Hi everyone, I currently work in the shipping industry and would like to give you some insight about what’s going on in Long Beach right now, and how Biden’s imposed “emergency fee” to alleviate congestion is actually making things worse. I hope this provides some of you with useful information.
Here’s some background for those of you unfamiliar with ocean imports. When vessels come to Long Beach port, the containers are unloaded and delivered to the terminal. From there, containers are either delivered to CFS (container freight station) for unloading, or the entire container is delivered to the customer that purchased the goods.
Right now, containers are stuck in the terminal unable to be delivered to CFS or to the customer’s warehouse. This is due to a lack of truck drivers and chassis (equipment used to transport containers). Not only is this bad because customers can’t get their goods, but there is also something called a “last free date” which is the date by which the importer has to get the container out of the terminal. If the importer is unable to get the container out by the last free date, shipping lines will charge importers significant extra charges (called demurrage charges) for each day that the container isn’t picked up (usually $200-350 per day, depending on the shipping line). Well, since there is a lack of truck drivers and equipment, there is literally no way to get the containers out of the terminal. Every day that goes by, charges are being added onto shipments, which ultimately ends up on an invoice billed to the customer. Some demurrage charges are able to be contested and refunded, but a refund does not always happen.
That isn’t the worst part. Biden recently began imposing an “emergency fee” onto shipping lines to help combat port congestion. But guess what? Shipping lines are recently announced that they are going to start billing importers somewhere around $150 per cubic meter in additional fees. To put this into perspective, a 40 foot container, lets say has 60cbm of goods, will be charged an extra $9000 by shipping lines. Biden’s emergency fee literally does nothing to address port congestion, and actually makes things WORSE.
Here’s what I’m afraid of. When demurrage charges get so high, customers could simply choose abandon their goods at the terminal. The cost of demurrage and other stupid fees could EASILY surpass the value of the actual goods. Why would a customer want to pay more than the goods of the shipment to have the shipment released to them? This poses a huge risk to shipping lines, importers, and everyone involved in the shipping industry right now. Also, don’t get me started on per diem (for those of you interested, just Google it, it’s an additional fee resulting in customers being unable to return their containers back to the terminal in time)
The amount of fees piling on that will ultimately land on consumers, combined with the demand for goods, is honestly kind of scary, and I have no idea how this is going to end if we don’t get some kind of divine intervention ASAP.
tldr; bad things are brewing in the shipping industry right now, and it has only been getting worse.