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FMC Report Indicates Little Diversion from U.S. Ports Due to HMT, Cites Alternatives

The Federal Maritime Commission released a Study of U.S. Inland Containerized Cargo Moving Through Canadian and Mexican Seaports, which had been prompted by requests from members of Congress to study the impacts and the extent to which the U.S. Harbor Maintenance Tax (HMT), enacted in 1986, other U.S. policies and other factors may incentivize U.S.-bound container cargo to shift from U.S. seaports to those located in Canada and Mexico.

The study confirmed previous estimates that a significant amount of containerized cargo imports moving through the ports of Oakland, Seattle, Tacoma and Portland may be vulnerable to Canada routing. But it said many factors influence why shippers choose to use ports in Canada and Mexico, including overall shipment savings, risk mitigation through port diversification, perceived transit time benefits, avoidance of the HMT, and rail rate disparities. It also said there are many options available to Congress if it decides to revise or replace the current HMT structure.

The study partially results from a Notice of Inquiry the FMC issued in November 2011. Seventy-six responses representing interests in the United States, Canada, and Mexico were received in response to the NOI, it said.

One request from Congress was to determine whether U.S. shippers violate any laws by using Mexican or Canadian ports. FMC said it "examined in great detail the history of cargo 'diversion' and the many precedents in FMC case law. It found that "carriers shipping cargo through Canadian and Mexican ports violate no U.S. law, treaty, agreement, or FMC regulation," it said.

The study said the number of import containers routed through Canada had been dropping continuously from 2000-2007, but began increasing in late 2007 when Canada's Port of Prince Rupert opened. It noted that Canadian shippers import more containers through the U.S., than U.S. importers move via Canada.

It cited figures that it said might suggest that Port of Prince Rupert "is simply a less expensive corridor for cargo" heading to the U.S. Midwest, even without the impact of the HMT, though others suggested that wasn't true. The report also said some shippers prefer Rupert because it's closer to Asia, cutting time onboard ships.

As for alternatives, the FMC report said: