Port Emergency: LA and Long Beach ports to charge a management fee effective November 1

UPDATE: via Daily Breeze

The Ports of Los Angeles and Long Beach will soon hit ocean carriers with potentially hefty fees for cargo containers that remain too long at terminals, marking yet another major effort to solve a supply chain backlog that has seen freighters spend days at sea waiting to dock, empty containers blocking streets in nearby Wilmington and warehouses overflowing.

The joint announcement on Monday afternoon, Oct. 25, underscored a growing frustration among officials with the nation’s two busiest ports — not to mention the federal government — as the supply chain bottleneck, which shows no sign of diminishing, threatens the holiday shopping season and the economic recovery from the coronavirus pandemic.

We must expedite the movement of cargo through the ports to work down the number of ships at anchor,” Port of LA Executive Director Gene Seroka said in the written release.

The new policy, set to go into effect Nov. 1, will charge ocean carriers a fee for truck-bound containers that sit in terminals nine days or more and those set to go out by rail that remain at least three days. The fee will be $100 per container. But the fee will also increase by $100 per container per day beyond those minimum thresholds.

In recent days, officials said, the Port of LA found there were 94,142 containers sitting on the docks. Almost 40% of those had been sitting there for more than nine days. About 8% had been sitting for 9 to 12 days. And 30% — or about 28,243 containers — had been there for at least 13 days.

Under the coming fees, the 30% of containers lingering at the ports for at least 13 days would cost the ocean carriers more than $14 million a day, at minimum.

No data was immediately available from the Port of Long Beach.

Port officials were not available for additional comment, beyond their initial written statements, and the Pacific Merchant Shipping Association, which represents shippers, did not have an immediate response to the fee when reached by phone Monday evening.

But containers piling up at the ports are among the issues plaguing the supply chain.

The International Longshore and Warehouse Union is unloading ships as quickly as possible, union leaders and workers have said, but until unloaded cargo from one ship is moved out, there is no room to call in the next ship for unloading.

There is simply no space, workers have said, to process the waiting cargo any faster.

But it isn’t entirely clear what the ocean carriers can do to more quickly move containers out of the ports.

Many of these issues, while part of long-held fears officials have had about the supply chain’s vulnerability, have become critical over the last year, as the Ports of Los Angeles and Long Beach have been slammed with a massive, pandemic-related cargo surge.

The Port of Long Beach’s has seen 24.3% more cargo this year, through September, compared to the same period in 2020. The Port of LA has seen a 26% increase.

And the supply chain has clogged as a result.

Take truck and rail dwell times, for example.

While the dwell times for cargo leaving by rail have improved of late, according to recent data, truck pickup times have slowed, with that leg of the supply chain facing multiple issues, including not having enough chassis to load the cargo.

Before the import surge began in mid-2020, containers sat on terminals for under four days waiting for truck pickups. Containers destined for trains sat for fewer than two days.

Earlier this year, rail dwell time hit a high of 13.5 days, on average, Seroka said in mid-October. By September, that number had fallen to 5.5, according to the most-recent data from PMSA. But the truck dwell time reached a new high of 5.94 days on average.

Among the other consequences is that cargo ships have had to spend days waiting along the Southern California coast for a dock to open — and then even longer for their cargo to be unloaded.

The ports set a record on Sunday with 80 container vessels waiting at anchor, according to the Marine Exchange of Southern California, which essentially acts as the air traffic controller for the ports.

There were 107 total vessels, including containers ships, at anchor on Monday and 57 at berths.

The container ships have spent an average of 12.8 days waiting to dock, according to the latest Port of LA data. And on Monday, the rolling average of days at berth was eight.

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,” Port of Long Beach Executive Director Mario Cordero said 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 policy was developed in coordination with the Biden-Harris Supply Chain Disruptions Task Force, the U.S. Department of Transportation and multiple supply chain stakeholders.

President Joe Biden and administration officials met with both port directors on Oct. 13 in Washington, D.C., with Biden announcing the Port of LA would move toward 24/7 operations.

Fees collected will be re-invested by the two ports for programs designed to enhance efficiency, accelerate cargo velocity and address congestion impacts throughout the San Pedro Bay, according to the joint announcement from the ports.

John Porcari, the appointed port envoy to the task force, said in a Monday statement that officials hope the push toward fees will help get the supply chain moving.

These actions aim to expedite the movement of goods and reduce congestion in our ports,” Porcari said. “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.”

Source: Daily Breeze

What does this mean for Sunset customers?

This fee will be effective as of 11/01.  Due to massive shortages of chassis and trucks this will potentially impact any Sunset customer that will call into this port.  These charges are on top of demurrage charges and will cost customers significant rate increases for imported freight to Los Angeles.

Sunset is here to help with the most basic or complex shipments.  Email [email protected] to speak further about how to manage any International needs that arise.

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