By Sourcing Journal
This article was published in Sourcing Journal February 2, 2022.
Starting Feb. 14, the West Coast Marine Terminal Operator Agreement (WCMTOA) will once again increase traffic mitigation fees at the Ports of Los Angeles and Long Beach, with the rates spiking to $78.23 per TEU (twenty-foot equivalent unit) during daytime shifts on weekdays.
The WCMTOA, which comprises the 12 international MTOs serving the Los Angeles and Long Beach ports, is imposing the fees at the request of the Biden-Harris Administration Supply Chain Disruptions Task Force. They are currently subject to regulatory clearance by the Federal Maritime Commission (FMC).
As part of the ports’ PierPass OffPeak program, the traffic mitigation fees (TMF) are imposed by the operators to clear up congestion and encourage shippers or consignees to move cargo during off-peak hours.
On Nov. 10, in response to an earlier request from the task force, WCMTOA temporarily adjusted the TMF to $78.23 per TEU between Dec. 1 and Jan. 31. Shippers were charged only on weekdays during the daytime shift.
Under this temporary adjustment filed in November with the FMC, the TMF was scheduled to revert to its previous levels on Feb. 1. That change did take place, with the rate returning to $34.21 per TEU or $68.42 for all other sizes of container and payable throughout all hours of terminal operation. The ports cooked up an appointment-based systems to encourage trucks to access the facilities during off-peak hours.
On Jan. 21, the task force’s port envoy asked the WCMTOA to encourage more truck trips in the off-peak shifts by continuing to waive the fee during the second and third shift operations.
The TMF hikes are different from the $100 per day container dwell fees that the ports have routinely delayed but should now take effect on Feb. 4. The executive directors of both ports will reassess whether they still need to implement the fee after they review the latest data. The two ports have seen dock-clogging cargo shrink 67 percent since announcing the fees in October.
This would ideally thin out the backlog of ships out on the ocean as well. But critics question how the ports are tracking where the containers are, especially since a vessel queue system was established in November.
“They told the ships they couldn’t wait offshore—they have to wait…over the horizon where you can’t see them,” Flexport CEO Ryan Petersen said at the National Retail Federation Big Show last month. “If you counted the ships that were waiting on the horizon, the number had gone up by 30 to 40 percent.”
Nevertheless, the TMF, like the queueing and the dwell fees, is yet another move to encourage stakeholders to operate around the clock.
Under the original PierPass OffPeak Program, which was established in 2005 to mitigate severe traffic congestion around the ports, incentive pricing (such as charging a TMF for weekday, daytime container moves) was used to enable and drive traffic to new night shifts.
OffPeak 2.0 was introduced in 2018 after consulting with supply chain stakeholders to address traffic bottlenecks with appointment systems instead of incentive pricing. The change also sought to eliminate the problematic truck bunching that occurred between shifts with the previous program.
Containers exempt from the TMF include empty containers, domestic and transshipment cargo, and import cargo or export cargo that transits the Alameda Corridor in a container and is subject to a fee imposed by the Alameda Corridor Transportation Authority. Empty chassis and bobtail trucks are also exempt.
PierPass is a not-for-profit company created by the MTOs at the Port of Los Angeles and Port of Long Beach to address multi-terminal issues such as congestion, air quality and security.
The two ports are still awaiting results from both federal and state funding, with the White House’s Infrastructure Bill setting aside $4 billion for capacity expansions enabling key ports to accommodate bigger vessels and further enhance the U.S.’s ability to move goods. And California Governor Gavin Newsom has plans to allocate $2.3 billion to supply chain spending, specifically $1.2 billion for the ports, freight and goods movement projects and $1.1 billion for worker training and zero-emissions vehicles.
These potential funds would build on the $52 million grant the White House previously announced in December to support the Port of Long Beach’s on-dock rail facility, as well as a multi-billion-dollar loan agreement with California to modernize the state’s ports, freight and other goods movement infrastructure.