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Peak Shipping Fees Rise at Ports of Los Angeles and Long Beach

Goods passing through the West Coast’s key ports will get 2.3% more expensive next month.

A West Coast Marine Terminal Operators Agreement will impose a 2.3% increase for a Traffic Mitigation Fee (TMF) at the Ports of Los Angeles and Long Beach starting Aug. 1.

The TMF will be $72.09 per 20-foot equivalent unit, or TEU, or $144.18 per 40-foot container. The fee is charged only on containers that are moved between 3 a.m. and 6 p.m. on weekdays, so no TMF will come due for containers moved during OffPeak shifts–6 p.m. to 3 a.m. on weekdays or 8 a.m. to 5 p.m. on Saturdays.

OffPeak provides these regular night and Saturday work shifts to handle trucks delivering and picking up containers at the 13 container terminals in the two adjacent ports. PierPass launched the OffPeak program in 2005 to reduce severe cargo-related congestion and air pollution on local streets and highways around the Los Angeles and Long Beach ports.

Nearly half of all port truck trips now take place during the OffPeak shifts. Using a congestion pricing model, PierPass charges a TMF on weekday daytime cargo moves to incentivize cargo owners to use the OffPeak shifts. The TMF also helps offset the cost of operating extended gate hours. Labor costs are the single largest component of extended gate costs.

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The terminal operator organization noted that the adjustment matches the combined 2.3% increase in longshore wage and assessment rates that took effect on July 1.

According to an analysis by maritime industry consultants SC Analytics, the net costs incurred by the terminals to operate the OffPeak shifts in 2016 totaled $224.7 million. During that year, the terminals received $182.7 million from the TMF, offsetting roughly 81 percent of the OffPeak program’s costs.

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PierPass is a not-for-profit company created by marine terminal operators at the Port of Los Angeles and Port of Long Beach to address multi-terminal issues such as congestion, air quality and security.

According to international trade law specialists Sandler, Travis & Rosenberg, PierPASS and the TMF have come under increasing scrutiny in recent years. In 2015, then-Federal Maritime Commission chairman Mario Cordero called on PierPASS and participating terminals to justify the continued need for the TMF, as well as the sustainability of annual TMF increases.

A subsequent third-party analysis validated the methodology used to calculate the costs of the off-peak gate openings and determined that these costs are not fully offset by the TMF, ST&R noted. In 2016, California Assembly member Patrick O’Donnell introduced legislation aimed at overhauling the PierPASS program, which he called “an outdated relic” that has failed to modernize the gate system at these ports and left trucks continuing to experience long delays waiting to pick up and drop off cargo.