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Hamburg Süd Newsletter-Client Advisory: LA Port Container Dwell Time Fee Update

1 November 2021 Monday

The ports of Los Angeles and Long Beach on Friday will seek formal approval from their boards of harbor commissioners to levy a new “emergency storage fee” on carriers designed to force the retrieval of long-dwelling containers. The meetings are expected to reveal critical details of how the ports will implement the fee, and come as carriers lobby the ports to delay the planned Nov. 1 imposition.
How the ports seek to impose the new tariffs will give container lines a sense of how they can legally pass on the surcharges to major importers and non-vessel-operating common carriers (NVOs). Those surcharges start at $100 on the 9th day of dwell, then escalate in increments of $100 with each passing day. Thus, the total charges owed would be $300 on the second day, $600 on the third day, $1,000 on the fourth day, and so on. It is unclear how carriers that don't have tariffs in effect at the Federal Maritime Commission (FMC) allowing them to pass along port related charges would pass the charges along to shippers.
Encouraged by the Biden administration and its port envoy John Porcari, the ports made the surprising announcement on Monday of the fees they are calling a last-ditch effort to improve the flow of containers by penalizing carriers when boxes remain at marine terminals too long. The ports’ efforts to extend hours of operation have been resisted by marine terminals that say not enough importers and consignees pick up cargo at off-hours to warrant the added gate costs.
Four carriers say they will pass the new fees on to major retailers and NVOs, a move that represents a sea change in typical carrier-customer relations in the largest US trade lane. In the past, carriers willingly agreed to absorb port-levied storage fees, known as demurrage, to attract — and keep — business from the large national retailers that dominate the trans-Pacific trade lane.
But the severity of the storage fees is spurring carriers to consider how they’ll pass those charges onto the largest US importers, who until now haven’t felt pressure to remove containerized goods that won’t be needed on shelves until 2022.
Some carriers are concerned that if the charges take effect on Nov. 1 as announced, they will not be able to recoup pass-on fees for the first month if they must wait 30 days for the FMC-approved tariffs to take effect.
One container line executive estimated that at least half of the cargo potentially subject to the new emergency fees was controlled by the largest retailers and NVOs. The source added that the vast majority of containers not being picked up by retailers and consignees were container yard moves, meaning the container line wasn’t contracted to provide landside delivery.
The overriding concern of retailers and other importers is whether they should be charged demurrage when they cannot access their containers through no fault of their own, he said. However, recognizing that the investigating Federal Maritime Commission may not move as quickly as the trade might like on this issue.
MSC, ONE to restart Oakland calls next month
Mediterranean Shipping Co. and Ocean Network Express (ONE) are bringing additional vessel services to the Port of Oakland next month, providing some relief to agricultural shippers who have complained about cutbacks in export availability.
MSC’s Sentosa service from Southeast Asia will make its first call at Oakland on Nov. 6, according to a statement Thursday from the Port of Oakland. The Sentosa service, which has weekly capacity of 13,000 TEU, had previously only called at Long Beach, but Oakland will be its first port of call on the revised rotation.
In addition, ONE will restore Oakland as a call on its PS5 service, which had previously made its only North American call at Los Angeles after Oakland was taken off the rotation in 2019. The PS5 service provides 6,500 TEU of weekly capacity from China and Japan, with the first resumed call to Oakland expected on Nov. 26.
Vessel congestion at Oakland has greatly diminished since June, when up to 29 vessels were waiting for berths to open at the port each day. Part of the delay stemmed from crane work that the Oakland International Container Terminal was doing on its berths.

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