Port of Los Angeles – $25.7 Million Economic Relief Program to Aid Port Customers

A $25.7 million economic relief program aimed at helping Port of Los Angeles container terminals emerge from the recession was unanimously approved Thursday by the Los Angeles Harbor Commission. The program includes a temporary 6 percent rent reduction for container terminal operators as well as an empty container discount and reduced rates for containerized cargo transferred from one vessel to another within the Port.

The $25.7 million in cost reductions — most of which will be realized between January 1 and June 30th of 2010 — comes on the heels of approximately $15 million in Port of Los Angeles discounts during 2009. The 2009 savings came mostly from an Intermodal Container Discount Program that gave Port customers discounts for increasing rail use. During public discussion, board members requested staff to report back to them in early 2010 to discuss options for extending or making permanent the empty rate reduction and trans-shipment rate reduction as measures to remain competitive with other ports.

“While there are hints that we’ve seen the worst of the recession, it is critical that we continue to help our customers through this difficult period,” said Port Executive Director Geraldine Knatz, Ph.D. “These measures will provide some cost relief to our customers, protect our market share, and help us maintain a competitive edge through the next 18 months as the market slowly recovers.”

“From an industry standpoint, we welcome this assistance from the Port of Los Angeles,” said Michele Grubbs, Vice-President of the Pacific Merchant Shipping Association, which represents terminal operators and shipping lines. “The Port recognizes the growing competitive challenges facing our industry.”

“We appreciate the leadership and support from the Harbor Commission and Port of Los Angeles executive team,” added Frank Pisano, Vice President of TraPac, a major terminal operator at the Port of Los Angeles. “These are challenging times and it bodes well for the Port of Los Angeles that it has stepped up and delivered a substantial relief package to its customers.”

Under the measures approved Thursday, terminal operators will receive a 6 percent rent credit based on operating revenues paid to the Port during Fiscal Year 2007-2008. The credit will be issued between Jan. 1, 2010 and June 30, 2010 at an anticipated $19.7 million cost to the Port.

The empty container discount lowers the empty container rate for all Port of Los Angeles customers and will reduce business costs for them by approximately $2.75 through June 30th, 2010. Additionally, the trans-shipment container discount for customers that transfer containers from one of its vessels to another within the Port will save about $275,000 through June 30th, the end of the Port’s fiscal year.

The Port of Los Angeles is America’s premier port and has a strong commitment to developing innovative strategic and sustainable operations that benefit the economy as well as the quality of life for the region and the nation it serves. As the leading seaport in North America in terms of shipping container volume and cargo value, the Port generates 919,000 regional jobs and $39.1 billion in annual wages and tax revenues. A proprietary department of the City of Los Angeles, the Port is self-supporting and does not receive taxpayer dollars.

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