Pundit’s Mailbag — Exporter Headaches
Jim Prevor’s Perishable Pundit, February 14, 2007
We received this letter from a San Francisco-based exporter:
Many thanks to Duncan for bringing this situation to our attention. The competitiveness of U.S. agriculture in overseas markets is dependent not just on the farm gate price but also on what expenses the product has to carry to get overseas.
The PierPass program is designed to reduce traffic during peak daytime traffic hours. To do this the ports charge a fee for delivering vans during peak hours and use the money to fund keeping the port gates open for nighttime and Saturday delivery.
The authorities trumpet it as a big success:
LONG BEACH, Calif., July 24, 2006 — PierPASS Inc.’s highly successful OffPeak celebrates its one-year anniversary today, marking a year of accomplishment and continuing improvement for the system created to reduce truck traffic during peak daytime traffic hours, alleviate overall port congestion and lessen the industry’s environmental impact at the Ports of Los Angeles and Long Beach
PierpASS today announced that 2.5 million truck trips have been diverted from peak daytime traffic during the first full year since the OffPeak program launched on July 23, 2005. Current projections are that in 2006 alone, between 2.8 and 3 million trucks will motor through OffPeak’s night time and Saturday gates. OffPeak is taking up to 60,000 truck trips per week out of daytime freeway traffic patterns, producing a notable reduction in daytime congestion on roads near the ports
“The OffPeak program has been a tremendous success,” said Richard Steinke, executive director for the Port of Long Beach. “It shows how the goods movement industry can implement an innovative solution to resolve a very serious traffic issue. And an additional benefit is that the reduction in truck idling is improving air quality for the entire region.”
Since the start of the program, between 30 percent and 35 percent of container cargo at the ports has moved during the new OffPeak shifts on a typical day, far exceeding initial expectations for the program.
"Faced with a crisis of congestion, the entire goods movement industry has changed the way it does business in order to keep this vital economic corridor open,” said PierPASS President and CEO Bruce Wargo. “Importers, exporters, terminals and truck drivers have all made significant changes in their business models, and the results have been impressive.”
Since July 23, 2005, all 12 international marine terminals at the two adjacent ports have offered night and weekend gate openings. OffPeak night operations run from 6 p.m. to 3 a.m. Monday through Thursday. OffPeak Saturday operations are from 8 a.m. to 6 p.m. A Traffic Mitigation Fee on most peak daytime traffic funds the OffPeak gates and provides an incentive to use the OffPeak gates.
According to Geraldine Knatz, executive director of the Port of Los Angeles, the OffPeak program has delivered important benefits to port operations. “OffPeak has had several benefits for the Port of Angeles, but foremost among them has been the expansion of our capacity to handle more cargo and helping alleviate the considerable daytime traffic in and around the Port.”
Offpeak’s role in alleviating the traffic congestion at the port complex was highlighted recently in the findings of a survey conducted by an independent research firm with nearly 500 truck drivers who serve the Ports of Los Angeles and Long Beach. According to the survey, 66 percent of truck drivers familiar with the OffPeak program said they viewed OffPeak as positive for their jobs. Seventy-one percent of the truckers surveyed reported reduced traffic on the freeways and roads leading to the terminals, leading to the breakthrough finding that 43 percent confirmed they are making more trips per shift since OffPeak began.
“The goal of this program from day one has been to reduce traffic congestion caused by the over-abundance of cargo industry trucks working during the daytime,” said Wargo. “Everything else springs from this effort: Improved traffic patterns; reduced emissions from idling truck engines; the faster flow of goods from place to place; better fuel efficiency for those on the roads; and a cleaner, safer environment for neighboring communities. It all starts with diverting trucks to the new night and Saturday gates.”
According to the Los Angeles County Economic Development Corporation, the number of containers handled at the Los Angeles/Long Beach port complex is forecast to increase by 10.2 percent in 2006. The combined Ports of Long Beach and Los Angeles ranked as the fifth largest in the world in 2005, handling more than 40 percent of all containerized goods imported into the U.S.
Yet sometimes the authorities deal mostly with the big players and ignore the way these programs play out for smaller firms… and virtually all produce companies are smaller firms.
In addition produce is often less predictable. Harvests get held up due to weather, loads don’t make inspection, they pack out a different size than anticipated and sources of supply have to be switched.
So the seemingly fair rules applicable to all, disadvantage produce.
But everyone, including the ports have an interest in keeping U.S. produce exports competitive. Perhaps we can put together a working group of produce exporters to work with the port on this issue. If anyone from the port or marine terminal operators at LA and Long Beach are reading this and are willing to work with the group, please send us an e-mail, we’ll get an ad hoc group together to help resolve the issue.
Once again, thanks to Duncan and Bayfresh Produce for letting the industry know about the situation. In the end $356 a load in fees means there will be less exported than could have been. That means lower FOB’s as growers try and move more product domestically. So this is an area of real concern. Let us see what we can make happen.