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Shippers raise concerns about ‘PierPass 2.0’

By: Chris Dupin,, May 02, 2018

Industry groups are calling for a Federal Maritime Commission investigation of changes planned by container terminals in Los Angeles and Long Beach.

Several large shipper groups are raising concerns about proposed changes to the PierPass OffPeak program in the Port of Los Angeles and Port of Long Beach that were announced last month. The two ports are said to handle about 40 percent of the nation’s imported containers.
   The National Retail Federation (NRF), Retail Industry Leaders Association (RILA) and National Industrial Transportation League (NITL) all have written letters to the Federal Maritime Commission to express concerns about the OffPeak program. The Agriculture Transportation Coalition (AgTC) also has expressed concerns and says it expects the contemplated changes to be a major topic of discussion at its annual meeting next month.
   Created in 2005 by the terminals using their authority under the West Coast Marine Terminal Operators Agreement (FMC Agreement 201143-17), PierPass encourages shippers to pick up and deliver containers at night by charging a “traffic mitigation fee” during the day and waiving it at night and on Saturday.
   PierPass says it has succeeded in reducing traffic congestion around the two ports by moving about half the container transactions at terminals to evening and weekends. But the program has been subject to increased criticism as the traffic mitigation fee has increased.
    Under the changes announced last month, in what is being called by some “PierPass 2.0,” the terminal operators are proposing to cut the fee nearly in half, but charging it around the clock. Traffic will be spread out during the day and night by requiring shippers to have an appointment with terminals in order to pick up or deliver containers.
    NRF told the FMC that as a result of the revision, some members “will see their costs reduced, while others will see their costs increase. Our concerns about the fee structure in the proposed amendment do not specifically relate to costs but to competition, transparency, and congestion.”
   David French, senior vice president of government relations at NRF, wrote to the FMC to tell it his group “opposes this amendment. We urge the FMC to disapprove it, and to initiate further investigation into whether it is appropriate for marine terminals to impose fees on entities with whom they have no commercial relationships, and if necessary to enjoin WCMTOA from making this amendment on the grounds that it will impose an unreasonable increase in shipping costs.
   “At the very least, we think the FMC should seek further information on the proposed appointment system to ensure that this proposal does not inadvertently disincentivize the use of off-hour gates, thereby creating more road congestion. We believe that ongoing oversight of PierPass is long overdue,” French wrote.
    Jon Gold, the vice president of supply chain and customs policy at NRF, said the letter was shared with the two ports.
    RILA told the FMC that “increased price-fixing authority should be a last resort, not the first resort presented in the proposed amendments.”
   “The agreement amendment seeks broad authority to modify the current PierPass OffPeak Program that has been in place since 2005 and would allow the WCMTOA members to collectively set any fee at any time they want,” RILA said.
   RILA said it strongly opposes the authority sought to set a flat fee. The application does not even begin to set forth a justification for the commission to approve such core price-fixing authority that is now entirely divorced from the alleviation of terminal congestion and is proposed as solely a revenue-generating mechanism for WCMTOA’s members, purportedly to finance such costs of doing business as labor for the extended gate hours. The one-sidedness of the proposal, and its lack of consistency with ordinary principles of bargaining in a competitive environment, are confirmed by statements in the question-and-answer document provided with the filing that there will be no ‘compensation to truckers if a terminal fails to serve them during their appointments.’”
     FMC should “reject the proposed expansion of WCMTOA’s rate-setting authority and first allow improvements in the appointment systems to be implemented and assessed. The commission should not, as WCMTOA proposes, grant this broad authority first and then wait to see how the appointment system can be improved,” wrote Jennifer Safavian, RILA’s executive vice president of government affairs.
    NITL says it “generally does not oppose terminal truck appointment systems which can help manage truck congestion at marine terminals. However, our members have concerns regarding the propriety of the proposed container fee which eliminates the incentive for importers to move their cargo during off-peak periods and, thus, may result in an increase in congestion during peak terminal operations — contrary to the very purpose of the original PierPass program.”
    Jennifer Hedrick, the executive director NITL said its “members are also concerned about the lack of transparency as to whether the revenue projected to be collected under the proposed container fee bears a direct relationship to the costs of the L.A./Long Beach off-peak terminal operations, or if the new users fees will simply become a new operating revenue stream for the terminal operators.”
    The league asked the FMC “to request more information and undertake a thorough review of the reasonableness and lawfulness of the proposed amendments to the WCMTO Agreement.”
    Peter Friedmann, executive director of the AgTC, also complained about a lack of transparency, telling American Shipper in an email that “PierPass has never disclosed how much it is collecting” and “never disclosed exactly how they spend it. To whom do they write the checks, for how much?”
   A PierPass spokesman said this was false, saying the PierPass website "shows exactly how much it has collected each year from 2011 through 2016 (2017 info will be available soon.).
The PierPass financial performance report for last year on its website  said total combined revenue was $191.9 million in 2016.
   The spokesman also said the website discloses 'exactly how they spend it' each year in the published financial reports and on the FAQ page on the website, which states: 'All fees collected, minus the administrative and overhead costs incurred by PierPass to implement and manage the program, are allocated to the terminal operators to finance the labor and operational costs of the additional OffPeak program shifts."
   Friedman also complained “PierPass collects the fee continuously to ‘pay for the labor for the night gates.’ But when they don’t open night gates, they still collect the fee. If the fee is to pay for the night gates, shouldn’t the fee drop if there are no night gates operating?”
    Friedmann called for “thorough forensic accounting, with results shared with all shippers, truckers, etc. that are paying the PierPass fee” as well as for PierPass to be taken over by the Port of Los Angeles and Port of Long Beach “so that the public can gain visibility into how much is collected, how much is spent and what for. Until PierPass opens the books, we have to presume they are hiding something.”
    He said PierPass is bad for the two ports because it is “yet another disincentive” for shippers to use the Southern California ports. “It is another cost that exists in SoCal but does not exist in the U.S. Southeast ports. It’s another reason for importers to continue to shift their business away from the West Coast. The trend to shift is already clear, PierPass is one of the causes.” - 24/7 Support including Chat
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