Marine terminal operators in Los Angeles-Long Beach have agreed to restructure the 13-year old PierPass extended-gate program, slashing the traffic mitigation fee by 55 percent to $31.52 per TEU ($63.04 per FEU) and including mandatory appointments to spread truck flow out over the day and night shifts.
The new structure will take effect in August, pending Federal Maritime Commission approval. The members of the West Coast Marine Terminal Operators Association (WCMTOA) decided to shift from a congestion pricing model of charging $72.09 per TEU only on peak daytime moves to a flat fee assessed on all loaded-container day and night moves, in response to complaints from beneficial cargo owners (BCOs) and truckers about the high price of the traffic mitigation fee and truck bunching at certain times of the day.
Original OffPeak program: right for 2005, not today
“The original OffPeak program was an innovative and highly effective solution to the challenges we faced in 2005, but it was fairly inflexible, whereas an appointment-based model is scalable and can evolve to meet changing industry needs, technology, and practices,” said John Cushing, PierPass president.
Truckers agreed that the changes are a good first step toward an improved extended-gate program at LA-LB — the largest US port complex. “Collectively, we need to insure that we engage in ongoing dialogue and continuously fine-tune the details of our off-peak program,” said Weston LaBar of the Harbor Trucking Association. Organizations representing BCOs are meeting this week on the PierPass release that went out on Monday before weighing in on the subject. The new structure was developed from a report by consultants Tioga Group and WCL Consulting following interviews with BCOs, truckers, terminal operators, and other port stakeholders.
PierPass was established in 2005 when then California State Rep. Alan Lowenthal told terminal operators that neighboring communities in Southern California wanted an end to the traffic and pollution problems generated by port drayage trucks, and if the terminals did not come up with a solution, the legislature would impose one on them. Also at the time, port volumes had exploded to a level that they could not be handled in an 8 a.m. to 5 p.m., Monday through Friday schedule.
WCMTOA members established an extended-gate program to incentivize BCOs to move more of their cargo during the newly created night and weekend shifts. BCOs who sent their trucks to the harbor during the daytime peak shift would pay a traffic mitigation fee. BCOs who patronized the 6 p.m. to 3 a.m. weekday shift and weekend shift were exempt from the fee. This program accomplished its goal, with 58 percent of truck calls now occurring at night and on weekends, thereby reducing port traffic impact on local freeways during the daytime hours.
However, this structure came at a price for those who must pay the fee. Revenues generated by the traffic mitigation fee are used to compensate terminal operators for a portion of the additional costs they incur for equipment and labor on the night and weekend shifts. The current fee on peak traffic is $144.14 per FEU container, which does not sit well with small- and mid-size shippers, many of whom cannot afford the additional costs of keeping their warehouses open for a second shift in order to avoid the fee.
One goal of new system: eliminate truck bunching
A major goal of the restructured PierPass is to eliminate the truck bunching that occurs in the terminal downtime from the end of the first shift at 5 p.m. and the start of the night shift at 6 p.m. Some BCOs instruct the drivers who arrive at the terminal in mid-afternoon to wait until 6 p.m. so they do not have to pay the traffic mitigation fee. Long lines form at the terminals for two to three hours. LaBar said truckers agree that truck bunching should end with the new program, especially if terminal operators run 5 p.m. to 6 p.m. flex gates and remain open from 8 a.m. to 3 a.m. the next morning.
Coupling the flat fee with mandatory trucker appointments will also help smooth traffic flow throughout the day, and it should assist truckers in achieving more dual transactions (delivering an export load or empty container and picking up an import load in the same trip). Cushing noted that nine of the 12 terminals in Los Angeles-Long Beach already have appointments and the three remaining terminals are expected to initiate trucker appointments by August.
Participants in the Tioga/WCL survey also indicated that they would like to see an incentive program for BCOs who participate in peel-off programs that are conducted by some terminal operators. Those BCOs, either individually or in coordination with other shippers, work with carriers and terminal operators to segregate their shipments in a single pile upon discharge from the vessel. BCOs send their truckers directly to the pile, and each trucker takes possession of the next available container as it is peeled from the stack. This is more efficient than sending individual truckers deeper into the terminal in search of a specific container.
Terminal operators, truckers, and BCOs are launching this new venture with the realization that PierPass 2.0 is a first step toward continued evolution of the extended-gate program. Given the rapid advances in technology that enable supply chain participants to share information on shipments 10 days to two weeks before vessels even arrive at US ports, they agree that it will not take 13 years before PierPass 3.0 is developed.
Contact Bill Mongelluzzo at email@example.com and follow him on Twitter: @billmongelluzzo.