It’s Math Time!

The date was March 20th, 2006, and PierPASS executives announced a traffic mitigation fee increase of $ 20 per TEU. That means that the originally intended $ 20 per TEU fee, which was boosted to $ 40 per TEU at the programs outset, will become $ 50 per TEU as of April 3rd. Hardly anyone will be assessed the $ 50 fee though, because most containers are 40-footers and call for a 2 TEU levy of $ 100. Noting the announced fee increase, The Financial Times stated:

“The additional fees collected will be used to finance higher labour, operational and administrative costs associated with maintaining operations at the ports following the implementation of the OffPeak programme, which aims to ease traffic congestion by encouraging drivers to avoid the port area during peak hours.

“PierPASS, a not-for-profit organization created by the marine terminal operators at the ports of LA and Long Beach, said in a statement that OffPeak surpassed their initial estimations of reducing day time traffic at the port by up to 20 per cent by the end of the first year of its introduction. In reality, it took just six months for between 30 and 35 per cent of all gate activity to go to OffPeak operations.”

Here’s a paragraph from our November 12th, 2004 commentary, entitled “Pier Pressure”:

“Time to do some more math. PierPass Inc. proposes to collect the fees and administer the program, and along with an advisory committee from the shipper and transportation community, PierPass will evaluate the program to determine if the fees being collected cover the true costs incurred by terminal operators for running extended gates. Here’s where it gets tricky. More truckers conforming produce less fees, right? More truckers conforming require more gates, right? More gates in operation require more money, right? So where’s the money for the increasing cost of gate operations coming from if fewer fees are being collected from truckers?”

Now don’t tell me it took you all this time to figure that one out. As they’ve been saying all along, the program will be evaluated to determine if the fees being collected cover the true costs incurred by terminal operators for running extended gates. They knew about this progression of events, and they knew that the program would be self-defeating, and that it would be nothing more than a stop-gap, band-aid type measure. But what else could they do? They knew that periodic evaluations would be needed to justify increases in fees, and that was why an “advisory committee” was set up.

Unless there’s a sudden turn of events, however, look at what’s bound to happen in a few months:
– The April fee increase will force even more truckers to avoid the port area during peak hours.
– More gates will be required and more clerks will be required at these additional gates.
– More funds will be required to pay these clerks at these extended gates.
– The program will be evaluated once again in order to impose a further increase in fees.
– More drivers will be diverted and erstwhile “OffPeak” hours will then become “peak” hours … and an unpleasant “sudden turn of events”will be the result.