ports are not subject to the HMT. As the volume of such
shipments has grown—notably at the ports of Prince
Rupert in Canada and Lázaro Cárdenas in Mexico—
lawmakers in California and Washington state have voiced concern that the HMT is at least partly to blame for their neighbors’ rising fortunes.
The FMC’s inquiry was sparked by an Aug. 29 letter to
FMC Chairman Richard A. Lidinsky Jr. from Sens. Patty
Murray and Maria Cantwell of Washington. In the letter,
the senators asked the FMC to examine the extent to which
the HMT and other factors influence diversion of cargo
from U.S. West Coast ports to Canadian and Mexican competitors. The exemption for overland shipments, they
wrote, has given Mexican and Canadian ports a competitive
advantage over U.S. seaports, causing an increase in cargo
diversion, a reduction in revenue for the Harbor
Maintenance Trust Fund, and the loss of U.S. jobs. They
also asked the agency to offer “recommendations for legislative and regulatory responses” to those concerns.
The FMC agreed to take up the matter and in its
November 2011 notice of inquiry (Docket 11-19) asked for
comments on the HMT’s influence on cargo routing as well
as suggestions for actions the U.S. government could take to
improve the competitiveness of U.S. ports. That request
drew dozens of responses from private industry and government organizations across North America, as well as
from the governments of Canada and Mexico.
SPARKS FLY IN PUGET SOUND
The primary battleground of the dispute is the Pacific
Northwest, where the Puget Sound ports of Seattle and
Tacoma on the U.S. side of the border, and British
Columbia’s Prince Rupert and Vancouver on the Canadian
side, have long battled it out for market share.
In recent years, Seattle and Tacoma have been on the
short end of the stick. According to data compiled from
various port sources, the two ports accounted for nearly 16
percent of containerized traffic on the West Coast of North
America in 2010, down from about 18 percent in 2005.
During that same period, the market share for British
Columbia ports rose to 12 percent from about 8 percent.
Washington state interests insist that the HMT is, at least
in part, to blame for the shift in market share. In their comments, the Seattle Metropolitan Chamber of Commerce,
the Washington Public Ports Association, and the Port of
Seattle asserted that the HMT’s “land-border loophole”
provides incentives for shippers to avoid U.S. ports. They
have requested that the federal government change the law
to eliminate any such incentives.
Few others, though, believe the HMT is a significant factor in routing decisions. “When the FMC completes its
investigation, what [it] will find out is that the reasons for
using [Canadian West Coast] ports have nothing to do with
avoiding the 0.125 percent fee on the value of the cargo,”
says Peter Friedmann, Washington counsel for the
Coalition of New England Companies for Trade
(CONECT) and the Agriculture Transportation Coalition.
The main reason, he says, is that Prince Rupert is a day
and a half closer to Asia, and rail service from Prince Rupert
and Vancouver to the U.S. Midwest is faster and more
affordable than service from U.S. West Coast ports.
Shipper groups agree. “Shippers, including retailers, who
are using ports such as Prince Rupert are choosing these
ports because of their operational efficiencies, and it is our
