Shipping Giant Maersk Predicts Ports Will Implement Container Fees

Vessels wait to offload containers into the Port of Los Angeles, Calif., on Oct. 27, 2021. John Fredricks/The Epoch Times

LOS ANGELES—Shipping giant Maersk has informed customers the likelihood that the ports of Los Angeles and Long Beach will implement container fees has risen over the past month because of ongoing congestion issues.

“Given that congestion continues to impact vessel and landside supply chain operations, the likelihood of the [Biden Administration] implementing the fee has risen significantly this month,” reads a May 24 statement by Maersk.

Since last year’s announcement of the fee program, supply chains have endured even more disruptions, including the COVID-19 pandemic, historic levels of goods coming into the United States, geopolitical conflicts, and challenges in global markets, Maersk told customers.

Labor negotiations also started this month for a contract that expires July 1 in advance of shipping peak season, the company said. Port officials expect labor negotiations to continue beyond the deadline.

On June 3, port executives in Los Angeles and Long Beach will again consider charging the fees for containers that stay at the docks too long but have no plans to activate the program, according to port officials.

The ports denied Maersk’s report.

“Right now, there is no plan to implement the dwell fee,” Port of Los Angeles spokesman Phillip Sanfield told The Epoch Times.

Port directors decided to delay the fee again last week, another port spokesman Lee Peterson told The Epoch Times.

The ports have threatened shippers with the container dwell fees since Oct. 25, 2021, but have yet to implement the additional charges.

The ports have reduced the number of lingering containers by half since the program was first announced, according to Sanfield.

“Just the threat of the fee has done a remarkable job,” Sanfield said.

Still, the Port of Los Angeles reported containers stay on the docks for an average of 8.6 days, which was an increase this week, according to its website. As of May 31, the port had more than 73,000 containers stored at the docks to be shipped, with 25,000 waiting for more than nine days.

The port also had nearly 54,000 empty containers.

Cargo is “sitting too long,” Sanfield said. “It really should only be staying in port about two days.”

The biggest hurdle was getting cargo shipped by rail, Sanfield said. Nearly 28,000 containers waiting for railway shipping, with nearly 14,000 of those lingering for more than nine days.

If the container fees are implemented, ocean carriers will most likely pass the added costs onto shippers, threatening to add even more to already record-breaking shipping costs.

Under the program, the ports could charge ocean carriers $100 per container for each loaded import container that stays on the docks for longer than nine days. The fee would increase by $100 increments per container until it is shipped.

With 80 percent of all goods traded by sea, high shipping costs are driving inflation, according to the International Monetary Fund, which global economic developments.

“We find that shipping costs are an important driver of inflation around the world,” the IMF wrote in its blog in March. “When freight rates double, inflation picks up by about 0.7 percentage point. Most importantly, the effects are quite persistent, peaking after a year and lasting up to 18 months. This implies that the increase in shipping costs observed in 2021 could increase inflation by about 1.5 percentage points in 2022.”

Maersk did not return a request for comment by press time.