Letter to Mr. Cushing - Congressman Lowenthal Calls On Pierpass To Return To Nighttime Cargo Movement Incentives

Letter

Dear Mr. Cushing,

In light of President Biden's announcement of historic actions to expand the capacity of critical supply chains, I am writing you and your Board to strongly encourage you to work directly with the Los Angeles and Long Beach Port Directors, shippers and carriers to increase and coordinate the capacity of our supply chain and port complex. Specifically, I hope you will consider returning to the economic incentive model that was at the core of the original PierPass Program, as an essential measure to fully achieve the benefits of the expansion to 24/7 operation advocated by President Biden.

As you are aware, PierPass is a not-for-profit company that was created by the terminal operators at the ports of Long Beach and Los Angeles to address multiterminal issues such as congestion, security, and air quality. I have had direct involvement with PierPass since 2005, when, as chairman of the California State Senate Transportation Committee, I guided discussions that led to the creation of the program. At that time, the terminals established additional night and weekend shifts to address the rising cargo volumes which were causing spikes in diesel emissions by increased port activity.

This program greatly improved the quality of life for the people of my district in Long Beach, which I have represented as a City Councilmember, a member of the State Assembly and Senate, and as a Member of Congress. Here in Washington, I have continued to work to increase the efficiency, safety, and environmental cleanliness of multimodal goods movement through our district in my capacity as a member of the Transportation and Infrastructure Committee and as co-Chair of the Congressional PORTS Caucus.

Today, the impacts of the Covid-19 pandemic are stressing our supply chains like never before. Rising costs of goods movement and accompanying delays have hindered our economic recovery, and are a burden on firms and the American people.

I believe that PierPass can help address these challenges, and can build on the commitments secured by President Biden.

PierPass in 2018 modified the OffPeak program used for truck traffic mitigation at the Ports of Los Angeles and Long Beach by replacing the previous incentive-based pricing model with an appointment based system that uses a single flat fee on both daytime and nighttime container moves. This change abandoned the use of market signals to incentivize the use of off peak hours.

Restoring these incentives can increase efficiency and productivity during this critical time. During the global pandemic, when ports such as Long Beach have seen volume increases of up to 40% in some months, the PierPass program has continued to charge what is effectively a toll instead of working to incentivize movements to off peak hours. Given the current circumstances, PierPass should revert to the original incentive-based model. Supply and demand is driving our current congestion, and we can use these forces to address our supply chain choke points.

The rest of the supply chain is working to adjust, add capacity and efficiency. President Biden and the Supply Chain Disruption Task Force have secured bold commitments from labor, port operators, major retailers and shipping companies to expand hours and operations. Frontline maritime and longshore workers have worked tirelessly at great personal risk to keep the flow of goods moving, even at the height of the pandemic. The Port of Long Beach led an effort with the Governor's office to provide testing and vaccinations to the ILWU.

I fully understand that the strains on our supply chain are being felt at numerous points, and there is no single bottleneck or quick fix which will instantly restore the flow of goods. Concerns have been widely raised about congestion at warehouses, or disruptions in the trucking industry. However, this is not an excuse for inaction in the face of an existing inefficiency. In light of the changes I propose, I am confident that stakeholders and businesses will expand their hours as well as making additional hires when needed. This is a customary practice that businesses engage in every holiday season, let alone in the midst of an economic emergency. Our port directors, the supply chain stakeholders and partners, and indeed the American people, who have been faced with increasing costs, have made it very clear: inaction is not an option.

Finally, I am encouraged that the Federal Maritime Commission and Congress have expressed a strong willingness to fully engage in this supply chain crisis, through hearings, audits, and investigations. Clearly, more work needs to be done and I am willing to engage at the federal, state and local levels be it roundtables, hearings and individual meetings.

I look forward to hearing from you soon. If you have questions, please contact Andrew Bower, on my staff at (202) 225-7924. We appreciate your attention to this matter and look forward to an update on your work.

Sincerely,

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