Hello, it’s IINO.
I would like to broadcast IINO san’s Logistics Radio.
Today, I would like to talk about the theme, “Overdue container charges postponed for third time at LA and LB ports”.
Daily Logistics Radio by IINO san in 1st Dec. 2021
Postpone the Start of Collection of Overdue Containers Charge
The Ports of Los Angeles and Long Beach in North America announced, on November 29th, that they would postpone the start of collection of overage fees for overdue containers until December 6th.
In fact, the number of stagnant containers has been decreasing, and the decision was made to postpone for the third time.
I would like to talk about this based on my observations.
The regulation that penalizes overstayed containers on the West Coast of North America is based on the following;
More than 9 days in case of truck pickup
More than 6 days in case of rail pickup
There will be a fine of USD100/container per day.
The first day is USD100, the second day is USD200, the third day is USD300, and so on, increasing by USD100 per day. The total for the third day is USD600, which is quite a lot.
It was scheduled to start on November 1st, but was postponed and started on November 15th. As result, many overdue containers were removed from November 15th to the end of the month.
Number of overdue containers for imports are;
As of Nov. 1st: 28,358 containers
As of Nov.24th: 16,157 containers
The number of plants has decreased by about 40%, from about 28,000 to 16,000.
What Happens If Penalties Pile Up
This time, they decided to postpone the collection of the penalties further, to December 6th.
Although the number is decreasing, a significant number of containers are actually subject to penalties.
There is a possibility that the entire port will be fined 882,000USD per day, but the goal is not to fine, but to get the cargo out of the port as soon as possible.
As for the shippers, they may not be able to take them back even if they want to because of the actual shortage of chassis and truck drivers.
What happens when the penalties pile up due to the implementation of the system may lead to a deterioration in the performance of companies.
When the economy has just started to improve, it may lead to an increase in the unit price of products.
Japanese companies tend to cover their own costs at times like this, but American companies have the image of passing the cost on to their products.
The United States is currently experiencing inflation. Normally, 2% rise in prices is considered appropriate, but as of October, prices have risen by 6.2%.
In response to this, FED Chairman, Jerome Powell, is tightening the current quantitative easing program, and it was even reported in the news today that he is planning to accelerate it.
Such situation of inflation may have something to do with it.
Nevertheless, there are some signs that the congestion at the LA and LB ports will be resolved. The logistical congestion is due to other factors as well, such as inland congestion conditions and lack of manpower due to Corona.
I will continue to pay attention to this and update information.