Port of Los Angeles unveils incentive program for ocean carriers

In a move geared towards bringing more volume to the Port of Los Angeles (POLA) in 2014, the Los Angeles Board of Harbor Commissioners said yesterday it has signed off on an incentive program that will reward shipping lines bringing new container business into POLA.

Entitled the Ocean Common Carrier Incentive Program, POLA officials said that participating ocean carriers will earn $5 per Twenty-foot Equivalent (TEU) for each incremental container it ships through the port in calendar year 2014, with the rate heading up to $15 per TEU for all TEU if a carrier’s container volume increases by 100,000 or more units for the same 12-month period. 

In terms of measuring volume increases, port officials explained that the baseline for measuring volume is the number of containers each carrier moved through the port in calendar year 2013, with carriers receiving their incentive in the form of a lump-sum payment in early 2015.

“Carriers are rethinking their routes and relationships to be as competitive as possible,” said POLA Executive Director Geraldine Knatz, Ph.D., in a statement. “This incentive gives them another reason to strengthen their ties with the Port of Los Angeles.”

And with Trans-Pacific trade activity expected to rise, POLA said that global shipping is in the middle of various changes, with carriers revisiting the traditional business model of calling at a dedicated marine terminal.

The rollout of this program comes at a time when POLA continues to feel the effects of volumes being been negatively impacted due to a new service line between ocean carriers MSC and CMA CGM that moved from POLA to neighboring Port of Long Beach having recently commenced, with both carriers having established hubs at POLB, with vessels calling on POLB. MSC is sharing a POLB hub with COSCO and MSC is in a terminal sharing arrangement with Hanjin at POLB.

“This is something that will keep us competitive and hopefully one step ahead of the competition,” said POLA Director of Communications Philip Sanfield. “We are pretty excited about it and hope it results in some additional incremental cargo in 2014.”

An article in the Orange County Register quoted Michele Grubbs, vice president of the Pacific Merchant Shipping Association as saying the Ocean Common Carrier Incentive Program has decent potential

“The Port of Los Angeles understands the competition is fierce and they want the customers to bring the cargo to their port,” Grubbs said. “They are making it more attractive to choose their port with this incentive program.”