Shipping companies at the ports of Los Angeles and Long Beach will soon be fined if their containers stay in marine terminals for too long, officials announced on Monday.
Starting on Nov. 1, the ports will charge shipping companies that fall into one of two categories: containers scheduled to move by truck and containers moving by rail.
In the case of containers scheduled to move by truck, shipping companies will be charged for every container that stays in marine terminals for nine days or longer. For those moving by rail, shipping companies will be charged if the container stays for three days or more.
Companies will incur a fine of $100 per container, which will increase in $100 increments per container per day. The fees collected will be re-invested into programs aimed at enhancing efficiency accelerating cargo velocity, and addressing congestion impacts throughout the San Pedro Bay, officials said.
“We must expedite the movement of cargo through the ports to work down the number of ships at anchor,” Port of Los Angeles Executive Director Gene Seroka said in a statement. “Approximately 40 [percent] of the containers on our terminals today fall into the two categories. If we can clear this idling cargo, we’ll have much more space on our terminals to accept empties, handle exports, and improve fluidity for the wide range of cargo owners who utilize our ports.”
The new policy was developed in coordination with the Biden-Harris Supply Chain Disruptions Task Force as well as the Department of Transportation and various supply chain stakeholders.
President Joe Biden has attempted to alleviate supply shortages and disruptions before Christmas, but experts say that the process will take far longer.
Roughly 77 ships are currently waiting outside docks in the Ports of Los Angeles and Long Beach, California, carrying a staggering $24 billion worth of goods waiting to be offloaded, CNBC reported, citing economists at Goldman Sachs.
And according to Goldman economist Ronnie Walker, the situation does not look set to improve in the immediate future as officials struggle to find a solution to the issue.
“Backlogs and elevated shipping costs are likely to persist at least through the middle of next year because no immediate solution for the underlying supply–demand imbalance at U.S. ports is available,” Walker said in a note to clients earlier this week.
About 250,000 containers of goods are currently stacked up on the docks due to delayed pickups from chassis shortages and a lack of space in railyards and warehouses. This is causing dozens of ships to back up at anchor outside the ports.
The situation has resulted in shipping containers taking triple the time they usually take to get through major U.S. ports, according to CNBC.
Earlier this month, the White House released a statement saying it received confirmation from UPS, FedEx, Walmart, and other companies, as well as the Port of Los Angeles, to increase the number of shifts to deal with a backlog of container ships, labor shortages, and warehousing issues.
Biden also threatened on Oct. 13 to “call out” private companies who fail to assist his administration and step up to address global supply-chain bottlenecks.
“If the private sector doesn’t step up, we’re going to call them out and ask them to act,” he said in remarks at the White House.
The federal government said it will be working with multiple stakeholders across the supply chain for a 90-day period until the end of the year in an effort to alleviate bottlenecks.
“I support the actions taken by the ports of Los Angeles and Long Beach today to charge ocean carriers for lingering containers on marine terminals. These actions aim to expedite the movement of goods and reduce congestion in our ports,” said John D. Porcari, Port Envoy to the Biden-Harris Supply Chain Disruptions Task Force.