Will Port Congestion Fees Be Imposed?

Cargo in January normally speeds through the Port of Long Beach and the Port of Los Angeles like water gushing through a pipeline.

But the worst Los Angeles/Long Beach port congestion problem in a decade still has cargo stacked high on the docks. Goods continue to take two to three weeks to get off out of the ports and onto trucks and rail cars.

With so much cargo backed up, some shipping lines again are thinking about imposing a costly port congestion fee on every cargo container offloaded at the docks.

So far, Hapag-Lloyd and Matson Inc. have filed documents with the Federal Maritime Commission to start imposing a $1,000 per 40-foot container fee starting Jan. 15 for all cargo traveling from Asia and landing at the 29 West Coast ports where longshore laborers are working without a contract. The last contract expired on July 1.

It is still uncertain if the fee will go forward. Originally shipping lines said they would start charging a congestion fee on Nov. 17. But the FMC got the companies to postpone additional charges until the end of 2014.

Many importers thought the port congestion problem would be a recent memory by now. But that hasn’t happened.

There continues to be a lack of chassis used to transport cargo containers out of the ports. And with no new contract, longshore worker slowdowns are aggravating the situation.

On Jan. 5, the U.S. Federal Mediation and Conciliation Service said it planned to send in Scot Beckenbaugh, a skilled mediator and the service’s deputy director, to get the longshore workers and their employers, the Pacific Maritime Association, to agree to a new six-year contract. The association, which represents terminal operators and shipping lines, has been negotiating with the labor union since mid-May.

While strides have been made to resolve one of the stickiest points of the contract – healthcare—other issues have not been as easy to resolve. One difficult subject is what role the ILWU will have in repairing and maintaining the chassis fleet that once was owned by the shipping lines.

Last year, almost all the shipping lines sold their chassis inventory to three leasing companies that are not obligated to use longshore workers to keep the chassis running. One shipping line—SSA Marine—still owns and operates its own chassis.

The leasing companies have had a hard time evenly stocking each port terminal with chassis – with too many at one and not enough at another. That may change in February when the three leasing companies—Direct ChassisLink, TRAC Intermodal and Flexi-Van as well as SSA Marine create a gray chassis pool that is interoperable, making it easier to pick up and drop off chassis at any terminal.

“It is still real bad,” said Robert Curry Sr., president of California Cartage Co., a large trucking and warehouse concern in Long Beach, Calif., that contracts with about 200 truckers to pick up cargo containers.

Curry calculates that his company is behind by 1,200 loads and there is no way to ease the congestion because there are not enough truck drivers to get the job done. “We just had a meeting with the Evergreen steamship people. They are looking for more truck power to move some of their cargo to the railroads going east, and we have no more truck power.”

To clear back-logged cargo faster from the docks, the Pacific Maritime Association announced on Jan. 2 it would reduce the number of workers ordered to unload ships on the night shift, which generally runs from 6 p.m. to 3 a.m., so containers don’t continue to stack up, making it harder to locate unloaded containers and get them out of the gridlocked system.

“It makes no sense to maintain the pace of removing containers from ships when there’s no room for them on the terminals,” said PMA spokesman Wade Gates. “If a parking lot were full, you would clear out empty spaces before bringing in more cars. The same rule applies here.”

The PMA has also been complaining that since the end of October, the ILWU has been withholding skilled yard crane drivers from their shifts.

“The PMA is squarely blaming the longshore union for sending over trainees instead of top-of-the-line people to unload the ships. They can’t work as fast as the really good crane operators,” said Debra Taylor, a customs broker at Alba Wheels Up.

She said some of her customers are now just getting cargo that arrived dockside on Dec. 17.

ILWU spokesman Craig Merrilees said the PMA’s action to reduce the number of night gangs that would otherwise be filled by trained equipment operators is counterproductive and will only exacerbate the backlog of ships waiting for berths. As of Jan. 7, there were seven cargo container ships anchored off the Los Angeles/Long Beach breakwater waiting for space to dock. Normally there are none.

“The shortage of yard crane operators is a consequence of the PMA’s refusal before the commencement of negotiations to adequately train. The PMA regularly rejected the union’s overtures for such training and also refused to register new workers,” Gates wrote in an email.