Federal Maritime Commission Chairman Richard Lidinsky plans to seek an FMC review on cargo diversions from US West Coast ports to Canadian and Mexican ports and the impacts the federal Harbor Maintenance Tax (HMT) has on encouraging such diversions.
Speaking at the Canadian Maritime Conference in Montreal on Wednesday, Lidinsky said that he is moving forward with the review based on a personal request from US Senators Maria Cantwell and Patty Murray, both of Washington State.
In their Aug. 29 request to Lidinsky, Cantwell and Murray suggest that the federal HMT has become a "significant competitiveness issue" with the rise of Canadian and Mexican West Coast ports.
"It appears the HMT may be a key factor causing US ports to lose a growing share of imported container cargo from Asia," the senators said.
The two senators asked Lidinsky to "conduct an analysis of the impacts and the extent to which the HMT and other factors impact container cargo diversion from US West Coast ports to West Coast Canadian and Mexican ports, as well as offer legislative and regulatory recommendations to address this concern."
Inaugurated in 1986, the HMT is a federal tax imposed on shippers based on the value of imported and domestic goods being shipped through US ports. The tax, which generates between $1.3 billion and $1.6 billion a year, is placed in the federal HMT Trust Fund to be used for maintenance dredging of federal navigational channels.
"A growing number of containerized US imports from Asia move through the West Coast Canadian container ports of Vancouver and Prince Rupert en route to the US Midwest (i.e., Chicago and Memphis) through cross-border rail," the senators wrote in their letter to the FMC chair.
"Additional volumes enter US markets via Mexican ports. As a result, non-US ports are able to claim a substantial per-container cost advantage over US seaports based on the HMT alone. The results of this unfair disparity are increased cargo diversion and lost US jobs."
Lidinsky told the conference attendees "the volume of US cargo we saw moving through Canadian ports was around 140,000 TEU in the early 1980’s, today it stands at approximately 750,000 TEU annually."
He said he would ask the FMC at their next meeting in October to begin the review the two senators requested.
Lidinsky cited five main elements he believes are critical to the review, including: basic legal questions on where waterborne commerce of the US begins and ends; is the US handicapping itself with the HMT; the differing approaches of US and Canadian authorities toward container inspections; disparities between US and Canadian rail rates; and, the importance of investment in US infrastructure.
"I believe strongly," Lidinsky said, "that if our inquiry, and our open discussion, lead to improvements to US ports and policies, the commerce and the economies of both of our great nations will benefit."
Thursday, September 22, 2011
