West Coast port congestion may get some relief
Staff -- Purchasing, 7/14/2005 2:00:00 AM
The backups at the Ports of Los Angeles and Long Beach last year created snafus that some companies are still trying to make up for. Last year, overflow at the Port of Los Angeles diverted more than 100 ships carrying goods worth as much as $4 billion. The Port of Long Beach's November newsletter compared the scene to the World War II invasion of Normandy. And with peak shipping season for retailers and some manufacturers coming soon, shippers are getting concerned again—really concerned.
But there are some plans and programs in place to minimize the congestion at these ports. In a recent Bloomberg news report, Art Wong, a spokesman for the Port of Long Beach, and Arley Baker, a spokesman for the Port of Los Angeles, said congestion may not be as bad as companies fear and highlighted several steps taken in recent months to alleviate the problem. For example, the largest dockworker union, the San Francisco-based International Longshore and Warehouse Union, has hired 4,500 part-time laborers in the past year to supplement a workforce of 8,600 in the Los Angeles port complex. Railroads are hiring more workers to unload intermodal containers in the port.
And perhaps most importantly, a new program aimed at minimizing the congestion at West Coast ports will levy an extra fee for shipments being loaded or unloaded during peak hours of 8 a.m. to 5 p.m. The plan, called PierPASS, is being activated this month at the ports of Los Angeles and Long Beach with the hopes of encouraging more shippers to move to off-peak hours for loading and unloading of shipments. PierPASS will assess a "traffic mitigation fee" on all loaded containers entering or exiting the marine terminal gates by road during peak hours.
When off-peak hours are in full operation, the fee will be $40 per 20-ft equivalent unit, or $80 for a 40-ft container. However, during the initial ramp-up period of several weeks, PierPASS will set the fee at $20 per 20-ft equivalent unit. The cargo owners (shippers, consignees or their agents) are responsible for payment of the fee, according to the PierPass information. The trucking community and water carriers are not responsible for payment.
The Traffic Mitigation Fee payments collected, minus PierPASS overhead (PierPASS is a not-for-profit company) and minus the refunds for the cargo moving through the marine terminal gates during off peak hours, will be allocated to the marine terminals to help offset their incremental costs to operate the extra gates. The estimated annual cost to the terminal operators of operating these extra gates is $156 million to $160 million.
"Fundamentally, we can't continue the work like we are today," said Bruce Wargo, the president and CEO of PierPASS in a recent statement. "It's just not going to be possible to address the growth we see this year and the years coming after working eight to five Monday through Friday."
Registration for the new program began May 23 and the systems testing period was scheduled to begin in mid-June (computer systems operational, testing of financial and gate systems during daytime hours). The program goes live starting July 23, with off-peak gates open and the traffic mitigation fee required for daytime cargo movement.
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