California Ports Say Threat of Penalty Keeps Cargo Moving

The ports of Los Angeles and Long Beach say containers are moving off crowded docks even though a planned penalty program has been repeatedly pushed back.

Southern California port officials say the threat of a penalty fee, which has never been imposed, is a major reason cargo has been moving quickly and an enormous backup of container ships offshore has receded.

The ports of Los Angeles and Long Beach have pushed back what they call a container dwell fee each week since it was announced on Oct. 25, when officials said the growing stacks of containers sitting for days or weeks at a time were impeding the flow of goods through the busiest port complex in the U.S.

The latest in the string of suspensions, which have rolled out almost like clockwork late every Friday afternoon, came as the ports said the amount of “aging cargo” on their docks has declined by about 50% since last fall.

“There are many measures we have had to put in place, but this one, this undoubtedly has had a resounding effect,” said Gene Seroka, the Port of Los Angeles executive director.

The number of containers sitting at terminals longer than nine days has declined from about 95,000 boxes in late October, he said, to around 37,500 on average last week. The container count has dwindled even though the ports have never collected penalties.

“The port needs to be a transit facility, not a warehouse,” Mr. Seroka said.

The fee, an escalating assessment that would start at $100 for each day a container sits beyond nine days, was announced last fall as part of an effort led by the White House to clear supply-chain bottlenecks that have hobbled American businesses and at the time were threatening to keep goods off store shelves during the holiday season. Shipping lines heavily criticized the fee, saying they were being unfairly held responsible for long-sitting containers that their customers, including big retailers and their logistics providers, weren’t picking up in a timely manner.

Jon Monroe, a shipping industry consultant based in Gig Harbor, Wash., said he thinks the threat of the penalty has been effective. Mr. Monroe said the fee put the spotlight on the problem of containers sitting too long at the ports and got carriers and cargo handlers to encourage shippers to pick up boxes more quickly.

“I think it’s created an environment that has helped clear containers off the terminals,” he said.

The improvement on the docks has come as the backup of container ships waiting to get into the ports has eased. The number of ships dipped to 29 vessels on May 12, the lowest number since last August and down sharply from the 109 ships that were lined up waiting for berths on Jan. 9, according to the Marine Exchange of Southern California. 

Before the backups, which came as retailers and manufacturers rushed to restock inventories that had dwindled early in the pandemic, ships coming into the Southern California ports usually didn’t have to wait for berths.

Container volumes at the ports have remained at high levels this year. The neighboring ports handled more than 3.4 million loaded imported containers, measured in 20-foot equivalent units, in the first four months of 2022, 2% more than the same period a year ago and 33.4% more than in the first four months of 2019.

The Pacific Merchant Shipping Association, a trade group of shipping lines and terminal operators, says the average number of days imported containers sat at the ports waiting for handling rose in March to 7.7 days after three straight months of declining delays.

Written by:  Paul Page, Editor, for The Wall Street Journal.