California Container Fees Jump

WASHINGTON - Feb 14/08 - USDA -- In late 2007 and early 2008, the Ports of Los Angeles and Long Beach, CA, approved two new per-container fees; one will be used to reduce truck emissions and the other to improve transportation infrastructure for the ports.

These new container fees will be in addition to charges already in place at the port complex. By January 2009, loaded export and import containers using the ports of Los Angeles and Long Beach could pay as much as $200 per loaded container moved by truck and $66 per loaded container moved through the Alameda Corridor by rail. These programs were put in place to improve the air quality in Southern California, but they come at a time when agricultural exporters are facing significant rate increases from the shipping lines and increased repositioning costs to obtain available containers.

In November 2007, the ports approved a progressive ban on trucks built prior to 2007 that do business at the port complex. The first phase of the ban will begin October 1 and prohibit trucks built prior to 1990 to enter shipping terminals at the ports. The goal of the ports is to have all trucks that work at the harbor meet the 2007 U.S. Environmental Protection Agency standards by January 1, 2012.

In mid-December 2007, the port authorities moved forward with a program for funding the ban and approved a per-container fee to pay for replacing and retrofitting trucks doing business at the ports. The so-called Clean Truck Program (CTP) allows the ports to assess a fee of $35 on each loaded 20-foot container and $70 on each loaded 40-foot container. The funds collected through the CTP will be used to replace or retrofit the existing fleet of short-haul trucks that move containers at the port terminals with trucks fueled by clean diesel or alternative fuels. The ports will begin charging the fee on June 1 and stop when all trucks have been upgraded to the 2007 emission standards. Containers moved by rail will be exempt from the CTP fee.

The ports will use the new container fees to fund 80% of the cost of replacing or retrofitting nearly 17,000 trucks. The CTP fees will be collected at the terminals, but the ports are still developing specific mechanisms by which these container fees will be collected and how they will be distributed to truckers.

In mid-January, additional per-container fees were approved. These new fees include $15 per 20-foot container and $30 per 40-foot container to pay for infrastructure improvements. The cargo fee will be matched by the State of California's Proposition 1B funds, which together will finance about $3 billion in improvements. The ports will begin charging this fee in January 2009.

Both of these new container fees will be in addition to the current PierPASS program already in place at the ports. The PierPASS program charges a traffic mitigation fee on all loaded containers moved into or out of the port by truck during peak daytime hours. This fee is currently $50 per 20-foot container and $100 per 40-foot container. Shippers also use the Alameda Corridor for rail service into the port complex. This route costs shippers $18.04 per 20-foot container and $36.04 per 40-foot container.

Agricultural importers and exporters will feel the pinch of the new container fees. The Southern California port complex exported just over 656,000 TEUs (twenty-foot equivalent unit—the equivalent of one 20-foot container) of agricultural products between January and November of 2007—33% of which moved grain and grain products. In 2006, the ports moved more than 624,000 TEUs of agricultural exports with 19% grain and grain products.

If containerized agricultural exports through southern California continue at the same rate through December of 2007, exports could top 700,000 TEUs by the end of 2007. The Ports of Los Angeles and Long Beach, combined, moved 55% of U.S. waterborne containerized grain exports from January through November of 2007, when they reached record levels. Grain shippers are using more containers for export because of relatively high bulk freight rates, relatively low container rates, and better quality of the product at destination. Extra fees for containers at Southern California ports will narrow the cost advantage of containers.