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Chairman Cordero calls for Transparency in PierPASS operations under the West Coast MTO Agreement.

July 20, 2015

On June 30, 2015, PierPASS announced a four percent increase in its Traffic Mitigation Fee (TMF), increasing it from $66.50 to $69.17 per TEU (twenty-foot equivalent unit), to be in effect on August 1, 2015. In 2005, when the program was first implemented, the TMF was significantly lower at $40 per TEU. In light of this fee increase, I believe that PierPASS and the thirteen terminals at the Ports of Los Angeles and Long Beach should justify the continued need for the TMF, as well as the sustainability of annual TMF increases.

To avoid dissatisfaction from customers due to increased fees, PierPASS must be more transparent about the cost to operate off-peak shifts and the revenue collected from the TMF. I am a strong advocate for openness in the supply chain in order to promote a fair and efficient system, and believe it is time for PierPASS to critically self-assess its performance along five key dimensions: sun setting, service levels, fairness, transparency, and performance metrics.

Sun Setting:

  • The MTOs (marine terminal operators) indicated that they would sunset the TMF after a critical mass of container cargo had moved from the peak to off-peak shifts. Ten years later, the TMF is still being imposed and increased even though nearly 55 percent of the container cargo subject to the fee now moves during off-peak shifts.

Service Levels:

  • When the PierPASS program was first launched, the terminals promised five off-peak shifts per week. However, only four of the thirteen terminals currently provide five off-peak shifts a week, and one of them has announced that it plans to drop its weekend shift effective July 25th. Despite reduced service, the TMF continues to increase. PierPASS should justify why it is necessary to increase the TMF when the costs of off-peak gates should have decreased because most MTOs are no longer providing five off-peak shifts per week.

Fairness:

  • Less than twenty percent of all containers moving through the Ports of Los Angeles and Long Beach are assessed the TMF. PierPASS should justify why such a small portion of container traffic bears the burden of paying for the off-peak shifts.

Transparency:

  • Recently, the container terminals at Port Metro Vancouver started offering off-peak shifts, which are partially paid by a $50 truck reservation fee. Vancouver port officials independently audited how the assessed fee was calculated to ensure that the estimated revenue collected from the fee was not more than the estimated cost to operate the off-peak shifts. Perhaps it is now time that officials at the two San Pedro Bay Ports also independently audit the PierPASS program.

Performance Metrics:

  • Given that drayage truckers and shippers must pay for off-peak gate operations at the thirteen San Pedro Bay container terminals, they have requested that each terminal provide data on truck queue and dwell times. The MTOs so far have rebuffed these requests. A METRIS study published in 2011 found that the fastest terminals were two to three times faster than the slowest terminals, and longer wait times were limited to just a few terminals. The MTOs should seriously consider publishing their individual queue and dwell times so that truckers and shippers can better utilize their operations. Truck queue and dwell times at Vancouver’s four container terminals are made public, so there is precedent in making this information available.