Port of Los Angeles considers fee for lingering empty containers

The Port of Los Angeles (POLA) announced late last week that it intends to implement charging a fee to ocean carriers with empty containers in the port’s marine terminals, for a period of nine or more days.  

POLA said that this fee, which is subject to approval by the Los Angeles Harbor Commission, would go into effect on January 30. And it added that if the Harbor Commission approves this fee, its implementation is at the discretion of the port’s executive director.

If the fee takes effect, POLA said that ocean carriers would be assessed a $100 fee for an empty container dwelling for nine days and subsequently increase in $100 increments per container per day until the container exits a POLA marine terminal.

“While we have seen significant success reducing import containers on our docks the past two months, too many empty containers are currently sitting on marine terminals,” said Port of Los Angeles Executive Director Gene Seroka in a statement. “Just like the import dwell fee, the objective with this empty container program is not to collect fees but to free up valuable space on our docks, clearing the way for more ships and improving fluidity.”

The aforementioned import dwell fee, which POLA and neighboring Port of Long Beach (POLB), whom collectively account for roughly 40% of total U.S. imports, was rolled out on October 25, but the fee has since subsequently delayed, as POLA has seen a 53% reduction in import containers dwelling for more than nine days going back to October 24.

What’s more, POLA and POLB said yesterday that they will each delay consideration of the “Container Dwell Fee” until January 10, adding that going back to October 25, the ports have seen a combined decline of 35% in aging cargo on the docks, with year-end holidays slowing the progress compared to previous weeks, as was anticipated.

And the ports added that their respective executive directors will reassess fee implementation after another week of monitoring data.  

On a recent media conference call, POLA Executive Director Gene Seroka explained that while more work needs to be done, there has been a fair amount of progress made in recent weeks.

“The number of import containers on our docks is down significantly since we first announced plans for a Container Dwell Fee,” he said. “The threat of a fee has helped containers lingering nine-plus days on the import side of our business by 56% [for POLA] since this plan was announced back on October 25. And the overall number of import containers on our docks has dropped by 39% during that time. I am pleased with the progress, and as I told the Harbor Commission when it approved the plan, ‘I hope we don’t have to administer any fees.’ That would be because it means cargo is moving off of our terminals, allowing for more ships to get to berth and cargo to be processed.”

In late October, the ports announced they would start assessing surcharges to ocean carriers for import containers dwelling on marine terminals, as part of an effort to clear out the significant backlog at the ports.

As previously reported, 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 previously said that ocean carriers with cargo in either of these categories would 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.

These fees were subsequently approved by the Harbor Commissions of both ports on October 29.

POLA and POLB officials said that prior to the mid-2020 pandemic-driven run-up in imports, containers for local delivery, on average, were on container terminals for less than four days, with containers destined for trains dwelled for less than two days.

This is not the first time POLA and POLB have partnered up in recent 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.  

And in mid-October, the White House met 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.