Ocean Carriers to be Assessed for Containers that Dwell on Terminals

COURTESY OF THE PORT OF LOS ANGELES

SAN PEDRO, Calif. — Oct. 29, 2021 — The Los Angeles Harbor Commission voted 4 0 to implement a “Container Excess Dwell Fee” directed at ocean carriers to improve cargo movement on container terminals amid record volume. The program starts on Nov. 1, with penalties to be assessed no earlier than Nov. 15.

Under the 90-day policy, the Port of Los Angeles will charge ocean carriers for each import container that falls into one of two categories:

  1. Truck: In the case of containers scheduled to move by truck, ocean carriers will be charged for every container dwelling nine days or more.
  2. Rail: For containers moving by rail, ocean carriers will be charged if a container has dwelled for six days or more.

The Port will charge ocean carriers in these two categories $100 per container, increasing in $100 increments per container per day until the container leaves the terminal.

So, for example if containers are picked-up from the 9th day, the additional charges will be:

  • 9th day of pick-up: $100.00
  • 10th day of pick-up: $300.00 ($100.00 (9th day) + $200.00 (10th day))
  • 11th day of pick-up: $600.00 ($100.00 (9th day) + $200.00 (10th day) + $300.00 (11th))
  • 12th day of pick-up: $1,000.00 ($100.00 (9th day) + $200.00 (10th day) + $300.00 (11th) + $400.00 (12th day))

Note: This additional Container Excess Dwell Fee does not include nor is it a part of any additional demurrage/detention charges that the ocean carriers and/or terminals will continue to assess.

“Our objective with this program is not to generate revenue,” said Los Angeles Harbor Commission President Jaime Lee. “Instead, we need our supply chain partners to make operational changes that will reduce dwell times, clear our terminals and make room for the ships waiting to enter our port.”

“Starting Monday, we will be taking daily data snapshots of how long import containers sit on our container terminals,” said Port of Los Angeles Executive Director Gene Seroka. “If progress is being made clearing our docks, I have the discretion to delay the start of fees beyond Nov. 15. Our goal is to see significant improvement on our docks so that we don’t need to administer any fees.”

You can view their Board Presentation here.

Approximately 40% of the import containers on terminals are idling on terminals at least nine days. Before the pandemic-induced import surge began in mid-2020, on average, containers for local delivery remained on container terminals under four days, while containers destined for trains dwelled less than two days.

Any fees collected from dwelling cargo will be re-invested for programs designed to enhance efficiency, accelerate cargo velocity, and address congestion impacts.

The policy was developed in coordination with the Biden-Harris Supply Chain Disruptions Task Force, U.S. Department of Transportation, Port of Long Beach, and multiple supply chain stakeholders. The Long Beach Harbor Commission passed a similar program today.

The World Shipping Council, a lobbying group for international liner shipping, has said the fee amounts to demurrage fees on ocean carriers and “does not indicate an approach that can be expected to incentivize cargo owners to pick up their cargo from the ports.”

Maersk, the world’s top shipping line, said Thursday that much of how the cost will be charged and in turn collected is still to be determined, and more will be shared in the coming days. But it’s all but certain that the fee will be passed to the shipper.

Where it is within your control, we recommend timely recovery of your cargo from the docks without any delay. James J. Boyle & Co. will do its best to assist its customers in reducing exposure to these costs, but we have little control over the performance of third parties, such as Carriers, Docks, and Truckers, especially under these unusual supply chain circumstances. James J. Boyle & Co. cannot advance or be responsible for these costs.

Based on the foregoing, it is expected that a final decision and announcement will be made by Nov. 15 by the respective Harbor Commissions as to whether the fees will be assessed or not based on any perceived progress improvements in the meantime. We will keep our customers apprised of new developments.

Should you have any questions or concerns, please contact your nearest JJB representative.

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