New Incentives to Remove Congestion
Ports across the globe have been dealing with backlogs and delays to the global supply chain from the beginning of the Covid-19 pandemic in March 2020. Since then, local, national, and international governments have been exploring every option available to them to lessen the shipping backlog at crucial choke points.
Port Congestion Leads to Supply Chain Crisis
Beginning November 1st UPDATE 11/16/21: Fees will now begin 11/22, fines may be issued to unmoved cargo containers off the ports of Los Angeles and Long Beach, California. The dozens of unmoved containers have caused weeks worth of supply chain issues nationwide, preventing businesses from receiving the products they need. This jam is partially caused by a lack of warehouse workers and truck drivers available to pick up the goods from the containers. However, even once the goods are picked up, more issues such as storage and property damage become present. Since there are no workers available to transport the goods from the cargo containers, Los Angeles and Long Beach neighborhoods are being used as storage, crowding residential streets with trucks that can cause damage to the homes of Californians.
Local Government Steps In
The Board of Harbor Commissioners for both Los Angeles and Long Beach approved the Container Excess Dwell Fee, and new fines will be set in place in hopes of stimulating the supply chain. Prior to this port congestion, containers typically remained at the terminals for about four days, but recently almost half of these containers have been left for nine or more days. Last week, there were 153 anchored ships stalled at the ports, with more than 100 of these being large container ships holding millions of dollars worth of toys, clothing, electronics, and furniture. This causes issues nationwide because around 40% of shipping containers entering the U.S. come through the Los Angeles and Long Beach ports.
Container Excess Dwell Fee to Help Open Ports
For the next 90 days, containers full of goods to be moved by truck are allowed to sit at the ports for nine days until fines occur, meanwhile containers designated to be moved by rail will have six days to be moved. On each day over the allotted limit, a $100 fine per container may be issued, with an additional $100 fee per day that the container remains at the port. President Biden announced a plan to keep the Port of Los Angeles in operation for 24 hours a day in an effort to alleviate the port’s congestion before major holidays like Black Friday and Christmas, even considering deploying the National Guard to expedite the process. A multi-billion dollar loan agreement was also reached last week to help improve the infrastructure at the ports.
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