Date: Wednesday, November 3, 2021
The penalties on 58,900 containers at the ports of Los Angeles and Long Beach are officially racking up charges. These containers were part of the 60,000 containers the ports alerted the ocean carriers last Monday to move or face a daily $100 penalty per container, increasing in $100 increments per day.
American Shipper reached out to both ports for updates on the removal of the “lingering” containers.
According to Port of Los Angeles Executive Director Gene Seroka, there are a total of 84,000 total imports on docks waiting to be transported, a total that is 3,000 higher than a week ago. Of those 84,000, a whopping 40,000 of those containers have been at the Port of LA for nine-plus days, which is considered lingering. Containers are considered long-dwelling if the boxes are waiting over nine days for truck, six days for rail.
“This is the wrong direction,” said Seroka.
The Port of Long Beach saw 10% of its 27,000 lingering containers move out since last Wednesday. The port has approximately 18,900 containers being charged penalties.
“This is a sign that the surcharge is having its intended effect, but clearly there is more work to do,” said Noel Hacegaba, COO of the Port of Long Beach. “The ocean carriers are stepping up and coordinating with the shippers, terminals, railroads and motor carriers to look for the fastest way to push inbound containers out of the terminals.”
The 58,900 late containers at these ports represent a much-needed economic injection for the U.S. economy — a handsome $2,585,651,100 in trade, based on a per-import twenty-foot equivalent unit value of $43,899 (the average of containerized import TEUs at the Port of Los Angeles in 2020).
The Harbor Trucking Association tells American Shipper it continues to face the same issues with the terminals.
“Our hurdle has been and continues to be empty container returns,” said Matt Schrap, CEO of the Harbor Trucking Association. “While there has been movement on a limited number of sweeper vessels beginning to call to the port complex, we need consistent and continuous empty sweeper dispatch in order to free up space on dock and in our yards.”
Duration of trucks at the terminals at the Port of LA and Long Beach show slow-moving trade this past Saturday.
Weston LaBar, head of strategy for Long Beach-based logistics company Cargomatic, tells American Shipper his team continues to see an increase in the volume of containers moved every week.
“For us, the major issues are not about moving imports but rather continue to be around empty return restrictions that can lead to capacity constraints around chassis and yard storage,” explained LaBar.
“What the focus of the ports and public sector needs to be on is empty container storage and returns. The fee won’t solve any issues of port congestion without solving for the underlying contributing factors around empty containers.”
To move out those empty containers, sweeper vessels are being deployed to both ports. In the past month, the Port of Long Beach has had five sweepers come, and two more are scheduled to arrive this week.
Hacegaba tells American Shipper an estimated 30% of all containers sitting on the terminals are empties and they are encouraging ocean carriers to match 100% of their inbound loads on their outgoing vessels to maximize the evacuation of empties.
“We are also urging our ocean carriers to deploy sweeper vessels to evacuate empties as much as possible,” Hacegaba said. “Additionally, we continue to look for every opportunity to activate vacant land within the port for the temporary storage of empty containers.”
The Port of Long Beach recently announced a strategic partnership with Union Pacific and the Utah Inland Port Authority to move mountain region-bound containers by on-dock rail.
“This is the fastest way to get those boxes there,” Hacegaba said. “It’s all hands on deck and we need everyone in the supply chain to continue stepping up.”
There are currently 55,000 empty containers at the Port of Los Angeles — the equivalent of 15% of what’s on dock. Seroka tells American Shipper it would take four days of loading activity to move those empty boxes out of the port. A total of 350,000 empty containers are loaded per month.
“HTA says their members have an additional 8,000 empties that need to be returned,” said Seroka. “That is manageable.”
Unfortunately what is not manageable is the ability of the ports to stop the carriers from passing over the daily penalties to U.S. importers.
While these charges were not “intended” to be incurred by U.S. importers, they indeed are. American Shipper has reviewed notices on the new charges from ocean carriers like Zim Integrated Shipping Services, Evergreen, Maersk and Hamburg Süd. The total daily amount of penalties on these containers is $5.89 million and they are expected to only increase.
The National Retail Federation, American Apparel and Footwear Association, and the Retail Industry Leaders Association have all warned the biggest loser in this penalty will be the consumer.