BRi Global News - Detention and Demurrage Charges Rise as Regulators Circle and Major US Port Status
Dear all Valued Customers
Shippers have shelled out tens of millions of dollars in detention, demurrage, and storage penalties as the flow of containers through the US supply chain has slowed considerably in recent months in top US ports and rail hubs.
Months-long congestion and the slow return of empty containers at the ports of Los Angeles, Long Beach, and New York and New Jersey are flowing inland to key rail hubs such as Chicago, Dallas, and Memphis. Railroads are imposing “per diem” and “rail storage” charges as ocean containers are flooding terminals in the US interior.
Storage Safety Nets
Near port and off-site drop lots have become crucial in dealing with the import surge. Moving containers off-terminal stops the clock on fees for demurrage for shippers, as often the storage fee for these lots or warehouses is much less than demurrage after free time has expired.
Drop lots also offer another advantage to importers as they struggle to return empty containers. “Leaving an empty container on a chassis somewhere in the Inland Empire area creates a whole new set of challenges as opposed to, for instance, working with certain terminals like Long Beach Container Terminal [LBCT], where they implemented an auto-cancellation policy throughout the day,” Weston LaBar, CEO of the Harbor Trucking Association (HTA) said.
Additionally, drop lots give exporters a short-term solution for changing earliest receiving dates (ERDs), the earliest date and time available to drop a loaded container for a specific sailing. As ships are delayed, ERDs may change several times, leaving exporters with limited room to store the containers until the terminal can accept them.
Future Supply Chain Strategies
Due to the widespread delays, shippers may reconsider drayage strategies due to new routing and service options. While these logistics decisions may be more costly upfront, they also provide avenues to mitigate detention and demurrage usage fees that shippers have been racking up during months of congestion and the slow return of empty containers.
Disagreements between several supply chain parties - including ocean carriers, terminal operators, drayage providers, and shippers - has led to the involvement of federal regulators, as they attempt to guide the industry toward commercial solutions and take a closer look at how detention and demurrage are assessed. Although the FMC has repeatedly put carriers and marine terminals on notice through investigations and guidance on proper business practices, shippers and truckers allege the carriers and marine terminals are still levying unfair fees. They defend the fees as necessary to incentivize the timely removal of cargo and return of equipment. Cargo owners that don’t pick up or return containers quickly enough exacerbate and prolong port congestion, they contend.
Major U.S. Ports Status Update
Below is a general overview of the operations BRi USA has been able to gather for most major ports. This list will be updated as information is made available.
Port of Seattle and Tacoma – The Northwest Seaport Alliance (NWSA) reported that container freight volumes rose by 9% in January 2021 compared to January 2020 totalling 288,289 TEUs. NWSA, a partnership between the ports of Seattle and Tacoma, January container numbers showed an 11% increase in imports but a 13% decline in exports. The ports say that the drop in exports is due to increasing schedule unreliability. All terminals are open for normal operations this week.
Ports of Los Angeles/Long Beach – The Maersk Essen is finally discharging its cargo at its original destination at the Port of Los Angeles, after losing 750 containers overboard in the Pacific Ocean in mid-January. Marine terminal operators and the ILWU have reached an agreement to return to standard gate hours at the Ports of Los Angeles and Long Beach. Beginning Saturday, March 6, the second shift will begin at 6 p.m. and end at 3 a.m. Pacific Time. The first shift will continue to start at 8:00 a.m. Pacific Time and end at 5 p.m. The announcement marks a return to standard gate hours at the San Pedro Bay Port Complex. Shortly after the start of the COVID-19 pandemic last year, the second shift was temporarily delayed by one hour to allow extra time for equipment cleaning. Delays for port cargo or for cargo to be moved inland by rail have been excessive - up to weeks. Experts say that congestion will dissipate in Los Angeles-Long Beach when workers throughout the supply chain are vaccinated and imports take a modest dip. All terminals are open for normal operations this week.
