Daily surcharge fines begin Monday, forcing carriers to scramble
Halloween is going to be an extra scary day for the logistics world. A total of 60,000 containers have been marked as beyond the dwell time and need to be moved out of the ports of Los Angeles and Long Beach by the carriers or the penalties will start racking up. A total of 33,000 containers need to be rolled out of the Port of Los Angeles and 27,000 loaded containers for the Port of Long Beach — a whopping $2,633,940,000 value in trade.
Carriers were put on notice this week when the ports announced that, starting next Monday, a daily surcharge of $100 per container will be levied. Did this light a fire and a surge of containers being moved? No.
The pace of trade moving out of the ports could be characterized as more of a pregnant pause than a surge. Live webcams of the Port of Los Angeles terminals show more images of empty lanes than robust activity.
Turn times at both terminals tracked by the Harbor Trucking Association and GeoStamp also paint the snail pace of trade both before and after the announcement.
“We are having an emergency harbor meeting Friday morning to vote on this,” explained Port of Los Angeles Executive Director Gene Seroka. “I need to see progress on the movement of loaded containers. We need to show America we are doing whatever we can to get trade moving.”
Noel Hacegaba, COO of the Port of Long Beach, emphasized this container push would be significant in alleviating the congestion plaguing productivity.
“This is roughly 40% of all containers sitting on the terminals today,” he said. “Pulling all of these containers by Sunday will take an unprecedented coordinated effort but it must be done.”
Importers have told American Shipper they are afraid they will be on the hook for the fees. Some have already received letters notifying them of the additional charges.
“The carriers have always passed on fees and surcharges,” said one importer who asked for anonymity out of fear of retaliation. “Why would the Biden administration, which is behind this penalty, think the carriers would not pass it over? The Federal Maritime Commission is already looking into the excessive demurrage costs we are paying! Carriers are making record profits.”
Maersk sent a letter to customers on Wednesday detailing the penalties.
PSW Emergency Fee Surcharge
October 27, 2021
Dear Valued Customer,
As terminal congestion at the ports of Los Angeles and Long Beach reach historical levels, The Biden Administration announced on October 25th that effective the 1st of November 2021, the ports of Los Angeles and Long Beach will begin charging an “emergency fee” on all long dwelling cargo.
- The fee will be applied to all containers that remain at the terminal for 9 days or more and rail containers for 3 days or more.
The cost is $100 per container on the first day past the set dwelling limit for terminal or rail and will increase by $100 increments for each day that follows (i.e., $200 for day 2, $300 for day 3 and so on).
- As directed by the President’s Task Force and in concert with the directive, the ports of Los Angeles and Long Beach will be responsible for collecting the fees, with the revenue set to be reinvested toward long term port efficiency and infrastructure programs that will help mitigate any future congestion challenges in the San Pedro Bay area. Given the 7-day notice period, much of how the cost will be charged and in turn collected is still to be determined. More will be shared in the coming days as we approach the 1st of November start date.
Naturally we understand this puts all parties involved in a rather difficult situation as truck, chassis and warehouse capacity are all extremely stretched. Rest assured, we are aggressively working on several solutions to help mitigate some of the impacts. We will continue to keep you informed on all developments over the coming days.
When asked if the penalties would be passed over to customers, Maersk responded it was a work in progress since it has clients that have clauses in their contracts that stipulate no new additional charges.
“This penalty was not intended to be a passed-on cost,” explained Mario Cordero, Port of Long Beach executive director, at a port update press conference.
Hacegaba added, “We are using every tool at our disposal to move containers.”
The National Retail Federation and the American Apparel and Footwear Association tell American Shipper if these charges are passed on, it will only add to the mounting inflationary logistic charges importers have been paying.
Hacegaba stressed, “We need the entire supply chain to step up.”