The pivot two weeks ago by terminal operators in Los Angeles–Long Beach from charging a daytime-only fee for the PierPass extended gates program to a flat fee levied on all truck moves regardless of time of day has not caused a surge of traffic back to the daytime hours.
Beneficial cargo owners (BCOs), especially the large retailers who have avoided the traffic mitigation fee since the inception of PierPass in 2005 by sending their trucks to the harbor only at night, had warned of such a development. In public comments filed with the Federal Maritime Commission (FMC) this summer, some BCOs said shifting from the congestion-pricing model in which BCOs paid a fee of $144.18 per FEU on daytime moves only, to the proposed flat fee of $63.04 per FEU regardless of the time of day, would precipitate a flood of truck traffic back to the more desirable daytime shift at the ports. Due to the daytime-only fee, many large BCOs paid virtually no traffic mitigation fees because they moved their shipments at night.
Ports across North America are struggling with the challenge of how to pay for the additional equipment and labor costs that come with running a second shift each day to handle growing container volumes. SSA Marine, which handles about 70 percent of the volume in Oakland, operates its extended gates on a flat-fee model, and GCT Canada in Vancouver has been piloting a flat fee program since summer. Other ports have resisted fee-based programs, due primarily to resistance from BCOs, and the National Retail Federation (NRF) continues to question the transparency of the PierPass program.
Too soon to evaluate PierPass 2.0
It is still early to judge the impact of what has been called PierPass 2.0, but Weston LaBar, CEO of the Harbor Trucking Association in Southern California, said truck mobility data indicate there has been no change in port traffic flows since Nov. 19. Cargo volumes are so high — owing to the front-loading of imports before the Trump administration’s 25 percent tariff hikes on imports from mainland China are scheduled to take effect on Jan. 1 — that truckers take whatever appointment slots are available, LaBar said. A fee of $63.04 per FEU will not discourage nighttime calls. “You show up to get the container when you can get the container,” he said.
With cargo volumes expected to stay strong at least through December, and possibly leading up to the early Chinese New Year in 2019, when factories in Asia will close on Feb. 5 for at least a week or two, it will not be possible to judge the full impact of the flat fee until this spring, LaBar said.
The landlord ports of Los Angeles and Long Beach do not operate marine terminals, but they share the responsibility of overseeing all port operations to ensure congestion and truck turn times do not get out of hand. The port authorities will stay fully engaged when cargo volumes return to normal next year. “We have to improve our turn times,” said Gene Seroka, executive director of the Port of Los Angeles. The ports do not want a return to the pre-PierPass era when most of the traffic occured in the daytime hours, causing congestion not only at the marine terminals but also on Southern California roads and freeways. The original intent of the extended gates program when PierPass was formed 13 years ago was to mitigate the pushback from communities over port-generated traffic in their neighborhoods.
Data since mid-November show that truck traffic has remained roughly 50 percent day shift and 50 percent night shift since the flat fee structure took effect, said John Cushing, PierPass Inc. CEO. Terminal operators intend to maintain that balance through mandatory trucker appointment systems, he added. Each terminal sets only as many appointment slots each hour as it can handle. As the early-choice slots are filled, BCOs and their truckers with time-sensitive shipments have no choice but to take the slots that are available later in the day.
Many BCOs and truckers actually prefer night appointments, especially when containers must be delivered to distribution warehouses in the Inland Empire 50 miles to the east because freeway traffic diminishes at night, said Scott Weiss, vice president of business development at Port Logistics Group. Considering the value of truckers’ time, a $63 fee per FEU is not enough to push the drivers back to the congested day shift, he said.
Terminal operators are able to cite an immediate benefit of PierPass 2.0. Thomas Boyd, a spokesperson for APM Terminals, noted that when the daytime-only fee of $144.18 per FEU was charged, truckers used to line up at the terminals as early as 3 p.m. They waited outside the gates until the fee went away at 6 p.m. Those late afternoon truck lines have since dissipated, he noted. Additionally, information provided by PierPass shows that some terminals run a flex gate from the end of the first shift at 5 p.m. to the beginning of the night shift at 6 p.m., so the gates remain open continuously, which also helps to eliminate truck bunching in late afternoon.
Contact Bill Mongelluzzo at email@example.com and follow him on twitter:@billmongelluzzo.