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Commissioners Briefed on PierPass and the Status of Hanjin Shipping

Posted
October 19, 2016
NR 16-23

Contact: John K. DeCrosta, (202) 523-5911

The Federal Maritime Commission this morning discussed two matters of interest to each of the five Commissioners and the broader shipping public: ongoing developments related to the Hanjin Shipping bankruptcy, and a third party review of the southern California-based PierPass program.

The two above items were considered in the closed session of a regularly scheduled Sunshine Act meeting. In the open session of the meeting briefings were provided on the TOC Americas 2016 Conference, the Consultative Shipping Group Meetings, proceedings at the International Maritime Organization, and the meeting of the European Maritime Law Organisation.

“As Hanjin Shipping and PierPass were taken up in closed session, I am limited in what I can say about either of them, but the briefings we received from staff were timely and informative,” stated Mario Cordero, Chairman of the Federal Maritime Commission. “It was particularly instructive to receive the briefing on PierPass. It is important for the leaders and members of WCMTOA to understand that the way PierPass operates creates many valid questions that deserve meaningful answers. It remains to be seen if the current third party examination of PierPass’ operations will provide the transparency and accountability that its customers demand and the FMC is seeking. 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.”

Hanjin Shipping, a Korea-based container shipping company was forced into receivership in late August. Its cessation of operations has impacted U.S.-based terminal operators, beneficial cargo owners (BCO’s), truckers, and many others in the supply chain. The Federal Maritime Commission is monitoring developments related to this matter carefully and on a continuous basis. The U.S. Bankruptcy Court for the District of New Jersey is overseeing how Hanjin Shipping unwinds their operations domestically.

PierPass, established in 2005, is a program that creates off-peak gate hours at cargo handling facilities located at the Ports of Los Angeles and Long Beach. Cargo moved off of a marine terminal during daylight hours requires payment of a Traffic Mitigation Fee surcharge that helps finance night operations at those same facilities. Containers that move at night do not require payment of a Traffic Mitigation Fee.

PierPass was formed, and operates, under authority of the West Coast Marine Terminal Operators Agreement (WCMTOA). This agreement is on file at the Federal Maritime Commission and as such, PierPass comes under the agency’s regulatory and enforcement jurisdiction.

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.

Recently, PierPass engaged an outside consulting group to provide an analysis of aspects of its operations. Commission staff traveled to Long Beach last week to meet with PierPass executives to learn more about the examination being undertaken. At today’s meeting, Commission staff briefed the Commission on conversations had last week as well as their conclusions as to whether the work PierPass has contracted to be completed reaches the benchmark of a true, third-party audit that Cordero called for in July of this year.