Arthur Chen      Photo : @dashu83

Importers are afraid shipping lines shall "passes on" this surcharge to consumers. This boost inflation.

The Ports of Los Angeles and Long Beach started operating 7/24 hours in mid-October. So far it seems the effect is limited. According to observations in the past few days, only about 10 of the hundreds of container cranes in these two ports were operating. The reason is that the port does not have extra space for stacking containers. The port is full of empty containers and laden containers waiting to be picked up. In order to alleviate congestion, Southern California ports have introduced new measures. The operators of the two ports announced a new surcharge, charging a new detention port fee of US$100 per container per day to shipping lines.  Due to the significant increase in port staying time, it has become difficult for the terminal to clean up containers and have ships to call at the port. This new measure is the latest in the desire to speed up the flow of exported cargo. The applicable conditions for starting to collect surcharges are the following two categories: 1. For containers transported by truck to IPI ramps, stay in the port for 9 days or more; 2. For containers transported by rail to IPI ramps, stay in the port for 3 days and above.

Gene Seroka, Executive Director of the Port of Los Angeles, said: “We must speed up the shipments of cargo in the port to reduce the number of ships waiting to be berthed outside the port. Currently, about 40% of the containers on our terminals fall into these two categories. If we can clean up these idle Containers, our terminals will have more space to receive empty containers, handle export laden containers, and improve cargo mobility for the majority of cargo owners who use our ports." According to the announcement, the levied fee will be reinvested to the two ports to increase the port efficiency, speeding up freight and solving congestion. These new charging measures were introduced because just a few days ago, 100 ships were waiting, but at the weekend, the total number of ships waiting outside the port reached 110, including 80 container ships. About half of the ships anchored, while the rest waited further offshore.

I think these two ports just throw the hot potato to the shipping lines and charge a surcharge for excuse, probably because the shipping lines have made a lot of money this year and they want to scrape a layer of fat from the liners. The operation in the port is not directly related to the liners ! After the containers unloaded from the ships, all subsequent ground operations are in among of the ports with warehouses, truck companies, and railway companies to have the laden containers to trucks for pickup or transfer to rails to the inland terminal in the United States. The shipping lines can't do anything at all but have to rely on the ports to locate containers to release or transit as soon as possible. The real bottleneck of congestion in the port area are two points: First, the warehouses outside the port area have limited space to store containers which are far from enough to cope with the number of containers currently stranded. This year, the space of warehouse has been occupied by a large number of laden and empty containers. The Long beach government has regulations that containers on the open space can be stacked up to 2 layers (the reason is they may obstruct the view)! A large number of containers have to find more vacant land because they can only be 2 stories high, but there is not enough vacant land outside the port area. Warehouse operators can only use the frame to place the containers, occupying both sides of any available roads, and even park them beside the roads in residential areas. A large number of chassis are used for temporary storage of containers. This has also evolved into the second point. The container chassis that were supposed to be transported were used to park a lot of containers, and the port area did not have enough truck chassis to transport the containers. Containers are piled up in the port area, and the trailer heads are connected for several kilometers to line up to enter the port area for picking up the containers, but there have limited chassis to carry the containers. Such a vicious circle has caused the current logistics deadlock. 

According to reports, in the next three months, Long Beach City will temporarily relax its zoning rules. Stacking taller containers on private land is allowed, and stacking up to five layers is allowed, depending on security approvals. This measure should be absolutely effective in opening up the deadlock of logistics. However, it will take several months to relieve the current congestion in the port area, warehouse, trucks, and railways. The above illustrates the real situation of the backlog of logistics, so it is on purpose to blame to shipping lines that bear the surcharge. In fact, no pressure for shipping lines to pay more of these surcharges, but as far as cargo owners are concerned, based on previous experience, shipping lines may “pass on” this container detention surcharge to the downstream —“freight forwarder”, and forwarders must added it to the consignees. Therefore, any extra costs will be borne by the shipper in the end. After the cost of the superimposed, consumers will of course become the last one to take over, and merchandise prices will reflect these costs. Inflation cannot escape in the end.

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