US Northwest Seaport Alliance gets major boost in battle against congestion
The Northwest Seaport Alliance (NWSA) can see light at the end of the congestion tunnel. At ...
Charges for excessive container dwell times on docks are spreading on the US west coast, as ports and operators try to restore some fluidity to congested facilities.
Following announcements of levies at Los Angeles and Long Beach, the practice is now coming into play at Tacoma, with one forwarder expecting carriers to pass on charges and customers will refuse to pay them – leaving forwarders between a rock and a hard place.
The port’s Husky terminal will not release containers that have been on the premises for more than 15 days until importers pay a one-time charge of $315. And from 15 November, customers of the Washington United Terminal face a long-term dwell fee of $310 for containers at the terminal for more than 15 days.
These are one-off charges on top of late fees of $230 a day that kick in once a container has been at a terminal more than four days.
Tacoma has been struggling with worsening congestion – on Friday more than 15 ships were waiting for berth space, and in its notice to customers about the new charge, Husky Terminal pointed out that dwell time had grown exponentially in recent months.
The Northwest Seaport Alliance (comprising the ports of Tacoma and Washington) has opened three temporary container storage yards near docks this year, which has brought some relief, but not enough to halt the worsening congestion.
At Los Angeles, executive director Gene Seroka called the charges ‘a last resort’. He appealed to large importers especially to clear containers from the docks, as stuck at the port they could have dire consequences, particularly for small companies.
However, there are notable differences between the charging policies in California and Washington state. Whereas those at Tacoma are one-off fees, charges at LA and LB rise in increments of $100 every day over the 15-day mark.
And in California, it is the port authorities that levy the fees, not individual terminals, and the charges are levied on shipping lines, whereas the terminals in Tacoma charge importers.
Craig Grossgart, SVP global ocean at Seko Logistics, said there was never any doubt the carriers would pass on the charges by the California ports. But, he added: “Carriers are not going to absorb them.”
He said carriers did not want to assume liability for the entire journey of a shipment, even if they had to-door products.
This leaves forwarders in a tight spot. Mr Grossgart expects many shippers to refuse to pay their agents for these charges, claiming they have no control over retrieving containers from the ports.
By his estimate, about 5% of the containers sitting at the ports for long periods have been parked there by importers without the storage capacity to accommodate them, whereas over 90% of these boxes cannot be retrieved by importers.
According to the port of Los Angeles, the number of long-dwelling containers there fell 19% within a week of the plans for charges being announced.
Meanwhile, importers are also facing higher costs for containers stuck at rail yard and ramps. At the beginning of December, Norfolk Southern will cut free dwell time for importers at 27 second-tier rail ramps. From then on, importers have just the day they receive notification that the container is available, plus one more day, to collect it without incurring charges.
In addition, the rail carrier is raising demurrage fees in those 27 locations and will charge $200 on the first day beyond the limit, and $215 for each additional day.
Norfolk Southern wants to avoid congestion of containers spreading from its tier-one facilities to tier-two markets. Normally these are not congested, but now boxes are piling up even at tier-three and tier-four ramps, said Mr Grossgart.
These moves may encounter some push-back from frustrated importers and other parties facing higher charges. The Western States Trucking Association has written a letter to the governor of California urging him to enforce state legislation to prevent terminal operators and ocean carriers from charging excessive container and equipment fees when truckers are unable to return empty containers and pick up loaded import boxes.
The industry group argues in its letter that terminals and carriers are “profiting from the supply chain crisis”. It’s a sentiment many importers will share.