“Our primary purpose is to attract business from Prince Rupert and Savannah”

L.A. Considers $10 Incentive Plan; Long Beach Not Happy

The Port of Los Angeles is contemplating a short-term incentive program to pay tenants $10 for every new TEU they bring to the port by either adding a new service or luring an existing service from another West Coast port. Needless to say, Port of Long Beach reaction to the proposal was not positive.

Port of Los Angeles staff say the program would run through Dec. 31, 2009 and could capture an estimated 350,000 more TEUs for the Port of L.A. If successful, the cost would be $3.5 million; the net gain would be about $9.5 million.

The program likely would divert discretionary cargo from West Coast competitors, including the Port of Long Beach – the neighbor with whom the L.A. port has worked so closely to advance sweeping clean air environmental measures. A cornerstone of those measures – included in their joint Clean Air Action Plan – has been for the ports to act in a manner that gives neither an economic edge.

That goodwill – at times strained due to varying approaches and key differences in the two clean truck programs – could be jeopardized by L.A.’s proposed marketing incentive program. Viewed by L.A. as a smart way to attract business during tough economic times, the proposal has been likened by others to poaching by the port that already has the nation’s highest cargo volumes.

At the very least, the proposal is a reminder that the L.A. and Long Beach ports are fierce competitors, along with every other West Coast port.

“Our primary purpose is to attract business from Prince Rupert and Savannah,” said Los Angeles Harbor Commission President S. David Freeman. “The thrust of this story is not the impact on other ports, but L.A. wants your business.”

The proposal couldn’t come at a worse time and has the potential to sour relations with the Port of Long Beach, said Harbor Commission President James Hankla. “Now is an important time for the two ports to stay closely associated with each other and not do anything to harm the intent and the ability of the ports to carry out the Clean Air Action Plan.”

The proposal has surfaced just weeks before the two ports are about to impose a $35-per-TEU fee to help finance the conversion of the harbor drayage fleet to cleaner burning trucks. Discussed at Thursday’s Port of L.A. board meeting, the plan caused some in the audience to privately question why L.A. port officials don’t do away with the clean truck fee to boost business.