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For the third time in one month, Southern California ports delayed doling out millions of dollars in fines for lingering shipping containers

Shipping companies have warned that the extra costs which will top $100 million per day a week past the grace period will be passed on to customers. ...
Large containers on commercial dock in Long Beach, California.
  • On Monday, Southern California ports delayed collecting fines for cargo that had lingered too long.
  • The fines went into effect on November 1, but won't be collected until at least November 29.
  • The fines have been delayed three times since they were announced on October 25.

The ports in Los Angeles and Long Beach delayed the collection of millions of dollars in punitive fines for shipping companies that had let cargo containers stack up at terminals on Monday — the same day the locations were scheduled to begin the process.

The two ports pushed the deadline back to November 29. It's the third time that the fines have been delayed since they were first announced in October.

The executive directors of the twin ports said in a in a press release on Monday that there has been a 33% decline in idling cargo since the fines were announced.

Last week, the executive director of the Port of Los Angeles, Gene Seroka, said the ports had seen "significant improvement" in efforts to clear the containers out of the shipping terminals.

"Clearly, everyone is working together to speed the movement of the cargo and reduce the backlog of ships off the coast as quickly as possible," Port of Long Beach's executive director, Mario Cordero, said last week.

But, the 33% decline in shipping container backlogs might not be as optimistic as it sounds.

Data from the Port of Los Angeles shows that most of the containers at the site were moved when the fines were first announced. To date, at the Port of Los Angeles alone, over 26,000 containers have remained at the location for over 9 days — meaning the aggregate cost for the containers in Los Angeles would come to over $2.6 million from the first day past the grace period and climb to over $100 million per day within a week.

When the fines were initially announced, shipping container dwell times at both ports were at an all-time high and 58,900 containers were set to be fined.  

The shipping containers began accruing $100 per day fines on November 1. The fees increase by $100 each day the containers that will move by truck remain in the ports past 9 days, while goods that will move by rail incur fees after 6 days. 

Multiple experts previously told Insider they expect the fees to do little to move the goods out of the ports, though the extra costs will likely mean higher prices for consumers. Last week, 85 business groups, including the National Retail Federation, penned a letter to the Federal Maritime Commission, warning the charges will be passed further down the supply chain, Freight Waves reported.

The new daily fees would be an add-on to even higher demurrage fines. Carriers are charged demurrage fines for every day the container stays at the port past its allotted time — typically between four to seven days after the container is unloaded from the ship. The fines range from $75 to $300 per day and can grow the longer the container remains in the port.

Earlier this month, Hapag-Lloyd warned in its earnings call that the fees may also lead to an increase in abandoned cargo.

Read the original article on Business Insider

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