- A new measure intended to relieve congestion at Southern California ports threatens to pit U.S. importers against ocean carriers.
- It is highlighting divisions and competing interests at America’s busiest gateway for container imports.
A recent news article published in the WSJ states that California Port Congestion Fees Divide Importers, Operators.
Ports of Los Angeles and Long Beach
The ports of Los Angeles and Long Beach plan to begin charging the shipping lines starting Nov. 15 for containers that sit too long at marine terminals, a temporary fee officials say addresses a key part of the logjam that has tied up operations at the port complex and led to record numbers of ships waiting offshore to unload goods.
Importers and freight forwarders say the fee would amount to a levy on them since they expect carriers to pass the charges along to them even though they have little control over when boxes are moved away from the ports.
“The customers can’t get the boxes off the dock because they can’t find [trucking] power, the warehouse is full,” said Craig Grossgart, senior vice president of global ocean for Seko Logistics, an Itasca, Ill.-based freight forwarder.
Challenges authorities face in Los Angeles and Long Beach
“We understand the need to push to get the cargo moving,” said Jonathan Gold, vice president for supply chain at the National Retail Federation. “But we are concerned about how the fee is going to be implemented and the fact that it’s going to get passed along.”
How to interpret the new fee?
Ocean carriers such as German container line Hapag-Lloyd AG say they are still deciding how to interpret the new fee, which would be in place for 90 days.
France’s CMA CGM SA, in a note to customers this week that was reviewed by The Wall Street Journal, called the fee a “government pass-through charge.” Representatives for CMA CGM declined to comment.
Port of Long Beach executive director Mario Cordero said this week that the fee “is not intended as a pass-on cost.” Officials at both ports say moving the containers off terminals will help clear a backlog of more than 70 container ships, carrying hundreds of thousands of boxes, awaiting a berth at their facilities.
California’s Port of Los Angeles is struggling to keep up with the crush of cargo containers arriving at its terminals, creating one of the biggest choke points in the global supply-chain crisis.
This exclusive aerial video illustrates the scope of the problem and the complexities of this process. Photo: Thomas C. Miller
They said that reducing the stacks of boxes should allow dockworkers to unload ships more quickly and will help terminals accept more empty containers that are clogging truck yards close to the ports.
The charges will apply to containers
The charges will apply to containers that wait nine days or more to move by truck and six days or more to move by rail, and they rise sharply.
Boxes will be assessed a charge of $100 on the first day over the limit and the fee would escalate if the container doesn’t move so that by day seven the charge would total $2,800.
The fee plan comes as the Biden administration is trying to alleviate a global supply-chain backlog that is cutting into retailers profits, driving inflation and threatening product shortages for the holidays. “We look forward to ocean carriers putting their shoulder to the wheel and being part of the solution,” said John Porcari, the Biden administration official tasked with addressing port congestion.
An administration attempt
An administration attempt to push the port’s private terminal operators to work 24/7 has been slow to start because of lackluster interest from importers, trucking firms and the terminal operators.
Shippers note they already pay hefty fees for containers that dwell too long on dock terminals.
The Biden administration earlier this year encouraged the Federal Maritime Commission, an independent agency that regulates international ocean shipping, to examine the practice and to ensure such charges aren’t unjust or unreasonable.
Daniel Maffei, the commission’s chairman, declined to comment on the new fees because of the commission’s potential role as an adjudicator.
Public and private-sector officials
Public and private-sector officials are launching other programs aimed at reducing container congestion.
California Gov. Gavin Newsom signed an executive order on Oct. 20 directing state agencies to identify public and privately-owned sites that could be used for short-term storage of containers.
The city of Long Beach on Oct. 22 relaxed for 90 days restrictions on stacking containers at off-port facilities, with stacks now allowed to reach four high, up from two high previously.
Freight railroads Union Pacific Corp. and BNSF Railway are offering rebates to customers that bring containers to their Los Angeles and Long Beach terminals on weekends, which is aimed at spreading out the flow of boxes.
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Source: WSJ
