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Ports & Terminals

Long Beach’s Cordero defends surcharges on carriers as “bold measures” needed to address congestion crisis

Port of Long Beach Executive Director Mario Cordero defended surcharges that the Ports of Long Beach and Los Angeles propose to assess on ocean carriers, which he said were necessary to alleviate the congestion crisis at the two ports.

At a media briefing on October 27th Cordero explained: “We need to take bold measures to address a very, very serious situation here … The objective … with the carriers is to move the cargo … it’s a broad-brush approach to deal with what we need to move in the San Pedro Bay complex.”

Cordero expressed the hope that carriers, shippers, truckers and railroads would continue to work collaboratively to reduce congestion and speed containers from terminals to warehouses for distribution to end users.

Earlier in the day a group of shippers discussed congestion concerns at a Federal Maritime Commission advisory group meeting. Several shippers complained about the proposed surcharges. One shipper questioned the legality of the surcharges. The shippers worried that the surcharges might end up being assessed on the shippers and that the surcharges proposed by the Ports of Los Angeles and Long Beach would only add to costs.

Cordero disagreed with this assessment stating that the surcharge was not designed as a pass on to shippers, but as a tool to break the congestion logjam at the two Southern California ports:

“It is not intended as a pass on cost … both myself and my colleague Gene Seroka (executive director Port of Los Angeles) we have a directive that we have to address to move this cargo and not everyone is going to be happy about the way we do this. I am asking everyone to have that collaborative spirit to address a crisis we have before us.”

Ports Announce Surcharges

In an October 25th press release, the Ports of Long Beach and Los Angeles announced that they will assess the ocean carriers $100 per container per day if they fail to move containers off marine terminals by truck and by rail:
The announcement said that beginning November 1st the ports will charge ocean carriers with cargo in those two categories $100 per container, increasing in $100 increments per container per day.

  • Truck moves - In the case of “containers scheduled to move by truck, ocean carriers will be charged for every container dwelling nine days or more.”
  • Rail moves - For containers “moving by rail, ocean carriers will be charged if the container has dwelled for three days or more.”

Wait Time for Ships “Unacceptable”

Cordero said the average wait time for ships at anchor waiting to unload containers at the Southern California marine terminals was ten days which was an “unacceptable number … there shouldn’t be any vessels at anchor - that’s what we’re trying to accomplish here.”

Cordero agreed that a discussion of the need for moving to a 24/7 system of operations was healthy and believed that marine terminals were responding in a constructive manner, but he noted that truckers and warehouses needed to respond with similar 24/7 operations.

Harbor Trucking Association Head Says Surcharges Make Carriers “Engaged”

Matt Schrap, chief executive officer at the Harbor Trucking Association, said that he believes the proposed imposition of surcharges on the ocean carriers has motivated the carriers to become more “engaged” in solving the congestion problem.

He says that level of carrier engagement had also increased as a result of meetings that John Porcari, Port Envoy to the Biden-Harris Supply Chain Disruptions Task Force, has had with the ocean carriers.

Schrap said that it is vital to move empty containers off the docks and free up chassis that are under the containers so that harbor truckers can increase the velocity of pick-ups and deliveries: “We need to get these empty containers off the chassis, we have been saying this for months. Now it’s finally beginning to resonate.”

The problem is further complicated because the ports’ marine terminals are so jammed that truck pickups and deliveries have slowed down.

To make matters worse, Schrap says, empty containers are coming from ports outside of California and as far as Atlantic coast ports making a bad situation worse: “We’re taking empty containers from all over the country because it is a shorter water route for carriers. So now we have local empties competing with empties from Prince Rupert (British Columbia), from Chicago, from Savannah from Houston. They’re coming to LA/Long Beach which is gumming up the works.”

Schrap commends the efforts by the two ports to move empty containers off the docks and into outside storage facilities such as at Pier S at the Port of Long Beach. However, these storage facilities need sufficient forklifts and qualified operators to stage the containers and “yes that would free up chassis capacity to move off the docks.”

Sweeper Ships

In the past, he notes, a large supply of empty containers accumulating at the two ports would be repositioned back to Asia by the dispatch of an empty container vessel or “sweeper ship” that would dock at Los Angeles or Long Beach and pick up the surplus of empty containers. This is not happening this time, because the ships are either not available or they are delayed due to the traffic jam at the two ports: “We still need that sweeper ship. You talk to the old timers and they tell you that’s the way it used to be. It’s an operational cost that the carriers would absorb, but the sweeper ship needs to wait in line.”

The bottom line, Schrap says, is: “We want to get these goods off of these ships. We want to get that backlog cleared, get the cargo out to the people who need it. Warehouses and large shippers have committed to keep operations opened, but it doesn’t matter if you can’t get a chassis.”

Stas Margaronis
Stas Margaronis

WEST COAST CORRESPONDENT

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