Port of Oakland – All terminals are open for normal operations this week.
Port of Houston – All terminals are open for normal operations this week.
Port of New York/New Jersey – Demand from shippers looking to clear the backlog of containers at the Port of New York and New Jersey is soaking up drayage capacity and driving up spot rates for hauling containers to regional distribution centres. With the months-long surge in imports expected to continue through the second quarter and cargo flow slowed by weather delays in February, drayage executives expect spot rates will stay elevated at least until April and maybe into June. All terminals are open for normal operations this week.
Port of Virginia - The Port of Virginia’s terminals are operating with record efficiency – while handling record volumes – thanks in part to the completion of its three-year, $800 million productivity and capacity-increasing projects. The Port of Virginia reported its best January ever, with the nearly 271,000 TEUs handled being up more than 19 percent over the comparable year-earlier month. All terminals are open for normal operations this week.
North Carolina Ports - All terminals are open for normal operations this week.
South Carolina Ports - All terminals are open for normal operations this week.
GA Ports - All terminals are open for normal operations this week.
Retail Container Imports ‘Expected to Grow Dramatically’
US retailers project that continued growth in on-line shopping, as well as increasing in-store shopping, will power double-digit increases in imports through June, signalling little relief for the US port network already sagging under a record import surge.
Record retail sales and continued inventory restocking provide the backdrop for the National Retail Federation’s increased expectations for inbound containers. On Monday, the group raised its forecast for first-half 2021 twenty-foot equivalent units (TEUs) landing at major container ports in the U.S. to 23.3% year-over-year.
Notice of Modification of Section 301 Action: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute
The U.S. Trade Representative has determined to modify the action being taken in the investigation by suspending the additional tariffs on goods of the United Kingdom for a period of four months. The suspension is in accord with a joint U.S.-UK statement that promotes a resolution of the large civil aircraft dispute.
BRI can confirm the following changes for Section 301
• The additional duties imposed by subheadings 9903.89.05, 9903.89.07, 9903.89.10, 9903.89.13, 9903.89.16, 9903.89.19, 9903.89.22, 9903.89.25, 9903.89.28, 9903.89.31, 9903.89.34, 9903.89.40, 9903.89.43, 9903.89.46, 9903.89.49, 9903.89.50 and 9903.89.55, and as provided by their associated subchapter notes, will not apply to products of the United Kingdom that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on March 4, 2021, and before 12:01 a.m. eastern daylight time on July 4, 2021.
• Any products of the United Kingdom that were admitted into a U.S. foreign trade zone in ‘privileged foreign status’ as defined in 19 CFR 146.41, before 12:01 a.m. eastern standard time on March 4, 2021, will remain subject to the applicable duties in subheadings 9903.89.05, 9903.89.07, 9903.89.10, 9903.89.13, 9903.89.16, 9903.89.19, 9903.89.22, 9903.89.25, 9903.89.28, 9903.89.31, 9903.89.34, 9903.89.40, 9903.89.43, 9903.89.46, 9903.89.49, 9903.89.50 and 9903.89.55 upon entry for consumption.
• Any product of the United Kingdom covered by subparagraph 2 of the Annex to this notice that is admitted into a U.S. foreign trade zone on or after 12:01 a.m. eastern standard time on March 4, 2021, and before 12:01 a.m. eastern daylight time on July 4, 2021, may be admitted in any status, as applicable, as defined in 19 CFR 146, Subpart D.
BRi ERP and Order Management Program
To ensure you maintain visibility to your shipments as they move through the supply chain, please take advantage of BRi PATHWAY.
The information in PATHWAY is real-time and available 24/7.
To obtain a login for your account, please respond to this email so we can get you started!
As a valued customer, we hope that you will continue to trust us to source the best options for your supply chain needs now and into the future. Should you have any questions regarding this News, please do not hesitate to contact your Customer Solutions Representative.
Keeping you updated,
BRi Customer Solutions Team
Back to News Page