The West Coast Marine Terminal Operator Agreement (WCMTOA) plans to raise the current Traffic Mitigation Fee (TMF) at the Ports of Los Angeles and Long Beach CA to $60 per TEU in order to sustain continued operation of PierPass OffPeak gates. The TMF adjustment takes effect July 4, 2011.
This is the first increase in the TMF since 2006. Since then, hourly labor costs have increased 31%. The terminals have operated the OffPeak gates at a loss since the program’s start in 2005. The shortfall between TMF revenues and OffPeak gate costs was $52.3 million in 2010.
Adding the night shifts in 2005 substantially increased costs for terminal operators. The immediate effect of opening the night shifts was to spread the same amount of volume over twice the number of hours. In addition, nighttime labor rates are significantly higher than daytime rates.
“It is clear that absent some action, TMF revenue will continue to fall short of OffPeak gate costs and endanger the program,” said Bruce Wargo, president of PierPass, the non-profit formed by WCMTOA in 2005 that runs the OffPeak program. “With 55% of non-exempt cargo movements taking place during OffPeak hours, the program has become an important element of port operations.”
A number of options were evaluated by marine terminal operators to cut the losses, including adjusting the rate, decreasing the services offered, or instituting a fee on OffPeak cargo. Adjusting the rate was determined by the marine terminal operators to be the most effective and least disruptive way to reduce the losses.
Beginning in mid-2012, the TMF will be adjusted annually based on changes in Pacific Maritime Association maritime labor costs.
PierPass was created by marine terminal operators at the ports of Los Angeles and Long Beach in 2005 to address multi-terminal issues such as congestion, security, and air quality. Under the program, all international container terminals in the two ports established five new shifts per week. As an incentive to use the new OffPeak shifts and to cover the added cost of the shifts, a TMF is required for most cargo movement during peak hours (Monday through Friday, 3 am to 6 pm).