February 6, 2015
After the PMA’s announcement earlier this week that West Coast ports are on the verge of an involuntary port shutdown, we maybe seeing the process slowly playing itself out. The PMA announced today that terminals would not be hiring labor this weekend for vessel loading and unloading. Terminals had already a few weeks ago discontinued night operations for vessel loading and unloading. For the terminal operators, it didn’t make sense for them to be employing labor to remove containers into already congested terminals. This announcement will only further delay cargo arriving at West Coast ports. Note that labor will still be used for basic yard, rail and gate operations.
Another indication of how close we are to a complete terminal shutdown is the fact that numerous terminals are not allowing return of empty containers. In such circumstances, will the carrier charge for detention fees? Who will pay for the chassis rental fees for each day the container sits outside the terminal with a chassis? Won’t this only exacerbate the chassis shortage issue? How LONG will terminals delay the receiving of empty containers?
Carriers beginning to declare Force Majeure?
Maersk made a decision this week to drop all Oakland bound containers on the DS National v.503 in Los Angeles/Long Beach. While other carriers have made similar decisions a number of times over the past month, the difference this time is that Maersk is terminating the shipments in Los Angeles/Long Beach and will not be responsible for moving the containers up to Oakland. With previous instances this past month, carriers have decided to rail the Oakland containers from Los Angeles/Long Beach. However by terminating the containers in Los Angeles/Long Beach, Maersk is in effect declaring Force Majeure. Maersk has made a similar decision with Oakland bound containers on the Gudrun Maersk, which has not yet arrived in Long Beach.
Importers with containers on these two vessels will be forced to arrange their own transportation of the containers up to Oakland. What makes this current circumstance so troublesome is the following:
- Maersk is requiring that the empty containers be returned to the terminal from which it was picked up.
- However the terminal is incredibly congested and from what we have heard is unable to receive a return empty container.
Importers are therefore facing a no win situation. They can pick up a container, but face possible detention charges and chassis rental charges. Or they can leave a container inside a terminal and face demurrage charges. All of the above is assuming that a trucker can even be located who is able to pick up the container.
Assuming other carriers begin following Maersk’s decision above, we can only expect to see even more container congestion in Los Angeles/Long Beach.