OffPeak Frequently Asked Questions

Impact of OffPeak

Q: How does OffPeak help move cargo more efficiently?

• It spreads existing traffic across more hours.
• It makes better use of valuable port assets.
• It reduces turn times (pickup and drop-off) for the truck fleet and drivers.
• It reduces truck traffic on I-710 and other California highways during commute hours.

Q: How much traffic does the OffPeak program shift out of peak daytime hours?

• During 2007 and most of 2008 – prior to the economic downturn – OffPeak shifts handled an average of 68,000 truck trips in a typical week, or about 40 percent of all container moves at the two ports on days with both peak and OffPeak shifts. If the OffPeak shifts were to be eliminated, most of these trips would take place in peak daytime traffic, causing heavy congestion and thus increasing air pollution. In the first quarter of 2009, OffPeak shifts handled an average of 54,000 trucks in a typical week.
• As of December 2008, more than 11.46 million truck trips have been diverted out of peak daytime hours since the start of the program in July 2005.

Q: How does the OffPeak program help improve air quality around the ports?

• Taking a truck out of gridlocked traffic and allowing it to travel at higher speeds by driving at night reduces air pollution.
• According to the air quality model used by the California Air Resources Board to project the state’s emission inventory:
• A truck that travels 10 miles at 5 mph produces 90% more pollution than the same truck traveling those same 10 miles at 55 mph.
• A truck traveling 5 mph produces 318% more particulate matter than when it travels at 55 mph.
• A truck produces a quarter pound of pollution every hour it idles. Thus, every hour that a truck does not sit in a line idling reduces pollution by that amount.

Source: California Air Resources Board, EMFAC2002.  The pollutants include total organic gases, carbon monoxide, oxides of nitrogen, sulfur dioxide and PM10.

The Traffic Mitigation Fee (TMF)

Q: Why is the Traffic Mitigation Fee (TMF) Charged?

1. The TMF provides an incentive to use the night shifts; and
2. The TMF provides necessary funding for night shifts.

Q: Is PierPASS Inc. making money from the TMF?

• No. PierPASS Inc. is a not-for-profit organization and makes no profit or loss from operating the OffPeak program.
• All fees collected, minus the administrative and overhead costs incurred by PierPASS to implement and manage the program, are allocated to the terminal operators to finance the labor and operational costs of the five additional OffPeak program shifts.

Q: Are the terminal operators making money from the TMF?

• No. As shown in more detail below, the revenue from the TMF is not covering the added costs of operating a second shift. This has been determined through a semi-annual review of terminal costs by an independent third party analyst.

Q: What are PierPASS’s administrative expenses?

• Expenses of administering the program totaled $8.4 million, $7.1, $11.3 million, $9.5 million, $9.8 million and $5.2 million for the 2010, 2009, 2008, 2007, 2006 and 2005 fiscal years, respectively.
• For all periods, expenses consisted of administration costs, bank and professional fees, and the OffPeak program’s computer systems and software. The OffPeak program’s computer systems and software are used to collect TMF payments and manage the notification of TMF payment status to the terminal operators.

Q. What is the per TEU cost to run the OffPeak program?

• In the fourth quarter of 2010, the actual cost of OffPeak gates was $95 per TEU compared to the fee of $50 per TEU. The  currently fee is $60 per TEU.

Q: How frequently has the amount of the TMF been increased, and by how much?

• Since the OffPeak program began in July 2005, the amount of the TMF has been increased only once, in April 2006.

• From July 2005 through April 2006, the TMF rate was $40 per TEU (20-foot equivalent unit). On April 24, 2006, the TMF rate was adjusted to $50 per TEU.

• As of August 1, 2011, the TMF is $60 per TEU.

Q: How are net proceeds from the TMF distributed among terminal operators?

• Net proceeds of the TMF are allocated according to container volume at each terminal.

Q: Is the TMF a subsidy for inefficient operations at the terminals? If the terminals are being reimbursed for their costs of running the night shifts, isn’t that an incentive for the terminals to let their costs keep rising?

• Not at all. Net proceeds of the TMF are allocated according to container volume at each terminal, not according to their individual costs. The more efficient the terminals are, the more likely they are to avoid operating their night gates in the red.

Q: Why not just let market demand drive the supply of night shift operations?

• That was the situation before the OffPeak program began, and it wasn’t working. The large majority of shippers wanted to pick up their cargo during peak hours and built their business models around that. It was only when a general program was established by all the terminal operators – with a fee component as an incentive – that many shippers were motivated to move their cargo deliveries to off-peak hours.
• Community and political leaders demanded that the terminals operate a full-service second shift, and that all terminals be open for the full second shift.

OffPeak Creation

Q: Why was the OffPeak program created?

• Container traffic at the Los Angeles and Long Beach ports grew sharply between 2000 and 2004. By 2004, roads around the ports and marine terminals in the ports became severely congested.
• Community and elected leaders demanded that the terminals in the ports begin operating night shifts for container pick-ups and drop-offs.
• Elected officials were prepared to impose a solution that included a container fee on daytime port use collected by the state and the use of which would be decided in Sacramento.
• The goods movement industry came together and proposed an industry-driven solution that provided a financial incentive to move cargo outside of peak hours and a funding mechanism for five new night shifts.
• This solution became the OffPeak program, launched on July 23, 2005, and run by PierPASS Inc.

Q: What is PierPASS and what is OffPeak?

• PierPASS Inc. is a not-for-profit company created by marine terminal operators at the Los Angeles and Long Beach ports to operate the OffPeak program.
• The OffPeak program was launched in July 2005 with the support of state and local elected officials, local communities and cargo owners to reduce congestion in and around the Ports of Los Angeles and Long Beach.
• Under the OffPeak program, all international container terminals in the two ports established additional shifts to deliver and receive containers (see www.PierPASS-tmf.org for the most up-to-date schedule).
• As an incentive to use the OffPeak shifts and to cover the added cost of the shifts, a Traffic Mitigation Fee is required for most cargo movement during peak hours (Monday through Friday, 3 a.m. to 6 p.m.). See www.PierPASS-tmf.org for the most up-to-date schedule.