To reduce the historic shipping backlog on the U.S. West Coast, the ports of Los Angeles and Long Beach have announced a new “emergency fee,” effective November 1. This new fee will charge shipping lines $100 per container—increasing by $100 each day—for local-delivery containers that remain at the terminals nine days or longer and rail containers for three days or longer.
According to the JOC, “there is already a severe chassis shortage in Southern California affecting the ability of truckers to remove imported containers from the terminals, and warehouses in the region are out of space so they cannot receive containers either.”
While the idea of new penalties for ocean carriers is designed to incentivize the rapid removal of containers from the terminals, the plan is fraught with problems. If these charges are pushed off to importers who cannot accept more cargo at already overloaded warehouses, their only recourse may be to park the containers for use onsite, as additional storage units.
Rich Roche, Vice President at Mohawk Global offered, “this may not be the time and place for government intervention. The recently announced 24/7 idea, while well intentioned, turned out to be difficult, if not impossible to enact without the necessary truck drivers available to work the additional hours. Imposing this new hyper-demurrage may have even more grave consequence in tying up the remainder of already scarce chassis in the region that could result in unmitigated container gridlock.”
Once these fees are collected, the ports plan to reinvest the funds into programs designed to enhance efficiency, accelerate cargo velocity, and ultimately address congestion throughout the San Pedro Bay.