Press-Telegram, Long Beach, Calif., On the Waterfront column

Mar 9, 2010 — Press-Telegram

Kris Hanson

Mar. 9, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- My, how a terrible recession can change perceptions.

Port authorities are inching closer to scrapping a container fee that just two years ago promised to generate more than $200 million annually for port infrastructure projects.

The Infrastructure Cargo Fee, or IFC, was set to begin July 1 at $6 per 20-foot- equivalent container, generating much- needed funds to help pay for new bridges, terminals, roadways and the like.

But Monday, following a similar decision by the Port of Los Angeles last week, Long Beach harbor commissioners voted to shelve the fee as they ponder cancelling it altogether in coming weeks.

It's a complete turnaround by the ports, which in early 2008 adopted the fee at $15 per 20-foot container as a way to ensure the nation's largest seaport remained state- of-the-art and congestion-free in coming years.

The fee was originally scheduled to take effect Jan. 1, 2009.

At the time, port authorities said it was a painful but necessary decision, with former Long Beach Harbor Commission President Jim Hankla describing it as a "bitter pill that should be taken now so future generations won't have to."

But then came the global economic spiral, and a retreat by port authorities from several controversial fee increases, container taxes and related plans challenged by shippers, retailers, farmers and other cargo owners.

The recession reduced trade through most American seaports by some 25 percent,

and in Long Beach-Los Angeles, volumes dropped for nearly 30 consecutive months before rebounding -- slightly -- early this year.

During that time, the fee was twice delayed, once reduced and now appears headed for the scrap heap of legislative history.

Officials have not said how they plan to make up for the roughly $75 million expected each year from the $6 fee, though Congress is considering a national increase in an existing tax on imported goods.

The fee-increase bill, sponsored by Congresswoman Laura Richardson, D-Long Beach, would increase the Harbor Maintenance Tax (HMT) by 0.3125 of one percentage point, to 0.4375 percent, with all additional revenue placed in a fund dedicated to seaport infrastructure and environmental and security improvements.

The bill could generate some $2.7 billion in new revenue annually, which would be applied to all imports except those moved between U.S. ports and freight originating in Canada and Mexico.

Under the proposal, the HMT on a 40-foot container stuffed with computers and valued at $50,000 would jump from about $62 to $219.

Of the estimated $2.7 billion raised by the increase annually, 90 percent would go to infrastructure, 7 percent to environmental measures and 3 percent to increased security, Richardson said.

Volume on the rise

While port authorities scale back fees and offer discounts to help customers weather the downturn, economists are reporting that imports will jump 13 percent nationally this month compared with last year.

The steep increase, the best in more than two years, comes as retailers re-stock shelves in preparation for better sales in months ahead.

The increase is forecast for 13 percent nationally, and between 12 percent and 15percent in Long Beach-Los Angeles, which also saw impressive gains in January and February.

"This is very different from the past two years when merchants were continually cutting their imports in an effort to manage inventory," said Jonathan Gold, an economist with the National Retail Federation.

And despite worries that increases are only a temporary respite, growth is expected to continue through year's end, aiding the thousands of longshoremen, truckers, rail workers and others suffering from the lack of trade through local ports.

"We are in a cautious but sustained growth cycle," said Ben Hackett of Hackett Associates, a firm advising international shippers on trade trends and cycles.

"Trade will grow and as a result of statistical comparison with the trough in 2009, the growth rates will appear to be healthy."

kristopher.hanson@presstelegram.com, 562-499-1466

Newstex ID: KRTB-0107-42697290