Congestion at large U.S. ports is generating increased complaints by truckers and shippers about demurrage penalties for late pickup of containers that can’t be removed from gridlocked marine terminals.
The problem is most acute at the two largest U.S. container gateways, Los Angeles-Long Beach and New York-New Jersey, both of which are struggling to deal with bigger ships, rising volumes and chassis supply.
Demurrage complaints were prominent at a Oct. 1 Federal Maritime Commission hearing on port congestion. In a speech the following week to the annual New York-New Jersey Port Industry Day, Commissioner William Doyle said the issue “is surfacing more and more.”
“I have heard numerous examples of shippers who are ready, willing and able to pick up their containers but through no fault of their own are precluded from getting their boxes. As a result, they have to pay a fine for the storage days on the terminal,” he said. Cargo interests and the trucking companies they contract with are liable for demurrage if they don’t retrieve boxes within a certain number of “free days” after containers are unloaded from a ship. Terminals impose the charges to discourage use of their facilities for extended storage.
Demurrage is assessed against the cargo, but shippers often blame truckers for failing to pick up containers on time. When that happens, truckers may be stuck with the bills, which can mount quickly.
Current complaints about demurrage appear to be loudest in Los Angeles-Long Beach. Harbor truckers and cargo interests say terminals are refusing to waive the fees, even when congestion at terminals makes it impossible to pick up containers. Some beneficial cargo owners report hundreds of containers stuck in the ports, accumulating demurrage penalties.
Congestion at Southern California terminals cropped up at the start of the year and has worsened during the summer-fall import peak season. Truckers say they receive regular bulletins advising that a section of the terminal has been shut in order to clear backlogs. If a container’s free time expires that day, the trucker is billed anyway.
Noel Hacegaba, managing director of commercial operations at the Port of Long Beach, said port staff is aware of this situation and has had discussions with the harbor commission about possible remedies. “We are exploring all options,” he said.
Los Angeles-Long Beach truckers claim some some terminals are using demurrage as a profit center, charging $100 or more per day. Gene Seroka, executive director of the Port of Los Angeles, said that although his port is also looking into the demurrage issue, he hadn’t heard those allegations. “I will investigate it,” he said.
Motor carriers also are being charged per-diem fees for the late return of containers to terminals after they are emptied of import cargo. Truckers say terminals are offering no relief on per-diem fees even if drivers are shut out of terminals because of congestion.
Yet another beef by truckers involves “line demurrage” they say some ocean carriers charge in addition to the regular demurrage penalties levied under terminals’ tariffs.
“I’ve always questioned the legality of that in FMC tariffs — why a steamship line, which is not the terminal operator, has the right to charge line demurrage” to the beneficial cargo owner or trucker, said Jeff Bader, president of the Association of Bi-State Motor Carriers in New York-New Jersey.
Rising demurrage and per-diem charges are directly related to congestion at terminals, truckers and cargo interests say.
Reduced free time and increased demurrage charges “penalize shippers for the terminals’ own lack of efficiency,” Don Pisano, president of American Coffee Corp. in Jersey City, New Jersey, said at the FMC’s Baltimore hearing. “What is extraordinary is the sense that the carriers and the terminal operators only seem to serve each other — all others be damned.”
Chassis shortages and dislocations are leading some Los Angeles-Long Beach terminals to insist that truckers bring their own chassis, and to have an empty or loaded container on it. That’s long been the de facto situation at New York-New Jersey terminals where chassis are chronically in short supply and terminals are jammed with empty boxes.
In recent months, terminals in New York-New Jersey and Virginia have temporarily halted the return of empty boxes because of congestion. That’s contributing to a new problem: Some New York-New Jersey truckers complain that ocean carriers are requiring truckers to go out of their way to return empty containers to off-dock sites without adequate compensation.
Los Angeles is considering designation of vacant lots for off-dock storage of containers as a way to relieve pressure at the marine terminals, some of which report land utilization rates above 90 percent, Seroka said. The port also is investigating the use of off-dock locations as additional maintenance and repair sites so longshoremen can service equipment when on-dock facilities are congested.
While the congestion continues, truckers are struggling to maintain service and retain drives under federal drivers’ hours-of-service restrictions. Alex Cherin, executive director of the Harbor Trucking Association of Southern California, said the organization has discussed petitioning the Federal Motor Carrier Safety Administration for a temporary waiver of the HOS rules.