The nation’s top international ocean shipping regulator wants to look into whether West Coast terminal operators are exploiting supply chain disruptions by overcharging ships for off-peak terminal gates.
Chairman of the Federal Maritime Commission Daniel Maffei said on Friday that he will request a meeting of the full commission “as soon as practicable” to consider whether the agency should launch an investigation into PierPass, a nonprofit company founded in 2005 by container terminal operators in Los Angeles and Long Beach to alleviate port congestion.
Maffei’s request derives from recent temporary modifications in PierPass rates that have gone beyond simply covering the expense of operating off-peak gates and have instead become a profit center for the corporation.
According to PierPass, the rate change was made at the request of the Biden-Harris Administration Supply Chain Disruptions Task Force, led by White House Port Envoy John Porcari, with the goal of incentivizing importers to move more containers through off-peak night gates by charging its traffic mitigation fee (TMF) only during peak daytime hours – but at a 129 percent higher rate.
“I wholeheartedly support the president’s port envoy and his efforts to collaborate with the industry to discover measures to relieve congestion, including an incentive for more off-peak gate use,” Maffei said in a statement.
“However, neither he nor the other proponents of off-peak gate incentives could have anticipated that PierPass’ suggested charge structure generates far more revenue than is now required to execute the program in a revenue-neutral manner.”
PierPass claims to be working with President Biden’s port ambassador, but only if it can make millions more in profits from American importers.”
The temporary rise in the TMF rate, from $34.21 per twenty-foot equivalent unit to $78.23 per TEU, began on November 10 and ended on January 31. Because the fee is agreed upon by the 12 terminal operators at the two ports (as a mechanism to offset the cost of operating extra gate hours), it is granted antitrust exemption via a West Coast Marine Terminal Operating Agreement (WCMTOA) submitted with the FMC.
The WCMTOA’s counsel filed an amendment to the agreement on Jan. 24 – which the FMC has yet to approve – that would make the off-peak gate incentive scheme permanent.
However, based on two months of revenue data generated by the rate modification and submitted to the FMC, Maffei is skeptical that it is genuinely motivating 24/7 operations — a focus of the Biden administration – or that the rates are not simply producing more money for terminal operators.
“The current congestion at the ports of Los Angeles and Long Beach continues to be a threat to the nation’s economic vibrancy and a severe concern for thousands of importers and exporters,” Maffei said. “It can only be solved via positive group activities, and many stakeholders at the nation’s largest port complex have contributed, sometimes sacrificing for the greater good.” PierPass appears to be an outlier.
“I am aware of no change or proposal that PierPass has ever proposed to help alleviate COVID-related congestion, and to be fair, it is that PierPass is simply not in a position to help much.” This amendment, on the other hand, appears to be an attempt to benefit from a national crisis, rather than contemplating a sacrifice. I implore the WCMTOA parties to do more public-spirited measures.”
