The Port Authority of New York and New Jersey said it will implement a new quarterly container imbalance fee for ocean carriers as part of the seaport’s multi-pronged effort to aggressively move to handle record cargo volumes spurred by the peak season and shippers shifting away from the congested West Coast.
The container management fee, targeting excess empty containers being stored in the port for long periods, will be effective as of Sept. 1, pending a mandatory federal 30-day notice period. The fee is aimed at reducing the number of excess empty containers dwelling at the port and free up much-needed capacity for containers that are full of imports and ready to be picked up by cargo owners.
The seaport said it has been handling a cargo increase of nearly 12 percent year-to-date compared to the same period last year and a rise of 34 percent in cargo volume compared to the same period during pre-pandemic 2019. Despite two years of sustained record cargo growth, the port’s container terminals have remained open throughout the pandemic amid national supply chain issues that have caused major disruptions at other ports.
As part of its ongoing strategic planning efforts to encourage all players involved in the cargo shipping community to make substantial capacity improvements elsewhere in the supply chain to accommodate this tremendous growth, the Port Authority is taking proactive steps as the East Coast’s largest container port prepares for what is traditionally its busiest annual period ahead of the U.S. holiday shopping season.
“We rely heavily on our port partners as the downstream links in a vast global supply chain that needs full cooperation in order for international commerce to function and deliver the essential goods that the region’s residents need,” Port Authority chairman Kevin O’Toole said. “As we continue to manage record cargo volume and work with our tenants and port stakeholders for the removal of empty containers in a timely manner, we call on all industry stakeholders to find sustainable, long-term solutions to an industrywide problem affecting many U.S. ports.”
Port Authority executive director Rick Cotton said the new proactive container management approach is an example of the New York-New Jersey Port Authority’s ability to identify and implement solutions before they cause logjams in the region.
“We must use every tool in our toolbox to ensure that the flow of goods and business will continue as it has done throughout the pandemic thanks to the hard work of our waterfront labor and our partners,” Cotton said.
The container imbalance fee will be assessed on ocean carriers that do not evacuate empty containers that take up sorely needed space for arriving imports and impede overall port productivity and fluidity. Under this new container management fee, which will be assessed on a quarterly basis, ocean carriers’ total outgoing container volume must equal or exceed 110 percent of their incoming container volume during the same period or they will be assessed a fee of $100 per container for failing to hit this benchmark. Incoming and outgoing containers include loaded and empty containers, excluding rail volume.
“The Port of New York and New Jersey is facing record import volumes, leading to empty containers accumulating in and around the port complex that are now affecting the regional supply chain that is already under stress from various sources across the country,” said Bethann Rooney, director of the Port Department at the Port Authority of New York and New Jersey. “We emphatically encourage ocean carriers to step up their efforts to evacuate empty containers quicker and at higher volumes to free up much needed capacity for arriving imports in order to keep commerce moving through the port and the region.”
Fee proceeds will be used to offset the costs of providing additional storage capacity, and other expenses incurred by the glut of empty containers. In addition to the fee, the Port Authority has taken other steps to manage the empty containers, including repurposing 12 acres within the Port Newark and the Elizabeth-Port Authority Marine Terminal for temporary storage of empty containers and long-dwelling import containers. It is also in the process of negotiating or investigating additional storage space.
The agency said it has met with ocean carriers individually and as an industry and identified additional mitigation strategies, conducting targeted outreach to shipping companies and cargo owners currently storing their import containers within the port for excessive periods. Through much of the pandemic, the port’s terminal operators have offered longer weekday hours and weekend terminal hours to allow additional access to truck operators willing and able to work outside of traditional terminal operating hours.
In accordance with established transparency rules, the Port Authority has published the tariff language detailing the new container imbalance fee on its website for the 30-day public comment period. The fee will be reassessed when the global supply chain crisis eases, with a review as needed to the agency’s Board of Commissioners no later than September 2023.