Introduction
Certain logistics expenses are zone-specific — meaning that they only apply in certain regions or shipping ports. These charges are only added to the overall freight costs of a given shipment when it docks into a port wherein that particular expense is applicable. One such charge is known as the PierPASS fee, which is added to the freight expenses of shipments traveling to two specific locations in the US.
What is PierPASS in logistics?
PierPASS Inc. is a non-profit organization established collaboratively by the marine terminal operators at the Port of Los Angeles and the Port of Long Beach to resolve maritime traffic congestion and other issues, such as air quality, security, and freight delays, in and around the two ports. One of the most significant functions the organization has executed was the creation of a Traffic Mitigation Fee (TMF) using a congestion pricing model.
What is a PierPASS Fee or TMF?
The PierPASS fee, also known as a PierPASS Traffic Mitigation Fee (TMF), is defined as a supplementary terminal handling fee. This fee is charged for both LCL and FCL shipments. This is a standard charge that is not negotiable legally. As a result, freight forwarders cannot bargain or attempt to avoid paying this fee when their shipments reach any ports in those two cities.
What Ports Charge TMF?
Only two ports in the world charge the PierPASS TMF fee — that are the ports of Long Beach and Los Angeles, both Southern Californian cities. So, this fee is charged when a shipper’s shipment is unloaded at either of these two ports. An important detail is that PierPASS TMF charges are only applied during peak hours to incentivize pickups and shipments during off-peak hours.
Benefits of Traffic Mitigation Fee
Essentially, TMF was created to evenly spread-out pickups and deliveries throughout the day at the two ports, rather than certain parts of the day being extremely busy and others not being very busy. This enforced distribution of freight activity throughout peak and off-peak hours was done through the TMF charges. The application of TMF during peak hours and absence of it during non-peak hours mainly helps reduce vessel congestion and bottlenecks in ports. There are some other benefits too. After all, TMF positively affects different stakeholders in a variety of ways. For port operators, the off-peak traffic means that there are no phases during the day when the number of pickups and deliveries simply overwhelm them.
On top of this evening out of containers and activity throughout the day, this fee also ensures that there are fewer phases of a lull during a day and vessel handling remains smooth. Additionally, it also ensures that the port space is used efficiently. From the perspective of trucking owners, these fees help reduce waiting times at ports during shipments, pickups, and deliveries. As a result, truckers can carry out more orders during a day and, thereby, increase their earnings too.
From cargo owners' point of view, the lack of large traffic at all times in these ports helps them execute their production orders on time and keep their production schedules on time. Apart from keeping their schedules on time, cargo owners also can use the resources at their disposal — personnel and goods — much more efficiently. Apart from these benefits, the TMF helps reduce noise pollution at any phase during the day as there is no overcrowding of activity at the two ports. Likewise, air pollution and, most importantly, congestion of waterways and roadways can be reduced greatly with these fees.
In this way, this traffic management fee is not only beneficial for the various stakeholders involved in the two ports, but also their immediate environment.
How to calculate the PierPASS Traffic Mitigation Fee?
As per the official PierPASS website, the TMF is US$34.21 per 20-foot container and US$68.42 per 40-foot container (as of the last update made on August 1, 2021). For containers that are non-exempted from paying the TMF, the fees are charged for port pickups and deliveries made between Monday to Friday, 3 am to 6 pm. To calculate the PierPASS TMF, the port authorities take the number of containers for a shipment before establishing the total number of TEUs (Twenty-foot Equivalent Units of goods) and multiplying the total TEU count by US$33.48.
What is TMF hold mean?
Technically, a hold involves cargo owners and importers being unable to pick up their containers from a port until a specific fee is paid to the port authorities or due to any other number of reasons. Cargo owners and importers are charged the TMF at the Port of Long Beach and the Port of Los Angeles. So, in these ports, these entities may face a TMF hold until the fee is paid. Such holds can be resolved through online payment through third-party entities such as PierPASS or by getting in touch with the terminals to learn about alternate payment methods.
How do you pay Traffic Mitigation Fee?
If there are demurrage fees applicable on a container, the parties entrusted with picking up the container cannot do so until the fee has been paid. Similarly, at the two ports, there is a TMF or a PierPASS fee to reduce congestion. However, such TMF holds can be addressed through third-party entities such as PierPASS or by other payment methods or by contacting the port terminals regarding the same.
As stated earlier, the TMF is non-negotiable and is a flat fee that is applicable on all kinds of shipments. This fee is charged at the port terminal, where cargo owners or importers can pay the fee online after registering with PierPASS too.
How to register with PierPASS?
Cargo owners and importers need to register with PierPASS to make payments. These entities are generally the responsible party for moving containers — used for the storage and transportation of goods — into and out of the ports in Long Beach and Los Angeles through the truck gate. Cargo owners and importers who need to register with PierPASS can click this link to get to the digital user registration form for the purpose.
Difference between Traffic Mitigation Fees (TMF) and Port Congestion Surcharges (PCS)
Although the two fees fulfill, more or less, the same purpose of eventually reducing container congestion and pollution at ports to maximize space usage efficiency, there are certain subtle differences between the Traffic Management Fee (TMF) and Port Congestion Surcharge (PCS). Firstly, unlike the PierPASS TMF, PCS is applicable globally. Secondly, TMF is not applicable on certain days and periods of high traffic, unlike PCS, which is applicable continuously. Thirdly, the TMF is more rigid in terms of amounts, while PCS is slightly more flexible in the same regard.
