Containers wait on the dock of the Long Beach Container Terminal Thursday, Feb. 3, 2022. Photo by Brandon Richardson.

It happens like clockwork. Every Friday, a pair of press releases from the Los Angeles and Long Beach ports arrive in my inbox: “‘Container Dwell Fee’ on Hold.”

The container dwell fee, which port officials announced in October but have yet to actually implement, would charge ocean carriers for cargo that lingers at the docks for an excessive amount of time—nine days or more for cargo that would be moved by truck and three days or more for cargo that would be moved by rail—$100 per container per day.

Port officials have touted the penalty as one piece of a broader effort to address ongoing congestion at the twin port complex.

“With the escalating backlog of ships off the coast, we must take immediate action to prompt the rapid removal of containers from our marine terminals,” Port of Long Beach Executive Director Mario Cordero said in an Oct. 25 statement, when the fee was first announced. “The terminals are running out of space, and this will make room for the containers sitting on those ships at anchor.”

The penalty was initially slated to go into effect Nov. 15, but officials announced that day that because the ports had seen a significant decline in aging cargo, they would not yet start charging the fee. But they kept the fine on the table and set a new date to potentially begin imposing it: Nov. 22.

The fee has since been postponed 14 times.

The Business Journal, along with many other publications covering the ongoing supply chain crisis, wrote about the announcement of the penalty and the first few delays. But at a certain point, the decision not to charge for lingering cargo was no longer news.

And yet, the postponement press releases kept arriving in my inbox, week after week. So I reached out to both ports to ask why they’ve approached it this way—and more importantly, whether they believe, at this point, that ocean carriers will ever actually be charged for aging cargo.

Port of Los Angeles Executive Director Gene Seroka declined my interview request, but Cordero told me, by way of background, that the idea for the fee came as part of a broader set of discussions with John D. Porcari, the Port Envoy to the White House’s Supply Chain Disruptions Task Force.

“I think the whole question emanates from the beginning discussions with the White House envoy” late last year, he said, “and that was: How do we address the capacity constraints at our terminals?”

“We had some very lively, substantive discussions in terms of, ‘What’s the best approach to address this?’” Cordero added, “and hence came the fee to be placed on the carriers with regard to the imports sitting at the terminals for an excess amount of time.”

But between the fee’s Oct. 25 announcement and its planned Nov. 15 implementation, the twin ports saw a 26% drop in aging cargo.

“We’re encouraged by the progress our supply chain partners have made in helping our terminals shed long-dwelling import containers. Clearly, everyone is working together to speed the movement of cargo and reduce the backlog of ships off the coast as quickly as possible,” Cordero said in a statement at the time. “Postponing consideration of the fee provides more time, while keeping the focus on the results we need.”

When I spoke to Cordero earlier this month, he said the same logic still holds.

As of our Feb. 11 interview, there had been a 70% drop in aging cargo since late October.

“Given that progress,” Cordero said, “we will not act on implementing the fee [for now]. And frankly, given the collaboration that we’ve seen with the stakeholders, including the international carriers, I think that’s good news.”

“Our objective here is not to add fee on to fee here at the Southern California port complex,” he added. “The objective here is to make sure the industry understands that if we do not collaborate to achieve some metrics, then of course there will be a fee that will be applied.”

While all of that makes sense in the abstract, I still didn’t fully grasp why the ports continue, four months on, to make weekly assessments when it seems the impact the fee would have is only getting smaller.

To that, Cordero had a couple of answers.

First, he said, the decline in aging cargo only began after the ports announced they would start charging for it.

“I think the threat was a factor” in that progress, he said.

And while the threat of a fee helped move the number of lingering cargo containers back in the right direction, the number of containers remaining at the docks is still far higher than it was before the supply chain crisis hit the ports.

On Feb. 11, there were 18,588 containers at the twin ports that had sat for nine days or more. While that’s far lower than the 62,158 lingering containers the ports had at the end of October, it’s still enough to impact port operations. (When I asked Port of Long Beach spokesman Lee Peterson if he could help put those numbers in context by providing the number of containers that sat for nine days or more before the supply chain crisis, he said the ports didn’t track those numbers before the current surge because containers generally dwelled for a maximum of four days.)

So maybe a reframing of the container dwell fee policy is in order. While the fee itself is purely theoretical—and may well always remain that way—the threat is real. Not only is it real, but the threat seems to be effective and, based on the numbers, still necessary.

Still, I had one question: Is there a certain metric the ports hope to reach before they decide the fee—or should I say, the threat of the fee—is no longer needed?

Cordero declined to give a straight “yes” or “no”—if he’s learned anything over the past couple years, it’s that circumstances can quickly change.

“It’s an ongoing assessment,” he said.

While Seroka declined my interview request, I still wanted to pose this question to him. So at his most recent press conference on Feb. 17, I did.

“The metric is very straightforward: zero containers on our docks nine days or more,” he said. “It’s a lofty goal, but we’re going to continue to pursue it, and we will keep the tool of that fee in our box as long as we need to.”

It seems I’ll likely continue to see those same press releases in my inbox, week after week.

But Cordero, at least, is optimistic about the fact that imposing the fee remains unnecessary.

“Right now, with the supply chain overall, I think we’re going in the right direction,” he told me, “in terms of anticipating delays and the bottlenecks and issues overall in the supply chain.”

“I want to make sure I’m not saying, ‘Mission accomplished,’” he added, “but on the other hand, there’s light at the end of the tunnel.”

Hayley Munguia

Hayley Munguia is editor of the Long Beach Business Journal.

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