California law AB 45 prevents ports and terminals from charging detention and demurrage fees for containers not picked up or empties not delivered when the facilities prevent drivers from picking up or delivering.
Sometimes, the authorities or facilities institute sudden rules changes that prevent delivery of empty containers or prevent pickup of specific cargo because of hours or appointments. These rules are troublesome and cost time for drivers. And often the drivers or their firms are the ones paying the fees.
The contention is that the ports are by their own actions forcing expenses on the trucking firms and drivers.
The law, if enforced, would keep ports and terminals from charging these fees. But how to enforce the law is not altogether clear.
The Port of Long Beach has made a deal with a Utah site to transfer containers there, to relieve the congestion at the Long Beach terminal yards.
Moving containers by rail to Utah will clear space at the port and allow faster unloading there. The containers can then be picked up in Utah and forwarded to the points in the US.
This is a good strategy for the port. Many European ports, such as Rotterdam, Hamburg, and Antwerp, have done the same thing. In Europe, the containers tend to be moved by river barge or truck, but in the US, rail is the natural transportation mode to use.
It’s an idea that has been suggested years ago for the large ports on the West Coast US, but it took a crisis for it to happen.
I thought that long ago the ports would make such agreements with the Centerpoint complex in the Chicago area. Much of the container cargo moves to the Chicago area, for distribution to the rest of the United States. 8 years ago, Centerpoint had empty space available. Now it is completely built out, according to my informants.
Below the articles, I’ve provided my reference to our article of 2014, which suggested forging alliances with the Chicago warehouses.
Clott, Christopher B. and Bruce C. Hartman. (2014). “Supply Chain Integration, Landside Operations and Port Accessibility in Metropolitan Chicago”. Journal of Transportation Geography (51) 131-139. DOI: 10.1016/j.jtrangeo.2015.12.005
To get the attention of shippers and carriers, the Port of Long Beach and the Port of Los Angeles have instituted escalating fees for containers that are not picked up at the port. The fines start at $100 per day and go up with each following day.
These fees have been endorsed by the US Supply Chain Disruptions Task Force.
There are lots of efforts to try to give ocean carriers and shippers incentives to move cargo out. Railroads UP and BNSF also are planning to offer rebates to shippers who move cargo to them on weekends, using the longer time windows at the ports. The large rails are also taking other steps to improve flow. UP is reopening an idled rail terminal in the Chicago area, near the Centerpoint logistics complex. The refunds apply to containers in-gated at the ICTF (Intermodal Container Transfer Facility) in Long Beach CA. BNSF’s rebates apply both to LA and Long Beach.
We’ve also heard about California Governor Gavin Newsom’s efforts to find space to store containers, by leasing empty land near key transfer points.
Naturally, there are complaints about fees, which will surely be passed on to consumers. And many point to the general logjams for containers at warehouses and other choke points in supply chains. Dispersed bottlenecks are harder to do anything direct about; perhaps a money impact is the best way to get these diverse players to work harder to relieve the jam-ups.
And there’s a bit of contradiction, with the FMC looking into excessive demurrage and detention fees at port terminals, a long-standing gripe of shippers, while watching two ports add to those burdens.
Yet, there is some action. So the complaining is good, and a variety of approaches makes it more likely that the logjam will start to abate as more folks speed things up all over.
Read the articles for more details and different views.
Eric Kulisch, Air Cargo Editor Wednesday, October 27, 2021
Supply Chain and Logistics 