California again takes the lead in denying demurrage and detention charges by marine terminals and intrmodal equipment providers, such as chassis providers, when return is prevented by actions outside the control of the users. Such conditions might include gates being unavailable for return, a provider diverting the equipment from the original intrchange location, and when the carrier documents an unsuccessful attempt to return the item, or because a vessel’s booking date is changed.
All these changes will be good for the business. They will force carriers and equipment providers to pay attention to the effects of congestion, and work to reduce it.
Congratulations to California for this law. Now let’s see how it works.
The LA and Long Beach Ports have gone ahead by obtaining approval from Kern County Supervisors for a large inland port in Mojave CA. It will provide a place where containers can be gotten off the limited space at the port, and deployed where they can be rerouted to other destinations.
Developing inland ports is a move we’ve been recommending for years now. By ‘we’, I mean my colleague Chris Clott and me. We wrote about it years ago in this paper. Then, we were thinking much farther afield than Mojave, perhaps Chicago or a midwestern site. Those were the days of the land bridge to Europe, which has been reduced and delayed by the congestion of the last year. There is probably still a need for an inland dry port farther on, but the Mojave location should help a lot.
With a capacity of 3 million TEU and access to rail and air as well as truck transport, it should help to reduce congestion at the Los Angeles and Long Beach Ports.
Mojave is inland and to the north of Los Angeles and the ports, about 119 miles and two and a half hours away. There’s a rail connection, as well as some excellent interstate freeways to the door. It should be ideal for both Northern transport toward the Bay Area and north, and Eastward transport toward Las Vegas and beyond.
One of the big hassles in container shipping right now is the unfair treatment of drayage drivers. They are often forced to wait because of inadequate capacity at ports. And this is directly traceable to the advent of large ships, which take longer to unload and which result in large numbers of empty containers cluttering up ports. When there are too many containers, the port operations are delayed and cannot be efficient, so often the terminals close their doors to returning containers. They are usually empty.
Then we compound it with the fact that it’s not that useful for the ocean carrier to pick them up for return to an exporting location. It’s almost easier to build a new one in China, say for the next load. Also, an empty container takes up a slot on the ship that could be used for paying cargo. Remember that ocean routes are closed loops with pickups and deliveries along the way. Each stop presents a new version of a loading problem to be solved.
The FMC will look at whether the ocean carriers need to reimburse other supply chain participants for any delays suffered when they can’t return the containers on time. And the carriers have to be more diligent about picking up empties. That’s something the FMC should be able to influence. The carriers will squeal. But they have to start cleaning up their leftovers.