Last Thursday, PierPass held a workshop to evaluate extended gate options with about 70 stakeholders from groups such as beneficial cargo owners, forwarders, customs house brokers, and draymen, in addition to terminal operators.
PierPass, which operates under the authority of the 13 members of the West Coast Marine Terminal Operators Agreement (WCMTOA), was created in 2005 to improve security, offer extended hours at terminals, and reduce pollution and traffic congestion in and around the ports of Los Angeles and Long Beach. It does this by offering the ability for truckers to pick-up or drop-off containers at off-peak hours (weekday nights and on Saturdays).
PierPass collects a “traffic mitigation fee” of $70.49 per TEU or $140.98 per FEU from cargo owners that pick-up or drop-off loaded containers at the marine terminals between 3:00 a.m. and 6:00 p.m. Monday through Friday, and that money is used to partially offset the cost of the extended hours. Empty containers, loaded containers that move in and out of terminals by railroad, or containers transshipped through the two ports (a container may arrive on a ship at one terminal, but then be shipped out through another) are exempt from the fee.
Since cargo owners do not pay the fee to pick-up or drop-off containers during the extended hours, they have an incentive to use the off-peak hours, and nearly half of all containers are handled at night or on Saturday. Not all terminals have off-peak hours on the same days of the week, but they are between 6:00 p.m. and 3:00 a.m. on weekdays, and 8:00 a.m. and 5:00 p.m. on Saturdays.
In 2015, about 56 percent of the containers handled at the two ports, including empties, moved during the day, while the additional 44 percent were transported at night. Excluding empties, Cushing said the ratio is closer to 50-50. Cushing said that over the life of the program, about 35 million truck trips have been diverted to off-peak hours.
Cushing said the purpose of the meeting was to review the success that PierPass has achieved to date and discuss alternatives that have been suggested to PierPass.
At the meeting, three possible alternatives to the current off-peak program were discussed.
One alternative was the use of dynamic and variable pricing. Fees would vary according to how congested terminals are. Dynamic pricing is commonly used to control traffic on bridges and highways.
The third alternative would involve charging a lower flat fee that would apply to cargo moving in and out of terminals at all hours, but spread out traffic by requiring truckers to have an appointment. Cushing noted that eight terminals in Los Angeles and Long Beach now require truckers to have an appointment to pick-up containers. Cushing said there was a lot of discussion at the meeting of this alternative.
He noted that no decision was made at the meeting, but a PierPass advisory committee that has about 25 stakeholders will compile information discussed last week and appoint an “extended gates subcommittee” to further explore the alternatives. He also said plans will be taken to keep the subcommittee at a manageable size, while still including representatives from all parts of the port community - importers, exporters, truckers, customs brokers, terminal operators, etc.
A decision on whether to change the PierPass system is expected some time next year, perhaps in the second quarter.
Weston LaBar, executive director for the Harbor Trucking Association, said he thought the PierPass meeting was “a really good event” and there was a clear preference among the attendees for the alternative that involved a flat fee on all shipments, in conjunction with an appointment system.
In the meantime, a third-party audit of PierPass is expected to be completed by the end of the year and was the subject of a closed door discussion of the Federal Maritime Commission (FMC) last week.
Cushing said Mario Cordero, the chairman of the FMC, asked for an audit of PierPass.
The audit is being conducted by KPMG, and it is hoped it will shine light on how the terminals determine their costs and how the PierPass fee is collected and developed.
FMC staff met with PierPass executives last week to learn more about the audit.
“I hope that this work product will be an exercise in real disclosure, such a meaningful overture would go a long way toward repairing relations with customers and easing mounting concerns at the Commission about the way PierPass does business," Cordero added.
The FMC said, “The volume and tenor of complaints about PierPass reaching the Commission from truckers, beneficial cargo owners, and other leading supply chain executives have increased steadily and dramatically over the past two years. A common criticism of PierPass centers on the increased cost of the program and the service that is offered is neither dependable, nor does it improve with annual fee increases.”
LaBar said there is a coalition of beneficial cargo owners and trucking companies that would like “an open and frank discussion on the governance of the offpeak program and what some alternatives to WCMTOA governance would look like. That is a discussion that still needs to happen.”