LA harbor commission delays vote on tariff rate increase

The Los Angeles harbor commission has delayed a vote on a resolution that called for a temporary 6.2% general rate increase to its tariff No.4, which would affect more than 100 items.

Michael DiBernardo, deputy executive director of marketing and customer relations for the Port of Los Angeles, told the Los Angeles Board of Harbor Commissioners that the proposed increase would allow the port to keep up with inflation, which he noted is “quite high” at just more than 7% and, in some cases, sits at 6%.

Port officials said the rate hike would impact rates for cargo, commercial fishing, leasing office space, 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,” DiBernardo said, “so that we can stay up with market and stay up with inflation.

“If you look at the July-to-December 2023 numbers, that averages approximately 44 cents per TEU,” he added, referring to twenty-foot equivalent units, the standard cargo measurement. “If you look at the whole year of 2024, it’s about $1.20 per TEU as an impact.”

The California Ports Authority each year advises on general rate increases, or GRI, using data from the Bureau of Labor Statistics’s 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.

POLA introduces general increases in advance for those specific items, DiBernardo said.

There are certain port terminals that would be exempt from the GRI because of current permits or have a “stepped up” rate, he said.

The Los Angeles City Council approved a permanent 7.1% GRI in April 2022. But the last time City Council adopted a permanent GRI was in 2005.

Harbor Commissioner Diane Middleton said these costs represent the port “being compensated” for inflationary costs in terms of port operations.

New Commissioner Lee Williams, meanwhile, recused himself from the Thursday, May 11, vote because his spouse derives income from labor provided at facilities affected by the potential tariff. Out of an abundance of caution, Williams said, he would wait until further review can determine whether there’s a potential conflict.

Commission Vice President Edward Renwick made a motion delay to the vote on Thursday to provide more time for his colleagues to consider the implications of the GRI. But he expressed support for the resolution, saying 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.

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