LOS ANGELES — The central message of a study by the Federal Maritime Commission on the impact of the harbor maintenance fee on cargo routing might well be that the lack of a national freight policy, rather than the burden of the tax itself, is compromising the competitiveness of U.S. ports.
That is the opinion of FMC Commissioner Mario Cordero, who addressed the Los Angeles-Long Beach Propeller Club Wednesday.
The FMC this past year conducted a study on the impact of the fee on cargo routing decisions, specifically if the fee is causing a diversion of cargo from U.S. ports to Canada and Mexico, which do not have such a tax.
The harbor maintenance fee was mandated in the 1986 Water Resources Development Act. A fee of 0.125 percent of the value of the cargo is levied on imports, with the revenue to be used to improve and maintain the nation’s harbors and inland waterways.
Some ports contend the harbor maintenance fee is a disincentive for some importers, especially importers of high-value merchandise, to ship through U.S. ports. Seattle and Tacoma have been quite vocal in charging that some U.S.-bound cargo that should move through the Pacific Northwest is being diverted to Canadian Pacific Coast ports primarily because of the fee.
Emphasizing that he was offering his opinion rather than speaking for the commission as a whole, Cordero said the FMC study determined for sure that Canada is in not violating U.S. law through its transportation policies.
As for its impact on cargo routing, Cordero said the fee is one of a number of factors including port efficiency and costs, risk mitigation, frequency of ocean and intermodal services and related commercial benefits that importers consider when routing their shipments.
Cordero believes Canada’s national freight transportation policy, with its emphasis on infrastructure development, corridors of national significance and leveraging public-private partnerships, gives its ports a competitive advantage.
On a positive note, the highway bill approved this summer by Congress stipulates that the Department of Transportation by September 2013 must present to the president and Congress a vision for a national freight transportation policy.
If the DOT develops a strategic vision for freight policy, more efficient freight corridors and effective public-private partnerships, “you need not be concerned about what Canada and Mexico do,” Cordero said.
Another positive development from the focus on the harbor maintenance fee could be an eventual revision of how the revenue is apportioned and to which projects would benefit. Cordero, who served as a Long Beach harbor commissioner before he was appointed to the FMC, said West Coast ports such as Seattle, Tacoma, Los Angeles and Long Beach are some of the biggest generators of revenue because of their large cargo volumes, but they receive back only a penny on every dollar they generate because their dredging needs are minimal.
Some ports are advocating that donor ports receive a better return, possibly 10 cents to 25 cents of each dollar they generate. Also, when ports do not require a great deal of dredging, the money could possibly be used for environmental mitigation or development of marine facilities.