PierPass is replacing the OffPeak program that has been in place since 2005 to encourage trucks to move containerized cargo at night at the Ports of Los Angeles and Long Beach and to fund nighttime operations at the 12 marine terminals in the port.
While PierPass has succeeded in reducing traffic congestion at the port and surrounding roadways by moving about half the port's container pick-ups and deliveries to evening and weekends, the program has been criticized for a number of years by shippers as the traffic mitigation fee charged to fund the OffPeak program increased.
Instead of waiving the fee for containers picked up at night, terminal operators will charge a flat fee for both daytime and nighttime container moves. PierPass said applying a traffic mitigation fee to both day and night container moves will allow it to reduce the current fee from $72.09 per TEU to $31.52. Forty-foot containers and other size containers will pay a fee of $63.04. PierPass has posted information about changes to the OffPeak program including a detailed Q&A on its website.
John Cushing, president of PierPass, said PierPass set the new fee at a level that it expects will bring in about the same amount of money as the current traffic mitigation fee did last year. The fee in the past has covered about 81 percent of the overall cost of having extended hours at night and weekends at the container terminals in Los Angeles and Long Beach. The remaining 19 percent comes from the bottom line of the terminals, said Cushing.
West Coast MTO Agreement members — the 12 marine terminal operators at the two adjacent ports —reached the decision after an 18-month process involving industry stakeholders and an analysis and survey by consultants. Subject to regulatory approval, the revised OffPeak program is expected to begin in August.
“The industry has been demanding ‘PierPass 2.0,’ and we are responding,” Cushing said. “The original OffPeak program was an innovative and highly effective solution to the challenges we faced in 2005. But it was fairly inflexible, whereas an appointment-based model is scalable and can evolve to meet changing industry needs, technology and practices.”
Cushing said he sees two big benefits to the changes being made. First, he said the change aims to prevent the long lines of trucks that develop outside terminals in the afternoon as draymen wait for the evening shift to start when shippers would not have to pay the traffic mitigation fee when they pick-up containers. Second, he said the new program is a "scalable technology."
"When we began the OffPeak program back in 2005 only a few terminals had appointment systems and they were rather basic. Whereas today, all of the terminals will have the appointment systems but their appointment systems have become more sophisticated." When all the terminals have appointment systems it will be possible to "look at best practices, what’s working well with appointments so the members will have the ability to discuss common business rules and other features." That could lead eventually a common portal for appointments.
Shipper groups often have expressed dissatisfaction with PierPass and in 2014, some became so frustrated with congestion at the two ports that they asked PierPass to suspend its fees or for the two ports to take over the program. Port and trucking executives are praising the forthcoming changes.
“The Port of Long Beach is pleased with the progress PierPass has made in working with industry stakeholders to improve night gate operations in our terminals,” said Mario Cordero, executive director of the Port of Long Beach and former chairman of the Federal Maritime Commission. “As ships are getting bigger and volumes increase, efficient gate management is critical to our ability to move cargo in a reliable, predictable and expedient manner.”
Under the new structure, the terminals will spread traffic out by requiring appointments to pick up import containers. Nine of the terminals have appointment systems already and the three SSA Marine terminals plan to have one in place by August, using the same appointment system in Long Beach that they currently use at its terminal in Oakland, said Cushing.
PierPass said some terminals also have appointment systems that are used for exports and others are in the process of adding them. In addition, some terminals require appointments for empties.
“We expect that most exports will be delivered as part of a dual transaction, with the truck picking up either an import load or an empty for the return trip. Either the export would be delivered when the truck goes to the terminal to pick up a scheduled import container or it would pick up an empty for the return trip,” PierPass said. Cushing added that terminals will also make appointments for shippers picking up containers from "peel off" stacks.
The following cargo is exempt from the new fee structure: empty containers or empty chassis; import or export cargo that transits the Alameda corridor in a container and is subject to a fee imposed by the Alameda Corridor Transportation Authority; and transshipment cargo.
“It is expected that the flat fee with an appointment system will reduce the number of trucks that currently wait inside or outside the marine terminals for the OffPeak shift to begin, as the same rates will be applicable to both shifts. The appointment system will flatten truck visits across two shifts, which will also mitigate peaks and valleys. The appointment system will enable MTOs to schedule longshore labor to match planned pickups and dropoffs,” PierPass said.
“For the time being, each terminal will continue to use its own existing appointment system. The terminals plan to look at best-practice opportunities for common portals once the port-wide program is in place,” PierPass said.
Cushing was traveling to Washington, D.C. to brief the FMC and shippers groups about the planned changes. The changes were also discussed last week with officials from the two port authorities, the Harbor Trucking Association and California Trucking Association and during telephone conference calls with the PierPass advisory committee and the PierPass Extended Gate Subcommittee, two groups that Cushing said "have been working with us for the last year and a half to review all of the alternatives and make recommendations."
Gene Seroka, executive director of the Port of Los Angeles, said he was “pleased and encouraged that PierPass members are taking a significant step forward to improve efficiencies at the San Pedro Bay port complex.”
Alex Cherin, executive director of the California Trucking Association Intermodal Conference, said, “This is the culmination of many collaborative discussions between the marine terminal operators and trucking communities over the last few years, and we look forward to supporting these efforts.”
Weston LaBar, chief executive officer of the Harbor Trucking Association, said, “This new direction for PierPass is another example of cross-industry collaboration and is a giant step in the right direction. It shows that the San Pedro Bay Port Complex will continue to be the preferred gateway for moving America’s cargo.”