Long Beach, Los Angeles Ports to Raise Traffic Mitigation Fee

10:15am | The West Coast MTO Agreement on Tuesday announced it will raise the current traffic mitigation fee  at the ports of Los Angeles and Long Beach to $60 per 20-foot equivalent unit (TEU) in order to sustain continued operation of PierPass OffPeak gates.

The TMF adjustment is effective July 4.

Adding the night shifts in 2005 substantially increased costs for terminal operators. The immediate effect of opening the night shifts was to spread the same amount of volume over twice the number of hours. In addition, nighttime labor rates are significantly higher than daytime rates.

This is the first increase in the TMF since 2006. Since then, hourly labor costs have increased 31 percent. The terminals have operated the OffPeak gates at a loss since the program’s start in 2005. The shortfall between TMF revenues and OffPeak gate costs was $52.3 million in 2010.

“It is clear that absent some action, TMF revenue will continue to fall short of OffPeak gate costs and endanger the program,” said Bruce Wargo, president of PierPass, the nonprofit formed by WCMTOA in 2005 that runs the OffPeak program. “With 55 percent of nonexempt cargo movements taking place during OffPeak hours, the program has become an important element of port operations.”

A number of options were evaluated by marine terminal operators to cut the losses, including adjusting the rate, decreasing the services offered or instituting a fee on OffPeak cargo. Adjusting the rate was determined by the marine terminal operators to be the most effective and least disruptive way to reduce the losses.

“While OffPeak was never intended to be a profit-making venture, the terminal operators can’t continue sustaining operational deficits at the current levels,” Wargo added.

Beginning in mid-2012, the TMF will be adjusted annually based on changes in Pacific Maritime Association maritime labor costs.

The OffPeak program provides tremendous value and future growth potential to the goods movement industry, greatly increasing the capacity of America’s largest port complex without requiring additional infrastructure.