Gate Crashing

Weak imports and exports moving through Southern California are putting a strain on one of the most successful freight efficiency and congestion mitigation programs ever created for intermodal trucks.

PierPass, started in 2005, charges shippers $120 per 40-foot container as a deterrent to hauling containers in and out of the ports of Los Angeles and Long Beach during the day. Shippers attest the program has speeded shipments through the ports. Government officials say the program has cut down on congestion along Southern California freeways and improved air quality. An average of 13,000 trucks using off-peak shifts in 2007 represented approximately 36 percent of the total truck traffic.

But terminal operators are concerned that a decrease in volume at the ports due to the deteriorating world economy is resulting in less money collected through the PierPass program - money used to fund their extended gate hours.

"The money coming in right now is a lot less than last year when we were doing a third more moves at night," said Andy Kircher, customer support manager at West Basin Container Terminal, which operates 12 gantry cranes at the Port of Los Angeles.

"During the downturn, there have been fewer containers, so there needs to be a more current assessment of how terminals are compensated - based on how they''re doing right now, rather than how they were doing last year."

Bruce Wargo, president of PierPass, acknowledged that with volume down at the ports, revenue generated by container fees are down as well. "We''re currently pulling in around $400,000 a day," Wargo said. "In the early part of last year they were closer to $500,000 a day. It''s an alarming number. All the terminal operators are concerned about the economy and trade. There is a nexus between the revenue collected and the ability of the terminals to provide operations."

Container box volume at major ports fell 7.9 percent in 2008, according to the National Retail Federation and IHS Global Insight. NRF and IHS predict volume will drop another 11.8 percent in the first half of 2009.

"Unfortunately, cargo volume at the ports reflects retailers'' anticipated sales, and NRF expects that sales will get worse before they get better," said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold. "Retailers are only going to import what they can sell."