Meeting Set to Consider Adoption of GALTEX Pilot Rate Increase

Industry support for compromise tariff is tepid; support for formalized opposition to proposal said to be growing.

The Board of Pilotage Commissioners – Ports of Galveston County have posted notice of meeting to consider final adoption of a pilotage rate increase to be held on August 10, 2009 at 10:00 AM at the Galveston County Commissioners Court Room in Galveston. The proposed rate increase, as laid out by the commissioners at their previous public meetings held on July 16 and 17, was a compromise between industry demands (that the current tariff was more than adequate) and the pilots themselves, who were asking for – in some cases – an increase that would have amounted to as much as 80 percent increases over five years.

MarEx readers can access the notice and proposed tariff changes by clicking HERE.

A hastily arranged mediation session between industry stakeholders and the pilots did not yield any fruit prior to the rate hearing. As a result, the Public Hearings went on as scheduled and the commissioners eventually ruled on the GALTEX Rate Application. Before that meeting, Board of Pilot Commissioner Chairman Vandy Anderson had urged both parties to try and reach an agreement and in an interview with MarEx during the week of June 23rd, Anderson warned that if an agreement was not reached prior to the scheduled July meeting, that “Probably, both sides would not be happy with the final result.”

The proposed multi-year rate increase will eventually raise pilot tariffs as much as 18 percent over four years, despite a faltering economy, depressed freight rates and worldwide contraction of ocean shipping capacity. The West Gulf Maritime Association (WGMA), a trade organization representing a large portion of the local stakeholders opposed to the proposed pilotage rate hike, has not yet endorsed the new rate structure.

Yesterday, WGMA leadership announced yet another meeting for their membership and industry stakeholders immediately prior to the August 10th Board meeting. The issue of accepting a proposed 5/4/4/4 multi-year tariff rate adjustment is expected to be discussed and debated at length. In a prepared statement received by MarEx this week, WGMA said, “The purpose of our pre-meeting will be to determine whether the WGMA members and stakeholders want WGMA to appeal the decision to increase the tariff to district court.”

Separately – and according to a MarEx source who declined to be identified in this article – it was reported that certain objecting parties are considering a court challenge to some or all parts of the Commission’s rate decision.

The contentious two-day hearing that ended a long, drawn out battle over a proposed pilotage rate hike resulted in the Board of Commissioners of Pilots for the Ports of Galveston County granting a five percent rate adjustment to the Galveston-Texas City Pilots tariff. The Board also indicated they would also approve a four year (5/4/4/4) percent tariff, assuming all objecting parties agree. This week, the likelihood of this happening appears to be dwindling rapidly.

For their part, the 15 GALTEX Ship pilots for the ports of Galveston and Texas City contend that that even after the rate hike that they still paid less than pilots at other Texas Gulf ports. During the two-day hearing, they petitioned the state commission for annual increases of 8 percent for two years, 7 percent for the following three years, as well as a cost of living adjustment each year. The multi-year rate granted by the commission amounts to less than one-half of what they were asking for, but still could hike pilot fees by as much as 18 percent over a four year period. A WGMA statement released this week even claims, “The proposed tariff is not a 5% increase of all charges, but instead increases the unit charge by 21.5%, changes the second pilot to full charge, and makes other changes to the tariff.”