbor and on roadways serving the ports.
PierPass manages collection of a traffic mitigation fee that is charged directly to importers and exporters that send trucks to the harbor during the peak daytime traffic hours. The fee is intended to encourage more truck traffic at night and on weekends, when no fee is charged. The fee also helps to defray the added costs that terminal operators face for running night and weekend gates.
The traffic mitigation fee has changed operational behavior in the harbor as about 55 percent of the truck traffic now occurs during the off-peak night and weekend gates, Wargo said. Off-peak traffic as a percentage of total truck calls remains in the 50 to 55 percent range the year round, fluctuating slightly because of seasonal influences, he said.
Most terminal operators in Los Angeles-Long Beach operate four weekday night gates and one Saturday day gate during the busy summer and fall months. When port traffic falls off during the slack months, terminals usually eliminate a night gate or a Saturday gate.
Although the traffic mitigation fee is designed to defray the cost of operating off-peak gates, revenue collection has never covered the full cost incurred by terminal operators, Wargo said. There is usually a 33 to 35 percent shortfall in revenues compared to operating costs, he said.
That margin is likely to remain even when the fee goes up on Aug. 1 because every July terminal operators experience an increase in labor costs tied to the International Longshore and Warehouse Union contract. Dockworker wages and benefits normally increase each summer under the terms of the contract.
Terminal operators had gone five years without an increase in the traffic mitigation fee before raising it in 2011 by $10 per TEU, or about 20 percent, Wargo said. In subsequent discussions with cargo interests, Wargo said he was told that smaller fee hikes on a predictable basis would make it easier for cargo interests to incorporate into their business plans.
Wargo will meet with terminal operators later this month to determine if container volumes are building rapidly enough to warrant a resumption of the fifth weekly off-peak gate for the upcoming peak shipping season.