Container operators face extra fees in California for container movement delays

Unprecedented congestion is being experienced at the ports of Los Angeles and Long Beach in California due to strains on the US supply chain. The congestion has led to a backlog of containers sitting for extended periods at key terminals in those ports and delays to ships waiting to berth. In response, the Los Angeles and Long Beach Harbor Commissions recently voted to amend their tariffs and impose a ‘Container Excess Dwell Fee’ on ocean carriers for discharged containers sitting at the terminals beyond specified time frames.

As per the tariff amendments, the ports will charge ocean carriers for loaded containers discharged at the ports that fall into one of two categories:

(a) For containers scheduled to move by truck, the fee applies to every container waiting nine days or more.

(b)      For containers moving by rail, the fee applies if the container has sat there for six days or more.

The Los Angeles Commission provided the following example to illustrate how the fee will be computed:

(A copy of the Commission’s announcement and proposal is available here.)

The Container Excess Dwell Fee program started on 1 November 2021 with fees to be assessed no earlier than 15 November. The port authorities have discretion to delay the start to fees beyond 15 November if progress is made in clearing the terminals. The fees will be billed monthly to the ocean common carrier on the bill of lading for the discharged container. These fees may ultimately be passed by carriers to cargo interests depending on the terms of applicable contracts or carrier tariffs.

Contrary to news reports, the fees are not in the nature of a fine and not intended to be a penalty. According to the port authorities, the purpose is ‘to drive the removal of cargo from [the] terminals based on the charging of a dwell fee.’ The fees are thus akin to container demurrage fees although being implemented to address the current logjam at the Los Angeles and Long Beach ports.