Feds to Study Why U.S.-Bound Cargo is Diverting to Canadian, Mexican Ports

Port of Seattle (Don Wilson, POS)

The Federal Maritime Commission (FMC) voted unanimously this week to begin a Notice of Inquiry (NOI) into disparities that may be causing U.S.-bound cargo to be driven to Canadian and Mexican ports.  The NOI process will enable the Commission to gather input on the issue from government, industry, and the public — both in the United States and Canada. The FMC is an independent federal agency responsible for regulating the nation’s international ocean transportation for the benefit of exporters, importers, and American consumers.

Chairman Richard A. Lidinsky, Jr. stated: “Canadian and Mexican ports are free to compete with U.S. ports for U.S. cargo. But they should do so on a playing field that is not artificially tilted by governments’ policies. So the primary question is: are we handicapping our own ports in international competition?”

The NOI is in response to written requests from Washington State’s U.S. Senators (link to letter)  and  Representatives (view the letter), and California U.S. Representative Laura Richardson (link to letter).

In her letter to the Commission, Representative Richardson wrote:

“A growing number of containerized U.S. imports from Asia are passing through west coast Canadian container ports (Vancouver and Prince Rupert) en route primarily to the U.S. Midwest (Chicago and Memphis, for example) through cross-border rail.

Some additional volumes also enter via Mexican ports. Although other factors could impact ports of choice, it appears that non-U.S. ports can claim a substantial per-container cost advantage over U.S. seaports based on the HMT alone. The results of this unfair disparity are increased cargo diversion and lost U.S. jobs. In addition, it is estimated that the Harbor Maintenance Trust Fund (HMTF) could lose between $575 million and $2.1 billion in revenue over the next ten years through diversion of cargo.

As a consequence, our country’s capacity to handle international trade growth would be adversely affected. It is imperative that we level the playing field between international ports and domestic ports so that the U.S. can continue to compete for cargo ultimately bound for the United States.”

Representative Rick Larsen, of Washington State, commented:

“Cargo diversion creates a trade imbalance and job loss.  Our Northwest ports are losing business to Canada at a time when we need this trade and the jobs it will create more than ever.  We need to understand why this is happening so Congress can take action to fix this disparity and create jobs.”

NOIs often precede Notice of Proposed Rulemaking, which is a public notice issued by law when one of the federal agency wishes to add, remove, or change a rule or regulation. Comments received in NOI period allow an agency to better prepare the NPRM by making more-informed decisions on proposals.

Learn more from our related stories:

WANTED – A National Freight Strategy

More Evidence Points to Need for National Freight Strategy, Investment

Feds Sit On $5 billion While Port Expansion and Maintenance Needs Go Unmet

British Columbia to Invest $25 Billion in Infrastructure to Capture More Asian Trade

Feds to Study Why U.S.-Bound Cargo is Diverting to Canadian, Mexican Ports

Trade – What it Means for Jobs, How it Depends on Transportation Network

A 2007 report on Canada’s Strategic Gateways and Trade Corridors Plan (16-page pdf)

Canada Invests Again to Capture More Asian Trade

2 Key Freight Elements in House Transportation Bill

Senate Bill Will Improve Freight Mobility and Economic Vitality

Panama Canal Expansion: A Game Changer

Maryland Deal Plans for Panama Canal Expansion, Take Share From West Coast Ports

The Surprising Numbers of the Maritime Transportation Network