I’ll let you in on a little secret: I strongly dislike taxes and fees. I’ve never been a fan of them.
Yes, I know that various types of seaport-related taxes and penalties, like demurrage, tariffs and wharfage are very important, and in many cases, absolutely necessary. But I’ve never truly been completely on board with the concept of one party tacking on additional fees on top of standard fees levied on parties that they do business with.
That being said, I’m definitely rethinking my position now that the ports of Long Beach and Los Angeles have managed to scare companies into moving cargo off the docks more quickly by threatening to impose what they’re calling a “cargo dwell fee.” No, not by actually imposing the fee, just by threatening to do so.
Before we get too far along in the story, let’s go back to the beginning.
In October, the adjoining San Pedro Bay ports announced due to a backlog of cargo sitting on their docks, they would impose the aforementioned cargo dwell fee on containers left at marine terminals for what’s considered an excessive amount of time.
Pre-pandemic, import containers usually stayed at a San Pedro Bay terminal less than four days if it left via truck, or under 48 hours if it went out by train.
The seaports intended to bill ocean carriers $100 for every container that dwells at terminals beyond the allotted time – nine or more days if the import moves by truck and six or more days if it moves by rail. In both instances, each container would be subject to a daily fee of $100 for every container in the penalty zone.
Upon learning this, ocean carriers started to get things into gear and began moving idle containers off the premises expeditiously. So quickly, in fact, that the ports have multiple times delayed implementation of the dwell fee because of the headway in clearing the backlog.
The ports, which have been taking data snapshots to see how long imports sit on their terminals and if progress on clearing the docks is being made, said that since announcing the fee Oct. 25, dwell times for cargo have dropped 37% at both ports.
As of early December, implementation of the dwell fee has been delayed multiple times due to cargo being cleared off the docks.
So, while it’s unfortunate that it took the threat of imposing an additional fee that could cost shippers tens or possibly hundreds of thousands of dollars a day, it’s great that the ocean carriers have finally managed to clear the docks. Let’s just hope that the ports don’t eventually have to follow through on their threat and start penalizing importers for using marine terminals as alternative warehousing.
Managing Editor Mark Nero can be reached at firstname.lastname@example.org