September was the Port of Los Angeles' busiest month in history with 883,625 20ft equivalent units © Getty Images
September was the Port of Los Angeles' busiest month in history with 883,625 20ft equivalent units © Getty Images

Authorities investigate container charges at jammed ports

Will Green is news editor of Supply Management
24 November 2020

US authorities have launched an investigation into the behaviour of shipping companies amid concerns about “potentially unreasonable practices” at jammed ports.

The Federal Maritime Commission (FMC) will investigate the policies and practices of companies, who have been accused of charging unfairly for the use of containers in relation to detention and demurrage.

Clients have also complained about problems trying to return containers to shipping companies and the availability of containers for exports.

The inquiry comes as firms in the UK raise fears they will not have stock for Christmas as ports suffer a “perfect storm” from coronavirus and Brexit that has seen container rates soar by up to 300%.

And health chiefs are reported to be spending around £1m a day to rent around 11,000 containers to store PPE at the Port of Felixstowe in Suffolk.

Commissioner Rebecca Dye, who will head the US inquiry, said: “The commission is concerned that certain practices of ocean carriers and their marine terminals may be amplifying the negative effect of bottlenecks at these ports and may be contrary to provisions in the Shipping Act of 1984.

“The potentially unreasonable practices of carriers and marine terminals regarding container return, export containers, and demurrage and detention charges in the Ports of Los Angeles, Long Beach, and New York/New Jersey present a serious risk to the ability of the United States to handle trade growth.”

Shipping platform Resilience360 said the Port of Los Angeles, the busiest in the US, had seen a 13.3% year-on-year rise in container activity in September, which was the busiest month in the port’s history with 883,625 20ft equivalent units.

Meanwhile truck turnaround times at Los Angeles and Long Beach, the second busiest port in the US, increased 33% between June and September.

“As yard utilisation has averaged above 80 percent, the terminals’ capacity to both store and move containers to distribution centres and rail ramps has been severely disrupted,” said Resilience360.

FMC commissioner Carl Bentzel said: “Container ship capacity is projected to be close to maxed out for the next few months, as spot rates for import cargoes are at all-time high rates.

“This has contributed to the interest of shipping lines to reposition empty cargo containers back to Asia as rapidly as possible. It has been reported that they are unwilling to provide services to US exporters for the export of American products.”

Commissioner Louis Sola said ships were having to wait 2-3 days at sea for a berth, while firms were using containers for storage due to full warehouses when carriers needed them back.

“Now is the time, more than ever, when we need technology, labour, terminals, truckers, rail, and other stakeholders to come together and ensure fast and efficient movement of all goods. We cannot allow the current situation to unduly enrich some and penalise others, nor can we allow the current congestion to create an imbalance in the flow of goods.”

The inquiry builds on another launched in March by the FMC to investigate the cargo delivery system in light of the coronavirus pandemic.

Meanwhile, the UK government is paying fees of £47.38 per day per container for those stored at the Port of Fexlixstowe for longer than two weeks, equating to around £520,000 per day, according to The Telegraph. But this figure could rise to £1.3m if late return fees for shipping containers, around £75 per day, are taken into account.

A government spokesperson said: “We have a storage network in place that lets us access and manage our PPE supply to meet demand throughout the winter.

“The amount of PPE stock held on quay at Felixstowe is already coming down rapidly, from nearly 7,000 containers in late October to under 4,000 now, with further reductions expected up to Christmas.”

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