Ocean Carriers Will Be Charged for Retaining Containers at Port of New York and New Jersey

Ocean Carriers Will Be Charged for Retaining Containers at Port of New York and New Jersey
FILE PHOTO: Shipping containers are unloaded from a ship at a container terminal at the Port of Long Beach-Port of Los Angeles complex, in Los Angeles, Calif., April 7, 2021. REUTERS/Lucy Nicholson/File Photo
Naveen Athrappully

The Port of New York and New Jersey has announced that it will charge a new quarterly “container imbalance fee” from ocean carriers as part of the port’s efforts to deal with container congestion.

According to the new system, the total outgoing container volume of an ocean carrier must equal or exceed 110 percent of its incoming container volume during a specific period. Failure to hit this benchmark will result in a fee of $100 per container, the port said in an Aug. 2 press release. The largest container ships can carry roughly 24,000, 20-foot equivalent units (TEU).

The port will include both loaded and empty containers while calculating outgoing and incoming container volumes, excluding rail volume. The fee will go into effect on Sept. 1, pending a mandatory federal 30-day notice period.

The decision comes as peak cargo season is approaching and the port is seeing a “cargo shift from the West Coast.” It is handling a cargo increase of almost 12 percent year to date, compared with the year-ago period. When compared with the same period in 2019, prior to the pandemic, cargo volume has risen by 34 percent.

The “container imbalance fee” will affect ocean carriers that do not evacuate empty containers, thereby taking up space for newly arriving containers and thus affecting “overall port productivity and fluidity.”

Proceeds collected from the fees will be used to offset costs of offering additional storage capacity and other related expenses.

“As we continue to manage record cargo volume and work with our tenants and port stakeholders for the removal of empty containers in a timely manner, we call on all industry stakeholders to find sustainable, long-term solutions to an industrywide problem affecting many U.S. ports,” Port Authority Chairman Kevin O’Toole said in the release.

Climbing Transportation Charges

Port congestion is also driving up container prices. As more containers remain unloaded and at rest, a false shortage is created as these containers remain out of supply for use. And when the availability of containers tightens, freight rates increase, which acts as an inflationary pressure on consumer goods.
“Global shippers should be prepared for volatility in the coming quarters,” Peter Sand, chief shipping analyst at ocean and air freight research firm Xeneta, said to CNBC.

“I think patience is required, not only in terms of understanding how market dynamics constantly develop but certainly also to realize that no two markets are alike.”

Shipping rates from Europe to North America's East Coast have jumped by 2 percent, while rates for the China to East Coast route were hovering around the $10,000 level in late July. In North America, there were 153 ships waiting offshore at various ports, up from 92 vessels on June 10.