Hazy Daze
November 22nd, 2004

Some of the information and calculations being disseminated by PierPass, Inc., a program created by the marine terminal operators in LA/Long Beach, needs clarification. Bruce Wargo, the general manager of PierPass revealed that a “consultant” hired to study the costs of operating weekend and night gates at the 13 terminals determined that the annual “cost” will be $ 156 million. In order to arrive at that odd-looking number some very complicated math must have been involved. No wonder they hired a “consultant”. Mr. Wargo also let it be known that “if” the terminals handle 4 million TEUs a year in off-peak hours, (another odd-looking number), “simple” math indicates that “their cost” would be $ 40 per TEU. (That’s odd, too. Even before the “consultant” was hired, port officials had already decided upon a fee, or fine, of $ 40 per TEU.) But why should it “cost” the terminals any money? When the program was announced some weeks ago it was stated that its purpose was to encourage off-peak use of the terminals in order to cut down on congestion, pollution, worker dissatisfaction, and just about every other problem that’s surfaced in the past few years, and that in order to offset this cost, a fee, or a fine, of $ 40 per TEU would be imposed on importers and exporters who use the gates during peak (daytime) hours. This provides PierPass with the income stream they wanted, thereby avoiding an out-of-pocket “cost”. The importers and the exporters, the ones paying the fees, or fines, are the ones actually shouldering the “cost”.

Mr. Wargo’s views on terminal congestion and vessel backups are equally puzzling. In the past month more than 100 vessels have diverted to other ports in order to avoid the costly and time-consuming chaos at LA/Long Beach, and because the extent of the congestion was not anticipated by port officials, a number of these carriers will seek out, and develop, alternate West Coast destinations. At any rate, less reliance will be placed upon the port’s future advisories, and carriers will prepare for future logjams by arranging well in advance for alternate ports to be available as safety valves. Once burned, twice shy. But Mr. Wargo is reported to have said that while some cargo owners may decide to divert in order to avoid the $ 40 per TEU day-use fee, a significant diversion of cargo is not practical. Try that one on a carrier paying $ 50,000 for each day his vessel is stuck in a “drift box”.

Those other ports, he said, are “likewise” operating at close to their physical capacity so they are not able to accommodate a massive diversion of cargo from Southern California. If “massive” cargos are acknowledged to be a future problem, and if LA/Long Beach is operating at close to its physical capacity right now (that’s what he’s saying, isn’t he?), then why isn’t he, and others, preparing for this future inundation? Instead of planning to spend billions of taxpayer dollars to demolish and replace bridges and highways, and instead of deluding themselves by thinking that disenchanted truckers will go along with graveyard shift schedules, why don’t responsible logisticians recommend spreading the load among all available West Coast ports? After all, the basic thinking behind the PierPass program is the idea that “spreading” trucking operations over a 24-hour period will relieve some of the congestion within the port’s operations; isn’t that what we were told? But in the next breath, we hear that future diversion of cargo away from LA/Long Beach shouldn’t really be considered. He’s concerned about the possible “gridlock” ... in those other ports, mind you!