The ports of Los Angeles and Long Beach announced Monday that they will postpone until Nov. 22 their controversial container demurrage fees aimed at ocean carriers, a sigh of relief for helpless shippers who were facing stiff penalties for containers stuck at marine terminals.
In making their announcement, the ports cited a 26% reduction in the number of containers remaining beyond the limit, at least compared to Oct. 25, when they first announced the sanctions.
As we have reported, under the temporary policy approved by the Port Commissions of both ports, ocean carriers will be charged the container dwell fee for all import containers that remain at the marine terminals for 9 or more days for containers scheduled to move by truck, and 6 or more days for those scheduled to move by rail. Containers falling into these categories would be charged $100 per container, increasing in increments of $100 per container per day until the container left the terminal.
While some progress appears to have been made in removing detained containers in the weeks since the announcement of the new policy, figures updated Monday still showed more than 29,000 containers remaining beyond the limit at the Port of Los Angeles, including 20,800 that remained for 13 days or more. At the Port of Long Beach, the figure rises to 19,600 containers staying beyond the allowed time.
In all, that’s more than 48,000 containers that would have been sanctioned if the new policy went into effect today, and an increase from figures released Friday, which showed some 43,000 containers exceeding the allowed limit.
At $100 each, ports would have had to pay fines totaling $4.8 million today alone, adding costs that ultimately will be passed directly by ocean carriers to shippers and, in turn, consumers. And every day those containers don’t leave the terminals, the daily fine will increase by $100, so tomorrow there will be another $200 fine, Wednesday $300, Thursday $400, and so on without limit
“We are encouraged by the progress our supply chain partners have made to help our terminals get rid of long standing import containers. Clearly, everyone is working together to expedite cargo movement and reduce the backlog of ships on shore as quickly as possible,” said Port of Long Beach Executive Director Mario Cordero. “Deferring rate consideration provides more time while keeping the focus on the results we need.”
Fees collected from cargo at the ports are expected to be reinvested in programs designed to improve efficiency, accelerate cargo velocity and address congestion impacts. But as it stands now, the ports will delay consideration of the fee until Nov. 22, 2021.
“There has been a significant improvement in the clearance of import containers from our docks in recent weeks,” said Port of Los Angeles CEO Gene Seroka, who also alluded to the fees in a CBS 60 Minutes segment that aired Sunday. “I am grateful to the many nodes in the supply chain, from the shipping lines, marine terminals, trucking and cargo owners, for their increased collaborative effort. We will continue to monitor the data closely as we approach November 22.”
Before the pandemic-induced surge in imports began in mid-2020, on average, containers destined for local delivery stayed at container terminals less than four days, while containers destined for rail stayed less than two days.
