Escalating $100 penalty regime is latest proposal to reduce bottlenecks
In its latest congestion mitigation effort, the Port of Los Angeles announced Thursday it plans to start charging ocean carriers a hefty surcharge next month for empty containers that are stored on marine terminals for nine days or longer.
Under the new program, scheduled to go into effect Jan. 30, carriers will be billed $100 per empty that overstays the limit, with the fee increasing in $100 increments per container per day until the container departs the terminal.
The fees proposed by port authority staff are subject to approval by the Los Angeles Harbor Commission. The next scheduled board meeting is on Jan. 13.
Whether the new fee will help declutter the port more than a similar $100 fee schedule on import containers is unclear. The import storage fee was approved at the end of October but has been postponed for seven consecutive weeks because of some progress in reducing long-stored containers.
The proposed fine is designed to motivate carriers to relocate idle boxes, but Matt Schrap, CEO of the Harbor Trucking Association, noted that carriers might comply by further restricting empty returns to avoid the fee if a scheduled vessel arrival is longer than nine days and then charge road haulers a daily late fee to store the empties for them.
“It cuts both ways,” he said in an email.
In a LinkedIn post later, he noted many terminals still don’t allow empty returns and loaded import containers to be exchanged at the same facility if they belong to different ocean carriers, have policies that restrict the ability of truckers to secure chassis or make appointments. “From our perspective, without additional considerations for empties dwelling outside of the harbor or in near-dock facilities and without a moratorium on empty return restrictions complex wide, it remains to be seen how this will impact the overall movement of empties out of California back to their point of origin,” he said.
The penalty on import cargo applies to containers that dwell more than nine days for local truck deliveries and more than six days for rail moves. They were originally scheduled to kick off on Nov. 15 and also be paid by ocean carriers. Most inland moves from the terminal are managed by the cargo owner, raising questions about how the ports could penalize carriers for containers not under their control and raising fears the carriers would simply pass on the fees to their customers, who complain their trucking vendors can’t easily get appointments for pickups because of the congestion. The port authorities can levy tariffs on terminal leaseholders, and by extension with their affiliated carriers, but don’t have any direct influence with cargo owners.
So far the threat of potential action has been enough to obtain some industry cooperation clearing cargo.
On Monday, LA and Long Beach port officials delayed collection of the container dwell fees again, citing a 41% combined drop in excessive overstays of import boxes. Import containers dwelling at the Port of Los Angeles more than nine days have dropped 53% since Oct. 24. Some relief came from large shippers that quickly set up pop-up storage yards to hold their containers outside the port, as well as sweeper vessels sent by carriers to pick up empties. But the post-holiday slowdown in volumes and backlogs of ships waiting for a berth also kept new cargo from flowing into the terminals, allowing them to reduce the piles.
“While we have seen significant success reducing import containers on our docks the past two months, too many empty containers are currently sitting on marine terminals,” said Port of Los Angeles Executive Director Gene Seroka. “Just like the import dwell fee, the objective with this empty container program is not to collect fees but to free up valuable space on our docks, clearing the way for more ships and improving fluidity.”
The new proposal actually targets the party that controls the empty containers on the terminal.
The ports of Los Angeles and Long Beach have typically acted in unison to address the congestion year, but Long Beach has not made any statement on empties so far.
Motor carriers and other port stakeholders have insisted that backlogs of empty containers are the main culprit clogging the terminals and that carriers need to bring in more vessels to clear them out faster. With empties taking up so much space on the docks, terminals are not accepting many empty returns, forcing trucking companies and warehouses to hold containers on their lots. The containers rest on chassis, the wheeled undercarriage used to haul the shipping units, which is limiting the availability of that equipment for making port pickups.
U.S. ports were crushed this year by high consumer demand for imported goods, which exceeded the available supply of vessels, labor, warehouse space and chassis, making it difficult for port truckers to operate.