Port of Los Angeles and Port of Long Beach to assess surcharges for dwelling import containers

At a time when port congestion remains an ongoing theme in supply chain circles, the Port of Los Angeles (POLA) and the Port of Long Beach (POLB) whom collectively account for roughly 40% of United States-bound import volumes, announced this week that, effective November 1, they will start assessing surcharges to ocean carriers for import containers dwelling on marine terminals.

The ports said that, as per this policy, they will charge ocean carriers for each container falling into two categories:

• for containers scheduled to move by truck, ocean carriers will be charged for every container dwelling nine days or more; and
• for containers moving by rail, ocean carriers will be charged if the container has dwelled for three days or more

And beginning November 1, POLA and POLB said that ocean carriers with cargo in either of these categories will be charged $100 per container, which will increase in $100 increments per container per day. The ports said that the fees collected from this initiative will be reinvested for programs to enhance efficiency, accelerate cargo velocity, and also address congestion impacts throughout San Pedro Bay.

“I support the actions taken by the ports of Los Angeles and Long Beach today to charge ocean carriers for lingering containers on marine terminals. These actions aim to expedite the movement of goods and reduce congestion in our ports,” said John D. Porcari, Port Envoy to the Biden-Harris Supply Chain Disruptions Task Force, in a statement. “As our economy continues to grow, increased demand and disruptions caused by the pandemic are putting our supply chains to the test. 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. The federal government will continue to bring together private companies and stakeholders from across the supply chain and serve as an honest broker helping to surface solutions like this to address supply chain disruptions.”

POLA Executive Director Gene Seroka said that it is imperative for the ports to work down the number of ships at anchor outside the ports.

“If we can clear this idling cargo, we’ll have much more space on our terminals to accept empties, handle exports, and improve fluidity for the wide range of cargo owners who utilize our ports,” he said.

And his counterpart, POLB Executive Director Mario Cordero said: 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. The terminals are running out of space, and this will make room for the containers sitting on those ships at anchor.”

Earlier this week, various reports indicated that there are 62 container ships anchored off the southern California coast, with 37 bound for POLA and 25 bound for POLB, which equate to roughly 200,000 TEU (Twenty-Foot Equivalent Units).

POLA and POLB said that prior to the middle of 2020, when the spate of imports started, due to the pandemic, containers, on average, for local delivery were on container terminals for less than four days and containers destined for trains typically had a dwell time of less than two days.

This is not the first time POLA and POLB have partnered up in the last few weeks.

In mid-September, they said that each port will expand its hours in which trucks pick up and return containers, with POLB to maximize its nighttime operations, and POLA to expand weekend operating gate hours.

POLA’s initiative, which it labeled “Accelerate Cargo LA,” will operate on a pilot basis, according to Seroka, focusing on ensuring gate availability meets cargo demands and also provides greater transparency to improve efficiency.

What’s more, both ports said they have called on maritime terminal operators, in an effort to “incentivize the use of all available gate hours,” with a focus on available night gate hours,” in an effort to reduce congestion and maximize cargo throughput capacity, too.  

On a media conference call on September 15, POLA’s Seroka said compared to August 2020, which was a record month for the port, August 2021 welcomed 84 container vessels at berth, including 11 extra loaders, with 26 vessels at anchor at the end of August, including some of the new entrants with smaller ships.

And in mid-October, the White House met this week with United States-based business leaders, port leaders, and union leaders to focus on the challenges U.S.-based ports are facing, in addition to what each stakeholder group can do address various supply chain issues.

One of the key themes of that meeting was augmenting supply chain throughput and moving goods more quickly, and also to augment supply chain resiliency. A key cornerstone of this, it said, is shifting to 24/7 operations at the Ports of Los Angeles (POLA) and POLB), whom collectively account for roughly 40% of U.S.-bound import containers and are on track to set new annual highs in 2021.

While POLB transitioned to 24/7 operations in mid-September, POLA is now doing the same, bringing on off-peak night time shifts and weekend hours, which the White House said is expected to double the number of hours cargo can move off of POLA docks and onto the roads to reach final destinations. What’s more, it added that the International Longshore and Warehouse Union (ILWU) has stated its membership are committed to working extra shifts, which will provide the needed capacity in order to clear existing backlogs.