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Pundit’s Mailbag — Exporter Headaches

Jim Prevor’s Perishable Pundit, February 14, 2007

We received this letter from a San Francisco-based exporter:

In or around July 2006 the marine terminal operators at the Ports of Long Beach and Los Angeles in California created Pier Pass. It was created to try to reduce container traffic during peak hours of the day.

As a small exporter of perishable produce mainly to Pacific Rim countries we are experiencing many difficulties with this system.

From an administration point of few it is a bit of a joke. Each container booking number must first be registered on their website and then up loaded. After the container is brought back to the port then we must check to see if the container was turned in during peak or off peak hours, if it is off peak no charge, peak $100 for 40’ Reefer unit. Other amounts for dry container both inbound / outbound.

We have had many containers held because of computer glitches because the port gate keepers cannot receive the load unless released by the computer. Today the computer held two of our loads again. As a result we will be billed $65 per hour for 4 hours per load overtime by our truckers in addition to being charged $100 for the privilege to turn in our container and deal with the back and forward on the phone and the frustration of having our cargo held up by a computer.

At this point because of the sudden extra charges which we cannot pass on to our overseas customers we are thinking maybe to just boycott LA port and bring all outbound cargo to Oakland. Oakland does not have Pier Pass and the extra charge would be about $237 per load. My extra cost per load today were $356 per load.

Every Monday all outstanding accounts must be cleared, if they are not they will again not release the cargo and accept it at the pier unless the $100 per load is paid. These guys want their money and they want it now.

I have requested to have an invoiced mail account and was informed I need to be moving 1000 loads per annum before they can offer such an account. I wonder how exporters in this country export directly more than 1000 loads per year of fresh produce through Los Angeles Port.

Do not get me wrong I am all for making everyone’s commute more efficient, as this is costing our produce industry and other industries more cost to do business not only in charges but in administration and time. Is there any third party actually monitoring this service, are motorist getting to and from work faster as a result of pier pass in Los Angeles I would really like to know. I would also like to know what the authorities are doing with this new found stream of revenue.

Lastly all this administration and cost could simply be eliminated if a gate tally was kept by port officials on load in and out. Loads being charged should be billed as an additional charge at the time by the steamship and added to the Ocean freight by individual carriers and paid when exporters pay the steamship ocean freight cost. Normally about 21 days from the issue of the bill of lading.

I propose a radical change to this system and welcome any reports you might do to help make a badly structured operation better for the people in our industry.

— Duncan McNiff — Produce Sales
Bayfresh Produce Co
San Francisco, California

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.

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