It is hard to get a solid number on the number of ships that are currently in standby at the twin California ports of Los Angeles and Long Beach, but it is clear the problem has not yet been resolved since Joseph Biden announced plans to ease congestion. The ports have decided to implement a little bit of an incentive program to motivate companies to get their products moving.
Fine Day for a Fine
Starting November 15th, both the Port of Los Angeles and the Port of Long Beach will begin charging ocean carriers for idling with cargo aboard. The system is as follows:
- Ships that arrive before November 15th have until that date to get containers off of port property before penalties start to accrue.
- Ships that arrive after November 15th have an eight-day grace period if the container is to be moved by truck, but they have a five-day grace period if instead it is to be moved by rail.
- The fine is on a container basis. Each container costs $100 per day. With ships easily and often having more than 2,000 containers aboard, that would be a fee of at least $200,000 for a day.
- The penalties increase by $100 per container per day. A ship with 2,000 that takes a week to move all of its cargo would end up paying $5.6 million.
Will it Work?
The twin ports are hoping that by putting fire underneath the ocean carriers’ feet, they will be more motivated to move their cargo off the boats and off of port property, and may even be willing to pay a premium to do so to avoid penalties. Truckers might benefit from increased mileage rates as a direct result of this program.
“Our objective with this program is not to generate revenue,” Los Angeles Harbor Commission President Jaime Lee said in a statement. The only way to know for sure if this is true is for the penalties to disappear once they have served their purpose. Hopefully the penalties do not become like the Federal Excise Tax, which was meant to help fund America’s actions in World War I.
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