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Business May 13, 2023
Cargo ships dock at the Port of Los Angeles. | Photo by imagesourcecurated/Envato Elements
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A Los Angeles City commission delayed a vote Thursday on a resolution calling for a temporary 6.2% general rate increase to its tariff No. 4, affecting more than 100 items.
Michael DiBernardo, deputy executive director of marketing and customer relations for the Port of Los Angeles, told the Board of Harbor Commissioners that the proposed GRI would allow the port to keep up with inflation, which he noted is “quite high” at just over 7% and, in some cases, sits at 6%.
Port officials said the rate hike would impact rates for cargo, commercial fishing, leasing office space, containers wharfage, breakbulk, liquid bulk, autos, water, electricity, pump, galentines and more, and that it would generate an estimated $4.3 million in revenue to the port if enacted by July 1, and approximately $12 million in 2024.
“There’s been a long gap in when we took general increases and we’d like to keep general increases consistent, so that we can stay up with market and stay up with inflation,” DiBernardo said.
“If you look at the July-to-December 2023 numbers, that averages approximately 44 cents per TEU. If you look at the whole year of 2024, it’s about $1.20 per TEU as an impact,” he said.
The California Ports Authority each year advises on GRI using data from the Bureau of Labor Statistics’ Consumer Price Index. Ports can propose GRI up to an amount set by the California Ports Authority.
Pilotage, cruise passenger and AMP fees, cruise emergency lay-up rate schedule, space assignments, parking charges, clean-truck program fees and incentive programs would be excluded from the proposed GRI. DiBernardo said that the port introduces general increases in advance for those specific items.
There are certain port terminals that would be exempt from the GRI due to current permits or have a “stepped up” rate, he said.
The Los Angeles City Council approved a permanent 7.1% GRI in April 2022. However, the last time City Council adopted a permanent GRI was in 2005.
Commissioner Diane Middleton said these costs represent the port “being compensated” for inflationary costs in terms of port operations.
Meanwhile, Commissioner Lee Williams recused himself from the vote as his spouse derives income from labor provided at facilities affected by the potential tariff. Out of an abundance of caution, Williams added, he would wait until further review can determine whether or not there’s a potential conflict.
Commission Vice President Edward Renwick made a motion delay to the vote to provide more time for his colleagues to consider the implications of the GRI. But, he expressed support for the resolution citing that it would promote “horizontal equity” between the different terminal operators and others, and that the GRI would be a “tiny cost” overall.
“We have to get better at doing everything that we do because you’re the high-cost provider of a commodity item,” Renwick said. “The only way you win is by turning it not into a commodity, but something that adds unique value.
“That’s what we need to do and it takes money to do it,” he said.
Commissioner Lucille Roybal-Allard seconded Renwick’s motion to delay the vote until the next commission meeting on May 25.
“I do have some concerns terms of the timing,” Roybal-Allard said. “Doing this at this time, especially when we are experiencing declining cargo volume.”
She asked for more information about the cumulative impact that the GRI would have on cargo and other fees.
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