California Apparel News

Fees to pick up cargo containers during daytime hours at L.A.’s two ports are increasing by 20 percent on April 3.

Currently, the price to pick up freight during the peak hours of 3 a.m. to 6 p.m. Mondays through Fridays is $40 per 20-foot container and $80 per 40-foot container.

The fees were established last summer to open up terminal gates at the ports of Los Angeles and Long Beach at night and on Saturday to relieve congestion during the day. Shippers who pick up their cargo at night or on Saturdays pay no fees at all.

“The fee increase is a result of a cost review we had done by an outside engineering company because the [current] fees were based on 2004 data,” said Tom Stephenson, chief financial officer of PierPass Inc., the not-for-profit entity in Long Beach, Calif., that administers the program.

“This represents what it was really costing the marine terminal operators.”

The new fees will be $50 per 20-foot container and $100 per 40-foot container.Big importers have profited the most by this program because many already have large warehouses that are open at night and staffed with clerks and security personnel.

It is the smaller importers, such as apparel firms, that can’t afford to keep their businesses open at night. So when the ports went to a nearly round-the-clock schedule starting July 23, many clothing firms decided to include the additional daytime fee as an operating expense.

Right now, the fees are not adding a huge amount to the wholesale cost of a garment. For example, if a 20-foot container can hold approximately 8,400 T-shirts, the new $50 fee amounts to less than one penny per garment.

“We’ll just have to live with it. It is not enough money to warrant starting a nightshift,” said John Clark, a vice president at Paul Davril Inc., a major Los Angeles apparel importer of branded and private-label goods that has the Kenneth Cole and Ecko Red licenses. They bring in eight to 10 containers a week. “We’re just putting it into our overhead costs.”

Some Los Angeles apparel manufacturers, like Stony Apparel, a juniorwear and childrenswear manufacturer known for its Eyeshadow label, ship their goods landed-duty paid, which means the overseas vendor pays the cost to deliver the goods to its door. “I think it [the 24-hour program] is a good thing because we needed it. The port has caught up on traffic and things are flowing,” said Dean Wiener, Stony Apparel’s chief operating officer.

Exceeding expectations

The OffPeak Program is organized by Pier- Pass, which was formed by marine terminal operators last year to avoid a repeat of the devastating cargo congestion problems that occurred during the June–October peak shipping season in 2004.

The cargo ship traffic jam got so bad that at one point in late October 2004 there were 97 ships either anchored off the breakwater or docked. On a normal day, there are 30 to 50 ships either anchored or in port. Delays of one to two weeks were not uncommon for unloading goods, leading many retailers to cancel their orders with apparel manufacturers.

In 2005, shippers started diverting their cargo to other West Coast ports such as Oakland, Calif., Seattle and Tacoma, Wash., to avoid a repeat of cargo problems in the Los Angeles area.

When PierPass launched its program last July, its first-year goal was to divert 15 to 20 percent of daytime cargo to nights. But they exceeded that.

During the first six months of operation, 30 to 35 percent of cargo activity was picked up during the evening and early morning hours.

Tepid truckers

The trucking industry still hasn’t wholeheartedly embraced the OffPeak system. When it went into effect, rumblings were heard that some of the 10,000 to 12,000 independent truckers who work at the ports would boycott the system. But no disruptions occurred.

PierPass supporters promised truckers they would be able to pick up more loads during evening hours because of less congestion. But trucking industry sources said that hasn’t happened yet.

However, trucking companies are paying their contract truckers an additional $40 to $52 per load to work at night, which has helped alleviate the strain of working odd hours, said one trucking industry executive who asked not to be identified.

A recent survey by the California Trucking Association showed that truck drivers who serve night gates are not getting any additional turns. However, drivers who work Saturdays make more turns than average simply because the work week is longer.

“Night gates and Saturday gates continue to be unpopular with drivers,” the survey noted.

Some 40 percent of truckers refuse to work nights, the survey found. And 33 percent of drivers who work night gates and 32 percent of those who work Saturday gates say they do so only because that is when the loads are available. Some trucking industry executives believe PierPass is upping the daytime fees to force more shippers to pick up at night, which would coerce more warehouses to open their doors during the evening.

PierPass executives deny that is their ulterior motive, but they would welcome more warehouses operating in the evening. “The whole concept of PierPass is that we would move to an 80-hour-a-week operation from what was a 40- hour-a-week operation,” Stephenson said. “One of the ways to do that is more warehouses are going to have to start receiving goods outside of 8 a.m. to 5 p.m. So the more warehouses that are open at night, the more it facilitates reaching that goal. But that wasn’t the cause of the price increase.”