Container fee put to rest at Port of Los Angeles

The Los Angeles Board of Harbor Commissioners recently voted in favor of port staff’s recommendation to eliminate a never-used container fee created nearly six years ago to help finance major rail, highway and bridge improvement projects.

The Infrastructure Cargo Fee (ICF), which would have varied from $6 to $18 per TEU (Twenty-Foot Equivalent container unit), would have been assessed on all loaded containers entering and leaving the port by truck or rail. The fee was formally approved in 2008 but never implemented.

“It is time to take this fee off the books for good,” said executive director Geraldine Knatz, Ph.D. “The fact that we never collected it illustrates how the port successfully sought funding from other sources – specifically grants – in order to develop port infrastructure in a responsible manner that makes sense for all our stakeholders and preserve our competitive advantage.”

Dr. Asaf Ashar, an independent maritime consultant based in Washington, DC, told LM that U.S. West Coast ports can remain competitive after the Panama Canal expansion if they “don’t give shippers reasons to do their business elsewhere.”

The ICF was added to the tariff – the port’s official schedule of rates, charges, rules and regulations – the same year the port was developing its “Clean Truck Program” and related channels to finance conversion of the private fleet of mostly older and more polluting drayage trucks that called at Port terminals. The ICF was initially established to help fund key infrastructure projects that would reduce traffic congestion, improve the flow of cargo and cut air pollution. 

The fee was due to start in 2009 and expected to collectively raise $1.4 billion in order to secure matching state transportation funds for the design and construction of 17 specific highway and rail construction projects throughout the harbor district. But when the economy began to slide into a deep recession, the port put the ICF on hold and aggressively pursued other federal, state and regional grants to advance its projects.

By leveraging its strong financial position, the port secured 55 percent of more than $313 million needed to pay for four capital projects now being built or due to begin construction by January 2014. The port is funding the remaining 45 percent with its own revenues.

Port projects moving forward are the Berth 200 Railyard, the South Wilmington Grade Separation and two I-110 interchanges. Of the remaining 13 projects that the ICF was intended to support throughout the harbor complex, only one other is exclusive to the Port of Los Angeles and four are joint projects. Recent traffic analyses show those five projects may not be needed before 2025 and can be deferred.