Fines aim to deter shippers using the port of LA as a makeshift warehouse

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(Updated at 3:40 p.m. ET)

The punitive charges that went into effect Monday at the Port of Los Angeles for containers left on the docks too long are a last resort to help shippers recover urgent cargoes trapped in a massive backlog, Executive Director Gene Seroka said during of the emergency Harbor Commission meeting on Friday. He implored large companies that don’t need products right away, and have overflowing warehouses, to find alternative storage in the area so that small businesses can get the orders they need to survive.

“There is no finger pointing. If you don’t need your cargo, let’s put it aside for now. Let’s put it somewhere else so that we can pick up the cargo that needs to hit the market for the holiday season, the ventilators that are on the containers that need to get to our medical and hospital networks, and the parts and components that are going to the manufacturers. Americans and factories, ”said the port manager.

Port officials have made it clear that they can no longer wait for industry stakeholders to find solutions, as letting containers languish well beyond normal free time is no longer acceptable.

“We tried diplomacy. We have tried collaborative meetings. [White House port envoy] John Porcari meets people every day and nothing has worked.

We haven’t moved the needle, ”Seroka said, explaining why the 90-day order, taken in consultation with the Biden administration, is necessary.

The commissioners voted 4-0 against a fine of $ 100 per container to ocean carriers for boxes that stay nine days or more and move by truck and six days for those scheduled to be transported by train at the dock. The fees are increasing by $ 100 per day, so by the time the first invoices are sent out on November 15, a carrier could be forced to pay $ 12,000.

The Port of Long Beach also approved the same change to its terminal fee schedule.

The Port of LA handled 903,865 twenty-foot equivalent units in September, a 2.3% increase from last year’s record. At the end of September, the volume at the Port of LA stood at 8.2 million TEUs, a 26% increase over the same period last year. The two ports are expected to handle a total of 20 million TEUs this year.

Several representatives from the logistics industry have complained that the high fees are misguided as carriers are mostly not responsible for the inland portion of the freight journey, and vessel operators plan to pass penalties on to their customers. And, they said, the root cause of the stalemate is the abundance of empty containers resting on wheeled chassis, called chassis, throughout Southern California, as marine terminals significantly limit the number of empty containers that can be returned.

Seroka said the port authority regrets any short-term pain, but action is needed as twin ports account for 40% of containerized imports into the United States and traffic congestion is hurting the economy, which has grown at a surprisingly high rate. 2% lower in the third quarter.

“My stomach has been tied up since we invented this thing” on October 23 because of the relationships developed since he started as a sales rep for American President Lines in 1988, Seroka told the committee.

Small businesses, Seroka said, feel the brunt of the pain. The port manager described how MGA Entertainment, a toy maker with seven underground containers, can’t get their orders to market for Christmas.

“There are hundreds of stories like this and that’s why we need to free up this space. This is going to help the little guy who imports, maybe, 10 containers a year and the next four weeks are going to make or break his payroll in a third generation family business. He’s the kind of person I try to get with a policy like this.

Cargo parked at marine terminals for nine days represents 47% of all containers in the Port of Los Angeles, or 38,000 shipping boxes. About 36% of all cargo stayed in terminals one to four days, but this represents 52% of the cargo exiting the gate, demonstrating that the longer the cargo, the less likely it is to be recovered. Before the pandemic spike in imports that began last year, containers for local delivery stayed in container terminals for less than four days on average, while containers for trains stayed for less than two days.

“Let’s get rid of the cargo that is not needed. No one will be ashamed publicly. It’s just the way the market tracks COVID-19. This will allow us to focus on those big voids, those exports that have been terribly affected by trade tariffs and people who have seasonal cargoes, ”Seroka said.

Local authorities have previously reported that some shippers, keen to avoid prolonged delays as transit times double and more than 70 ships park offshore while waiting for a berth to unload, have ordered goods. early next year and use the ports as makeshift warehouses.

In addition, hundreds of facilities are rented in and around the port district simply to store containers. Seroka said a few large overflow yards, similar to the one operated by the Port of Long Beach, are preferable, warning that with so many voids and sashes strewn across pop-up packages, it will be difficult to consistently return them to ports in a few weeks.

Port authorities explored the idea of ​​large strategic sites in Ontario, California and other parts of the Inland Empire, which could serve as terminals near the port where trucks could pick up containers for delivery to warehouses. and bring back empty containers, freeing up space on the docks. They are also considering desert locations further east as chassis depots.

Seroka said the port is reusing empty packages on port property to be container overflow yards and urged cargo owners to send their empty ones there, to retrieve a chassis that has undergone a six-point technical check by accredited longshoremen and leave with a loaded container. The empties will then be routed to the terminals for ship loading during the 3-7 a.m. shift rather than having individual truck drivers try to cope with restrictive rules on container exchanges.

“So we’re going to try to do everything we can to supplement the space we have here with more packages right inside, next to the terminals and flying those voids overnight,” he said. .

Chicken or egg?

Meanwhile, the supply of empty containers around the port continues to increase.

Many hauliers and importers say the reason they can’t pick up cargo at ports is because the terminals don’t allow drivers to return voids and do a swap, while port officials say they must first make room for unfilled units. Most of the voids are on the street, not obstructing the terminals, they stressed.

However, these voids exacerbate the chassis shortage and take up space in storage lots.

Seroka said the return of empty containers to Asia is at an all time high, but has done little to reduce terminal congestion that prevents stacking cranes and trucks from efficiently maneuvering and unloading ships. , he added.

A quarter of the containers on departing ships are loaded exports, while the rest are empty, an increase of 35-40% over last year.

Seroka reported that the storage problem is on top of a non-traditional influx of voids from east coast and Gulf ports such as Charleston, South Carolina and Houston. Container lines move material by rail across the country to get them back to Asia faster than they can by ship or because they divert material from less traveled trade routes to South America. Empty loads also allow railways to reposition crews, engines and cars on the West Coast.

Shipping carriers are reacting, but must do more, said the port manager. Cosco will bring in a rotating vessel that normally calls at Canadian ports in British Columbia just to pick up empty containers and bring them back to origin. German carrier Hapag-Lloyd recently brought in four sweepers to move the voids and another line company is planning to divert a ship from the Mexican market to empty the equipment.

Seroka also said he is asking major European carriers to bring back ultra-large container ships which normally operate in Asia-Europe trade and which can recover more voids after the import cargo is unloaded. Last year Mediterranean Shipping Co. called at the Port of Los Angeles with three vessels capable of carrying 23,000 TEUs.

Carriers must post their empty return numbers every day so that the trucking community can be notified of how many units can be accepted by each terminal. And marine terminals must develop a uniform policy on empty and chassis returns to make life easier for truckers serving multiple facilities, the port manager said.

Click here for more American Shipper / FreightWaves Stories by Eric Kulisch.

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