The West Coast ports in Los Angeles and Long Beach, Calif., have collaborated in another attempt to alleviate continued congestion at their terminals, both agreeing to levy fines to ocean freight carriers if they let cargo dwell too long.
On Friday, both the Los Angeles and Long Beach harbor commissions voted to implement a 90-day “container excess dwell fee” directed at ocean carriers in an effort to improve cargo movement on container terminals amid record volume.
The unprecedented accumulation of vessels continues to take its toll on the ports. As of Friday, there were 153 ships at anchor across both ports, berthed or “loitering”—cruising while awaiting dock space—and more than 100 of those were container ships, according to the Marine Exchange of Southern California, which monitors port vessel traffic.
“With the escalating backlog of ships off the coast, we must take immediate action to prompt the rapid removal of containers from our marine terminals,” said Port of Long Beach executive director Mario Cordero in a statement. “The terminals are running out of space, and this will make room for the containers sitting on those ships at anchor.”
The programs start Monday, Nov. 1, with penalties to be assessed no earlier than Nov. 15.
Under the policy, the ports will charge ocean carriers for each import container that falls into one of two categories. For containers scheduled to move by truck, ocean carriers will be charged for every container dwelling nine days or more. And for containers transported by rail, ocean carriers will be charged if a container has dwelled for six days or more.
The Port will charge ocean carriers in these two categories $100 per container, increasing in $100 increments per container per day until the container leaves the terminal.
Approximately 40 percent of the import containers within the two terminals are idling there for at least nine days, the ports say. Before the pandemic-induced import surge began in mid-2020, on average, containers for local delivery remained on container terminals under four days, while containers destined for trains dwelled less than two days.
“Our objective with this program is not to generate revenue,” said Los Angeles Harbor Commission president Jaime Lee in a statement. “Instead, we need our supply chain partners to make operational changes that will reduce dwell times, clear our terminals and make room for the ships waiting to enter our port.”
A board presentation indicated that this action was needed to improve terminal velocity within the supply chain. Additionally, the ports say reducing the on-terminal dwell time for import containers will provide more space on the terminals to accept empties, handle exports and improve fluidity for the wide range of cargo owners that use the ports.
Port of Los Angeles executive director Gene Seroka said that as of Monday, the port would start taking daily data snapshots of how long import containers sit on the container terminals.
“If progress is being made clearing our docks, I have the discretion to delay the start of fees beyond Nov. 15,” said Seroka in a statement. “Our goal is to see significant improvement on our docks so that we don’t need to administer any fees.”
Not all parties appear to be happy with the fees, particularly importers and freight forwarders. These stakeholders argue that such a fee would just convince carriers to pass the charges along to them even though they have little control over when boxes are moved away from the ports.
Jonathan Gold, vice president for supply chain at the National Retail Federation, shared the same concern with The Wall Street Journal, saying, “We are concerned about how the fee is going to be implemented and the fact that it’s going to get passed along.”
John D. Porcari, port envoy to the Biden-Harris Supply Chain Disruptions Task Force, gave his blessing to the actions from the West Coast ports as his own committee still seeks answers to mitigate the global issues. The task force helped develop the 90-day policty in coordination with the U.S. Department of Transportation and other supply chain stakeholders.
“As our economy continues to grow, increased demand and disruptions caused by the pandemic are putting our supply chains to the test. While we’ve seen new records set in terms of throughput this year at West Coast ports, we need more players throughout the supply chain to keep stepping up,” said Porcari in a statement. “The federal government will continue bring together private companies and stakeholders from across the supply chain and serve as an honest broker helping to surface solutions like this to address supply chain disruptions.”
Both the Ports of Los Angeles and Long Beach extended their hours to a 24-hour schedule to allow for more truckers to pick up goods at any time of the day. However, that action in itself won’t be enough to alleviate many of the current supply chain concerns, particularly since importers typically don’t keep their warehouses open 24 hours per day. Additionally, trucker shortages prevent importers from getting goods during the extended hours.
The move comes as President Biden told attendees at the Global Summit on Supply Chain Resilience in Rome over the weekend that his administration will allocate additional funding to the U.S. and its partners to help reduce the port congestion and processing times for entering and exiting the ports.