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Study of U.S. Inland Containerized Cargo Moving Through Canadian and Mexican Seaports Released

July 27, 2012

NR 12-11

Contact: Karen V. Gregory, Secretary (202-523-5725)

The FMC today released a Study of U.S. Inland Containerized Cargo Moving Through Canadian and Mexican Seaports. The Study was prompted by requests from Members of Congress to study the impacts and the extent to which the U.S. Harbor Maintenance Tax (HMT), other U.S. policies and other factors may incentivize U.S.-bound container cargo to shift from U.S. seaports to those located in Canada and Mexico. Seeking input from the public on factors that may contribute to this shift, the Commission issued a Notice of Inquiry (NOI) in November 2011. Seventy-six responses representing interests in the United States, Canada, and Mexico were received in response to the NOI.

The Study examines the competitiveness of Mexican and Canadian ports with U.S. West Coast ports;  discusses the history and the theories of cargo diversion and of the HMT; reviews ocean freight rates, transit times and rail charges;  summarizes responses to the NOI; and examines other potential relevant factors influencing the movement of cargo.  A case study of the Canadian Port of Prince Rupert, British Columbia is included.

The Study finds that: (1) carriers shipping cargo through Canadian and Mexican ports do not violate any U.S. law, treaty, agreement, or FMC regulation; (2) numerous factors account for why shippers elect to use ports in Canada and Mexico including overall shipment savings, risk mitigation through port diversification, perceived transit time benefits, avoidance of the HMT, and rail rate disparities; and (3) there are many options available to Congress should it decide to revise or replace the current HMT structure. The Study confirms previous estimates that a significant amount of containerized cargo imports moving through the Ports of Oakland, Seattle, Tacoma and Portland on the U.S. West Coast may be vulnerable to Canada routing.

Federal Maritime Commission Chairman Richard A. Lidinsky, Jr. stated, "This Study provides facts U.S. policymakers can rely upon as they make the important choices affecting this country’s ability to compete in a global transportation marketplace."

The Federal Maritime Commission is the independent federal agency responsible for regulating the nation's international ocean transportation for the benefit of exporters, importers, and the American consumer. The FMC's mission is to foster a fair, efficient, and reliable international ocean transportation system while protecting the public from unfair and deceptive practices.