A proposal by California’s ports to implement an automatic, annual general rate increase could be in jeopardy this year because the Port of Long Beach decided not to move forward on a proposal for an automatic GRI until 2014.
The Long Beach Harbor Commission this year will not adopt a proposal by the California Association of Port Authorities for an automatic GRI tied to the increase in the consumer price index. The GRI would cover fees such as wharfage and dockage that ports charge to their tenants.
The action will shift Thursday to Los Angeles, and next week to Oakland. Those ports are also considering the CAPA proposal. Although each port can act independently and vote to adopt the CAPA proposal, California’s container ports normally prefer to impose rate increases in unison so no port achieves a competitive advantage over the others.
California’s ports can legally discuss fees and charges because they have immunity from federal antitrust laws.
Staff members at the ports view an automatic GRI pegged to annual changes in the CPI as a transparent, measured way for the ports to increase their charges in line with inflation.
Industry groups, however, oppose the proposal, saying economic conditions in the ocean shipping and marine terminal industries do not necessarily track annual fluctuations in the CPI. Also, terminal operators and shipping lines say their industries continue to struggle because of the lingering effects of the global economic and trade downturns in 2008-09.
The Pacific Merchant Shipping Association, which represents shipping lines and terminal operators at West Coast ports, applauded the decision by Long Beach to postpone adoption of the CAPA plan until 2014 at the earliest.
John McLaurin, PMSA president, said Long Beach acted in the best interests of its tenants, who face competition not only from other West Coast ports, but also from ports on Canada’s Pacific coast and on the U.S. East Coast.
“The Port of Long Beach clearly listened to its customers,” McLaurin said.