Port of Los Angeles Long Beach charges shipping companies, U.S. Shippers Council: will eventually be borne by shippers

On Wednesday, two days after the ports of Los Angeles and Long Beach announced emergency fees for containers that spend too much time at terminals, the U.S. Shippers Advisory Council (the National Shippers Advisory Council, NSAC) held its first meeting. NSAC consists of 12 U.S. importers and 12 exporters and is designed to provide advice to the Federal Maritime Commission. Members include heavyweight companies such as Amazon, Wal-Mart, Target, Oddie's Office (Office Depot) and IKEA. Committee members have a lot to say about container demurrage fees charged by California ports, but none of it is good. Port of Los Angeles Long Beach charges shipping companies, American Shippers Council: It will eventually be at the shipper's expense Effective Nov. 1, the ports of Los Angeles and Long Beach will charge a fee of $100 per container for containers that are detained by truck for nine days or more and by rail for three days or more, as well as an additional $100 per day. This charge is levied on the carrier, however the carrier will almost certainly pass the charge on to the shipper, which also means it will amount to an ever-increasing demurrage charge. The chart below shows that the charge of $100 per container per day, increasing by $100 per day, will reach $46,500 per container by day 30. Port of Los Angeles Long Beach charges shipping companies, American Shippers Council: will eventually be borne by shippers Chart Source: American Shipper NSAC members stressed at their meeting Wednesday that the cost of the Los Angeles/Long Beach port will ultimately be borne by shippers. Daniel Miller, head of Cargill's global container business, called the fee "a crazy charge" and said, "We know it's going to come down to us. I had a couple of calls with carriers yesterday and they've acknowledged that, yes, it will come back to us." Rick DiMaio, senior vice president of supply chain operations for Oddie's Office (Office Depot), also said, "All the fines and fees are flowing to us and to the beneficiary shippers." Bob Connor, executive vice president of global transportation for Mallory Alexander Logistics, said his company asked his FMC contact whether the port must give 30 days' advance notice to carriers before implementing the charges, and whether carriers must give shippers 30 days' advance notice to pass the charges on to shippers. connor said his understanding is that the port can impose charges without prior notice, but the carrier must give the shipper 30 days' notice. However, this is not the case if the carrier has written in the tariff that they are allowed to pass on port charges immediately. The ocean carrier HMM's current tariff includes a clause stating that "Shipper shall be responsible for payment of any fees or surcharges imposed on Carrier by marine terminals, port authorities, governmental agencies or other third parties." Port of Los Angeles/Long Beach Charges Shipping Companies, American Shippers Council: Shippers Will Be Responsible "This new charge by the Port of Los Angeles/Long Beach will be a pass through for all ocean carriers, and carriers will be invoiced to reach their destination. Specifically for HMM, this provision is based on the high likelihood that such additional charges will occur. Such charges have been in place for quite some time and any carrier will be savvy enough to protect their interests." Stephen Nothdurft, vice president of HMM's Midwest region, said in an online post explaining the clause. Will the B&W tolling program incentivize faster action? The purpose of the Los Angeles/Long Beach toll plan is to force dock clearances and speed up container movement. NSAC members believe that these emergency port fees, given the current state of the supply chain, will not speed up the flow of containers. Daniel Miller said, "I don't think anyone on the committee would admit that leaving containers stranded at the port because they want to do so, everyone wants to get them out faster but can't do it." Adnan Qadri, head of global imports at Amazon, said, "In the past, demurrage was all about stimulating faster turnaround, the return of equipment and bringing liquidity to the network and supply chain. But in terms of how the supply chain is currently operating, I don't see any incentive for demurrage." "We (Amazon) are having a hard time accepting this demurrage charge, these charges will not drive any positive behavior, and what worries me is that it will not bring any benefit to the current state." The Amazon executive said.