FMC Report Indicates Little Diversion from U.S. Ports Due to HMT, Cites Alternatives
The Federal Maritime Commission released a Study of U.S. Inland Containerized Cargo Moving Through Canadian and Mexican Seaports, which had been prompted by requests from members of Congress to study the impacts and the extent to which the U.S. Harbor Maintenance Tax (HMT), enacted in 1986, other U.S. policies and other factors may incentivize U.S.-bound container cargo to shift from U.S. seaports to those located in Canada and Mexico.
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The study confirmed previous estimates that a significant amount of containerized cargo imports moving through the ports of Oakland, Seattle, Tacoma and Portland may be vulnerable to Canada routing. But it said many factors influence why shippers choose to use ports in Canada and Mexico, including overall shipment savings, risk mitigation through port diversification, perceived transit time benefits, avoidance of the HMT, and rail rate disparities. It also said there are many options available to Congress if it decides to revise or replace the current HMT structure.
The study partially results from a Notice of Inquiry the FMC issued in November 2011. Seventy-six responses representing interests in the United States, Canada, and Mexico were received in response to the NOI, it said.
One request from Congress was to determine whether U.S. shippers violate any laws by using Mexican or Canadian ports. FMC said it "examined in great detail the history of cargo 'diversion' and the many precedents in FMC case law. It found that "carriers shipping cargo through Canadian and Mexican ports violate no U.S. law, treaty, agreement, or FMC regulation," it said.
The study said the number of import containers routed through Canada had been dropping continuously from 2000-2007, but began increasing in late 2007 when Canada's Port of Prince Rupert opened. It noted that Canadian shippers import more containers through the U.S., than U.S. importers move via Canada.
It cited figures that it said might suggest that Port of Prince Rupert "is simply a less expensive corridor for cargo" heading to the U.S. Midwest, even without the impact of the HMT, though others suggested that wasn't true. The report also said some shippers prefer Rupert because it's closer to Asia, cutting time onboard ships.
As for alternatives, the FMC report said:
- the Revitalize America's Maritime Promise Act (RAMP Act) would restructure the HMT collection process so the total budget resources made available from the HMT Fund would be spent on harbor dredging and maintenance.
- The proposed Focusing Resources, Economic Investment, and Guidance to Help Transportation Act of would take steps towards establishing a national transportation policy, and provide funding for infrastructure projects.
- The Ports of Los Angeles, Long Beach, and Tacoma created a joint proposal to reform the HMT. The draft proposed Harbor Maintenance Tax Reform Act of 2012 incorporates sections one and two of the RAMP Act, but expands the uses of the HMT in section three, allowing ports who collect $25 million/year and whose expenditure of HMT collected at the port is less than 1/10 of the amount collected for the previous five fiscal years and whose channels are built to the authorized widths and depths, to receive monies from the HMTF annually to spend on any improvement in or adjacent to the navigable waters, on any improvement in berthing areas in such port pursuant to a channel widening project, on maintenance of berthing areas accessible from Federal navigational channels, or for dredging and disposal of clean sediments unsuitable for ocean disposal that are in or that affect the maintenance of Federal navigation channels.