A New Jersey legislative bill seeks to eliminate a Port Authority of New York and New Jersey cargo facility charge that container ship lines complain is costing them millions of dollars a year.
Several carriers filed a Federal Maritime Commission complaint against the cargo facility charge soon after the port authority imposed it in March 2011. The FMC case is before an administrative law judge.
The cargo facility charge is assessed on cargo loaded on or discharged from vessels. The charge is $4.95 per 20-foot-equivalent unit for containers, $1.11 per vehicle, or 13 cents per metric ton for bulk or heavy-lift cargoes.
The charge was designed to cover costs of road and rail projects and post-9/11 security improvements. It replaced an intermodal rail lift fee of $57.50 per container and a volume-based Sea-Link truck registration fee of $2,500 to $10,500 per quarter.
Carriers say competition prevents them from passing the cargo facility charge to shippers and consignees. Maersk Line has been absorbing $4 million a year in costs from the charge, said Doug Morgante, the carrier’s national director, state government relations.
“The port authority’s assumption was that it would be easy for ocean carriers to pass this fee along, and that consumers who buy sneakers or televisions or smartphones would pay a couple of cents or a couple of dollars extra,” Morgante said. “Unfortunately, it stops with the ocean carrier.”
Carriers pay the cargo facility charge on volumes that terminals report monthly to the port authority. The port authority can direct terminals to withhold service to carriers that don’t pay the charge.
Port officials say the charge is the fairest way to cover costs of improvements that benefit all port users. The port authority says increased use of intermodal rail benefits truck shipments, for example, by reducing congestion on roads.
The carriers’ complaint to the FMC contends that the port authority’s fee illegally subsidizes intermodal rail shipments and violates the Shipping Act by requiring carriers to pay for infrastructure they don’t use.
This month Sen. Robert Gordon introduced a bill to eliminate the cargo facility charge in order to “make the port authority more competitive with other ports located along the Eastern seaboard of the U.S.”
A Senate Transportation Committee hearing on the bill is scheduled for June 13 in Trenton. Carriers and the New York Shipping Association plan to present testimony in support of the bill.
Last fall, New Jersey state Sen. Joseph Pennacchio introduced a bill to require the fee to be paid by shippers or consignees instead of carriers. That bill remains in committee.
Because the port authority is a bistate agency, any legislation affecting the cargo facility charge would have to be approved by lawmakers and signed by the governor of New York as well as New Jersey.