More Stick than Carrot: the latest plan to clear the Southern California backlog

It’s only 60,000 containers by November 1st that have to get moved, right? Totally doable. 

 

Or not.

 

This week, the ports of Los Angeles and Long Beach decided the best way to get the 33,000 and 27,000 containers that have overstayed their welcome at their respective properties moving was to start charging the squatters penalties in hundred dollar increments.

The fee is to be assessed on local delivering cargo only and is designed to force importers and warehouses to take possession of containers rather than utilizing the ports as a cheaper storage location for warehouses that may already be overflowing and unable to receive more cargo.

 

Local delivering cargo will be assessed the fee after 9 days and rail delivery cargo after 3 days. The fee is $100 per day – but the problem is that it compounds to $200 on the second day, $300 on the third day, etc., etc.

The idea was hatched from a regularly scheduled meeting between the ports and White House Port Envoy John Pocari. With the daily average of container ships at anchor over seventy vessels and 24-hour operations not seeing the widespread adoption, they thought it would, ports have turned to the stick-in “carrot and stick” approach to incentivize the cargo to move through the backlog.

 

When the surcharges begin on November 1st, an estimated 60,000 containers on the terminals would be subject to the fee. The problem is it isn’t as simple as removing the container from the terminal. Critical chassis shortages and increased turn times have led to an inability of truckers to utilize all the appointments that are available because there are simply too many containers and not enough wheels.

The ports will pass this along to the carriers. Carriers, particularly those doing store door deliveries, will inevitably pass the charge along to their clients. Shippers forced to wait for a carrier’s equipment availability days after they are capable of receiving the container will undoubtedly be saddled with this fee, along with the demurrage and detention fees already applied.

 

We continue to work diligently to deliver containers to our clients as quickly as possible through the backlog, encouraging them to prioritize containers coming available to stop these penalty provisions that are adding hundreds and thousands of dollars to already record-high freight rates. For more information on this new challenge in Southern California, contact your Future Forwarding representative today.