As one major port scraps a container “dwell fee” before it was ever deployed, another port is planning to move full speed ahead with the extra container fee.
Port Houston’s Sustained Import Dwell Fee will go into effect on Wednesday, as more cargo is shifting from the constantly congested West Coast ports to other U.S.-based hubs on the East Coast and the Gulf Coast.
To address long-term container dwell, the Sustained Import Dwell Fee taking effect Feb. 1. applies to all loaded import containers on terminal, with the port charging $45 per unit per day to cargo owners if a container lingers more than eight days.
“The Sustained Import Dwell Fee is intended to minimize long-term storage of containers on the terminals and promote fluidity of cargo movement,” said Roger Guenther, executive director at Port Houston. “We’ve seen during the recent increase in demand that containers sitting on terminals for an extended period of time are a challenge. We are implementing this additional tool to help optimize space at our terminals and keep goods moving to the consumers in our region who need them.”
Port Houston has seen record annual container volume, taking on a total of 14 percent more 20-foot equivalent units (TEUs) in 2022, reaching 3.97 million TEUs. This is nearly double the volume posted six years earlier in 2016 and approximately 492,500 TEUs more than in 2021. For the year, total tonnage was up 22 percent.
The port had “consistent” double-digit growth at its Bayport and Barbours Cut container terminals from January through November, according to an official statement. But it appears a decline is already underway, representing a softening of demand. More than 292,000 TEUs were handled at Port Houston during December, 12 percent less versus the year-ago period.
Houston’s dwell fees are expected to come only a week after the San Pedro Bay ports of Long Beach and Los Angeles scrapped their proposal to deploy their own fees. While both major West Coast ports first voted to implement $100-per-container-per-day dwell fees in October 2021 to incentivize shippers to clear languishing cargo keeping containers ships backed up off the coast, the initiative kept getting postponed as terminal congestion cleared up.
The Long Beach and Los Angeles Boards of Harbor Commissioners both extended the fee program through Jan. 24, 2023. The executive directors of both ports had the authority from their respective harbor commissions to implement the fee, but neither activated the fines.
“I said when we launched this program that I hoped we would never collect a dime because that would mean that containers were moving off our docks. And that’s exactly what occurred,” said Gene Seroka, executive director, Port of Los Angeles, in a statement. “I’m grateful to the cargo owners and all our waterfront workers for all their successful efforts to improve the efficiency of our operations.”
Since the San Pedro Bay program was first announced on Oct. 25, 2021, the two ports have seen a combined decline of 92 percent in aging cargo on the docks.
“This fee was conceived as an incentive to ease congestion, keeping imported goods flowing to stores across America,” said Mario Cordero, executive director, Port of Long Beach. “Measured by this standard, we can all appreciate the policy’s success, and best of all, the fee was never implemented. We thank cargo owners and terminal operators for working with us to make operations more efficient, and of course dockworkers for their dedicated labor.”
The Houston fees were originally set to go into effect on Dec. 1, but implementation was postponed due to delays from the port’s external software developer.
The Sustained Import Dwell Fee is in addition to the demurrage charges for loaded import containers. Containers will be on hold until all terminal fees are reconciled.
Another fee, known as the Excessive Import Dwell Fee, was also approved in October and can be implemented by Guenther as needed. This fee starts with a $50-per-day charge on containers sitting one to three days after the expiration of free time. The fee continues to increase in increments of $25 the longer the container sits, reaching up to $150 per day levied on cargo sitting 14 or more days at the terminal.
Sustained Import Dwell Fees will not continue to accrue during the period that the Excessive Import Dwell Fee is in effect. If implemented, it will take effect following 30 days’ public notice and remain in effect for at least 60 days. For now, the Excessive Import Dwell Fee is not being implemented.
Port Houston isn’t the only major U.S. freight hub that wants to bring these dwell fees to bear amid cargo’s shift east. The Port Authority of New York and New Jersey laid the groundwork to what it called a quarterly container imbalance in its own effort to handle and move the record cargo volumes coming through the New York City-adjacent port system.
While the fees were initially set to go into effect on Sept. 1, the Port Authority pushed the launch to Oct. 1 after ocean carriers had expressed concerns regarding the original fee structure. To stay compliant, shippers had to ensure their total outgoing container volume equaled or exceeded 110 percent of their incoming container volume during the same period or they would be assessed a fee of $100 per container for failing to hit this benchmark.
In particular, smaller carriers had informed the port that they would not be able to clear the amount of empty containers expected. With the updated tariff, an algorithm will tailor the fee to each carrier.
The N.Y./N.J. 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.
If anything, the scare tactic of fines appeared to be a driver in clearing out space at the terminals. The Port Authority said the gateways had seen a 10.5 percent decline in aging containers from the time the fees were first announced in August through their enforcement on Oct. 1.