November 17, 2009

Tariff Rate Increase Offsets Some Expected Cost Increases

In the face of operating cost increases expected to total more than 8 percent next year, the Port of Houston Authority (PHA) announced that it would implement tariff rate increases of approximately 3 percent on container cargo and 2 percent on general cargo.

PHA tariffs are published rules and regulations regarding, among other things, use of its facilities and charges related to facility use and services.

The tariff increase will continue to enable the PHA to remain competitive in the current marketplace as well, and help cover the increasing costs of operating its terminals.

The new rates, which go into effect on January 1, 2010, will continue to be competitive with those charged by other U.S. ports in the region, and were deemed necessary to address PHA’s 2010 budget, that projects operating increases of 8 percent on container operations and 8.7 percent on general cargo operations.

PHA’s terminal operating efficiency is considered among the highest in the industry in terms of number of containers per hour, and PHA charges remain extremely competitive with those charged by ports around the country.

The PHA operates the largest container facilities on the U.S. Gulf Coast and is home to the nation’s most productive breakbulk operations.

PHA Executive Director Alec Dreyer says PHA’s tariff rates continue to be among the lowest of major U.S. ports.

“After considerable study, research and dialogue, it became overwhelmingly clear that moderate increases to tariffs made good sense, in both the short- and long-term,” Dreyer says. “Our biggest costs are labor, infrastructure and federally mandated security commitments. The costs of all three are rising and, as an organization, we are absorbing most of those cost increases.”

The Port Commission’s decision to approve the tariff changes came after PHA staff reviewed and weighed all of its options, in addition to seeking feedback from the steamship lines and other stakeholders over the past several months.

PHA Chairman James T. Edmonds says “today the Port Commission made the tough decision recommended by staff, to absorb much of our escalating operating costs and pass a portion onto the steamship lines.”

“We are in constant contact with our customers and remain sensitive to their needs, particularly during these trying economic times and we are committed to running our facilities as efficiently and effectively as is economically feasible,” Edmonds says.

Dreyer says choosing to continue to cut back on services or infrastructure commitments at this time in a short-term effort to shave costs would have an adverse affect on PHA customers.

“Ours is a unique business,” Dreyer says. “Our own success and the success of our customers hinges on our ability to provide ample, diverse and quality facilities and services to move their goods to market quickly, efficiently and in a cost-effective manner. To compromise that efficiency of flow and quality of service threatens to compromise the supply chain and harm the local economy.”