Port of Los Angeles: New Incentive Program for Shipping Lines

The Los Angeles Board of Harbor Commissioners yesterday approved a new incentive program to reward shipping lines that bring new container business to the Port of Los Angeles in 2014.

The Ocean Common Carrier Incentive Program adds to the advantages of moving cargo through America’s No. 1 container port at a time when the fundamentals of shipping are changing and international carriers are rethinking traditional business practices.

Separately, the Board also established a two-member ad hoc committee on Port Industrial and Economic Development dedicated to identifying and advancing the best economic practices for maintaining the Port’s top position. Vice President David Arian and Commissioner Patricia Castellanos will serve on the ad hoc committee.

“Both of these steps we’re taking today move us forward in our commitment to maintaining our No.1 status,” Arian said. “We will continue to develop new and innovative strategies to make sure we are as efficient and competitive as possible.”

Under the incentive program, an ocean carrier will earn $5 per 20-foot equivalent unit (TEU) for each incremental container it ships through the Port in calendar year 2014. The rate jumps to $15 per TEU for all TEUs, if a carrier’s container volume grows by 100,000 or more units for the same 12-month period.

The baseline for measuring the increased volume will be the total number of containers each carrier moved through the Port in calendar year 2013. Carriers will receive their incentive in a lump-sum payment in early 2015. Port staff will monitor the program on a monthly basis to evaluate its effectiveness and whether to recommend its extension beyond the first year.

While Trans-Pacific trade is projected to grow, international shipping is undergoing sweeping change. With larger vessels and increased global shipping capacity, carriers are revisiting the traditional business model of calling at a dedicated marine terminal.

“Carriers are rethinking their routes and relationships to be as competitive as possible,” said Port Executive Director Geraldine Knatz, Ph.D. “This incentive gives them another reason to strengthen their ties with the Port of Los Angeles.”

World-class terminal facilities, deep-water berths, superior on-dock rail infrastructure and an unmatched supply chain network are among the reasons the Port of Los Angeles is the nation’s premier international trade gateway. Under a five-year $1.2 billion capital improvement program, the Port is modernizing terminals, increasing rail capacity and improving roadways to maintain its facilities and meet industry’s future needs.

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 more than 830,000 regional jobs and $35 billion in annual wages and tax revenues. The Port of Los Angeles – A cleaner port. A brighter future.

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Port of Los Angeles, November 8, 2013