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The Ports of Los Angeles and Long Beach, the largest U.S. port system, are considering a new fee to help improve harbor infrastructure.
This story first appeared in the January 15, 2008 issue of WWD. Subscribe Today.
The Long Beach and Los Angeles boards of harbor commissioners met on Monday to discuss assessing a fee of $15 per 20-foot equivalent unit, or TEU, to raise $1.4 billion to pay for improvements to bridges, roads and rail networks. A TEU is the standard maritime industry measurement for counting cargo.
The fee would only be assessed on loaded TEU and is anticipated to last as long as seven years. A large portion of those funds would likely go toward replacing the Gerald Desmond and Heim bridges. The twin ports also anticipate receiving matching funds from California’s Proposition 1B, which voters approved in 2006 for air-quality projects, that would give the ports about $3 billion in financing.
“Proceeds from this tariff will help make our bridges safer, improve highway safety and congestion, and shift more containers from trucks to on-dock rail,” Geraldine Knatz, executive director of the Port of Los Angeles, said in a statement.
The suggested payment comes less than a month after the Port of Long Beach approved a separate cargo fee to generate $1.6 billion to help fund the replacement of nearly 17,000 short-haul trucks working in the port. Under that plan, $35 would be assessed on loaded TEU beginning June 1 and ending in 2012. The Port of Los Angeles is expected to implement a similar plan. If successful, all trucks built before 1989 will be banned as of Oct. 1. By 2010, only trucks built after 1993 would be allowed to work in the port system, and by 2012 all trucks would be required to meet 2007 federal Environmental Protection Agency standards.
Opponents of both plans object to how the fees are to be assessed and collected. They also say containerized cargo represents a narrow segment of port facility users and, therefore, will put the financial burden for funding improvements solely on containerized traffic.
The Waterfront Coalition, which represents shippers and other transportation providers, believes there is a fundamental flaw in how the ports propose to assess and collect the payments. Under the plans, those who own the cargo, known as beneficial cargo owners, would be responsible for paying the fee. However, cargo owners rarely have a business relationship with marine terminal operators.
“That system is unworkable,” said Ezra Fink, legislative representative for Waterfront Coalition.
Fink noted that containers often house the cargo of as many as 15 separate owners, further complicating the task of assessing and collecting a fee. In addition, no information has been provided as to how funds would be managed and dispersed.
“At this point, we’re not looking at the value so much as the policy for how they’re going about assessing the fee,” Fink said.
The Waterfront Coalition is also stressing that many industries that don’t use containerized cargo use port facilities. Other types of freight, like scrap metal, go into and out of the ports in open containers and would be exempt from the fees. Commuters also use the bridges and roadways.
“It would be a whole lot easier if they just assessed [a fee] on the truck, which is the true user,” Fink added. “That way you can capture all sorts of cargo, so basically you’d create a toll.”