Windfall for West Coast ports

In-Depth

Top US West Coast ports have received over US$ 170 million from the Harbor Maintenance Tax Fund, despite historically minimal federal investment.

Top US West Coast ports have secured over US$170 million from the Harbor Maintenance Tax Fund (HMTF) this year. The HMTF, administered by the US Army Corps of Engineers and funded through a 0.125% tax on importers’ cargo values, is intended for financing maintenance projects on the US navigable waterways.

Certain US deep-water ports historically received minimal federal investment despite contributing significantly to HMTF revenue. Los Angeles and Long Beach, which contribute around half of the fund’s revenue, saw modest returns, due to their naturally deep harbours. The Port of Los Angeles has received just 3% of its contributions in recent years.

In 2020, the America’s Water Infrastructure Act of 2018 was amended to allow the use of the funds to be extended to wharf repairs and other maintenance work on the waterfront.

Furthermore, for fiscal years 2024 through to 2029, appropriations will be determined by the funds deposited into the fund two years prior, supplemented by an additional amount of up to US$2 billion each year.

For 2024 the ports of Long Beach and Los Angeles have secured a combined US$112m for waterfront maintenance and repair, with US$58m going to Los Angeles and US$54m to Long Beach. The funding for Los Angeles represents a nearly tenfold increase on the US$6m it received in 2023.

“Now we have a more equitable distribution of funds and an allocation strategy that is expanded beyond maintenance dredging. This includes projects like seismic safety upgrades and wharf repairs and allows ports like Los Angeles to access more of these funds. The goal is to utilise the accumulated surplus and align future spending with the collected revenue each year,” said Port of Los Angeles Executive Director Gene Seroka.

Oakland confirmed to WorldCargo News that it anticipates receiving around US$40m.

The Northwest Seaport Alliance (NWSA), representing Seattle and Tacoma, anticipates a substantial injection of US$40 million from the fund.

Discussing the funding at a Board meeting, Managing Members of the NWSA heard that the HMTF money will free up operational revenues typically allocated for maintenance for other activities.

The NWSA has used this budget room to create two new incentive schemes that will run from May 2024 to April 2025: the Voyage Consistency & On-Time Arrival Award Programme and the Gate Operation Incentive. These initiatives shift the focus from volume-based incentives to enhancing service levels, making the port more attractive to cargo owners.

The Voyage Consistency & On-Time Arrival Award Programme sets up a US$1m prize pool for carriers that meet service level KPIs. The Gate Operation Incentive makes US$2m available to terminal operators to pay for labour to extend gate hours.

Combined with its International Container Rail Cargo incentive programme, NWSA has budgeted US$11m in total for incentive schemes.

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