California’s ports may face new political pressures during “Peak Season”

The Port of Long Beach will stage its 13th annual “Pulse of the Ports: Peak Season Forecast” next week, featuring a panel discussion with industry experts who will provide their thoughts and expectations for the upcoming peak season and the impact of new container alliances beginning in April…”among other issues.”

Pacific Rim shippers will no doubt hope that this panel will also share insights on the proposed billion dollar container fee now being proposed for California’s three largest ocean cargo gateways.

In its monthly “West Coast Trade Report,” the Pacific Maritime Shipping Association (PMSA) alerts shippers to the Fact that the South Coast Air Quality Management District (SCAQMD) has proposed not one – but two – different container fees to be assessed on containerized imports and exports moving through Long Beach, Los Angeles, and Oakland.

The fee proposals range from a low of $35 per twenty-foot equivalent unit (TEU) (which would reportedly raise $385 million per year) to upwards of $100 per TEU (which would raise $1.1 billion per year). Which proposal the SCAQMD decides to finally pursue is uncertain at this point, states the PMSA.

According to PMSA president, John McLaurin, the air district first pitched the $35 per TEU proposal with state legislators in late February. As part of that effort, the SCAQMD noted that the $385 million that would be collected every year would be used to “...help fund near-zero and zero emission cargo handling and drayage equipment.” The bill proposal was silent as to whether it applied to the Port of Oakland.

“Interestingly,” notes McLaurin, “while their Sacramento efforts were underway to introduce a bill implementing the $35 per TEU 
fee, the SCAQMD Legislative Committee held a ‘Special Meeting’ where the Legislative Committee adopted a staff recommendation to consider a $100 per TEU con- tainer fee. The fee would be imposed at the Ports of Los Angeles, Long Beach and Oakland.”

The PMSA notes further that while the Legislative Committee does not include any information on what the $1.1 billion would be spent on, it did discuss “...the low pass-through costs on shippers from the proposed fee...” and that the funds collected would go to the “...respective air districts containing the specified ports.”

Exactly how attractive ocean cargo container alliances will find California ports this year has yet to be determined, but with shippers concerned about rate hikes and with carriers now engaged in extreme collective cost-cutting, the “pulse” of ports here may weaken.