California's ports remain heavily congested despite intervention from the federal government, but the situation is about to get worse as the ports are going to charge an excess dwell-time fee for shipping companies starting Nov. 15.
Last month, ports in southern California announced that they would start fining shipping companies $100 per day for every container left behind at the ports for over nine days. The fee will increase by another $100 for every day each container remains at the port.
There are nearly 84,000 shipping containers at the ports of Los Angeles and Long Beach waiting to be transported elsewhere. Around 40,000 containers in Los Angeles and just under 20,000 in Long Beach will immediately start racking up fines come Nov. 15.
Port of Los Angeles Executive Director Gene Seroka argued that the fines would discourage shipping companies from using ports as warehouses. Free storage space in warehouses near the ports has become rare in recent months due to the immense congestion and the labor shortage.
The plan has been met with intense criticism, with some members of the National Shippers Advisory Council, branding it as crazy and "out of left field." The move, according to the council, will likely result in catastrophe at the state's already heavily stressed ports. (Related: Empty shipping containers being DUMPED in neighborhoods near ports in California.)
Experts warn that if the fee plan goes through, the cost will likely be passed on to importers, which could cause a cascading effect that will inevitably force consumers to pay more for everyday goods.
Ryan Petersen, CEO of freight forwarding and customs brokerage company Flexport, pointed out that the fees will add about $2,000 on average to every container, increasing the value of the goods in the container by about two percent.
When asked about the fees, a spokesperson for the Port of Los Angeles said: "The [Los Angeles Board of Harbor Commissioners] granted the executive director discretion regarding the program. More details and information will be coming on or before the 15th."
Port officials have also previously stated that charging fees is their last resort, and they are more than willing to reconsider this option if sufficient progress is made to deal with the congestion at the ports before Nov. 15.
But experts say that even if the ports place the fees, it will do little to resolve the port jams.
"The issue isn't about a lack of desire to move boxes, but a lack of physical space," said Corey Bertsch, vice president at global logistics company Slync.io.
Bertsch added that the fines will simply be passed on to cargo owners, who will have no choice but to accept that their rates have gone up.
"These containers would move if they could, but it's a combination of warehouses, trucks and labor issues."
California's ports are still overwhelmed
Despite the federal government's recommendation that ports run operations 24 hours a day, seven days a week, the number of container ships waiting outside California's ports remains at an all-time high.
On Monday, Nov. 8, there was a record-breaking 81 container ships stuck offshore the ports at Los Angeles and Long Beach. The next day, this record was broken again as the number of container ships at anchor, loitering or at berth in California stood at 111.
Of those 111 ships, 30 were at berth, 32 at anchor and a record 49 were loitering or in holding patterns outside the ports.
This tally also does not include an additional six non-container ships queueing to dock at the ports.
Kipp Louttit, head of Marine Exchange, pointed out that California's ports had never seen a backlog of more than 17 ships before the pandemic. In the past few months, Louttit said the sight of close to 100 ships lingering around the ports waiting to berth has become far too common.
According to Freight Waves, the total capacity of the ships currently at anchor or loitering outside the ports of Los Angeles and Long Beach was 576,720 twenty-foot equivalent units (TEU).
Assuming that the ships are at full capacity and the average customs value per import TEU is at $43,899, this means the value of all the cargo floating offshore is at around $25 billion.
Waiting times at anchorage have also surged in recent weeks. The Port of Los Angeles recently reported that the average wait for anchorage to berth was at an all-time high of 16.6 days, more than double the average of around 7.5 days at the beginning of September.
The situation is only expected to get worse unless California figures out another solution to the port jams that does not involve placing fines for excess dwell-times.
Learn more about how California is failing to resolve port congestion by reading the latest articles at CaliforniaCollapse.news.
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