Delayed cargo fines are starting to help

The Port of Los Angeles’ decision to impose fines on stuck shipping containers was a “last resort” but is already showing signs of the desired effect, chief executive Jean Seroka told CNBC on Tuesday.

The policy, which took effect Monday, was announced this week as part of efforts to reduce port congestion caused by the Covid pandemic. Shipping carriers will pay $ 100 per day for each container left for nine days or more. Fines for containers that leave the facility by rail begin to accumulate on the sixth day or later.

“We tried diplomacy. We tried cooperation, operational meetings everywhere, and so far nothing has gotten off the ground. This is a last resort and I didn’t want to use it, but we are starting to see movement, “Seroka told Squawk Box.

“People come to the table with these daily and twice a day hangouts to try to figure out what their plans are – liner shippers, importers – and how we are going to move this cargo and get others to move forward,” continued Seroka, head of the busiest container port. North America since 2014

According to Serok, the fines, which will be imposed no earlier than November 15, will be imposed on liner shipping companies.

“We asked them to work closely with us. As of late night we have 73 ships at anchor, and we have to put those ships on board and work. Productivity here at the port … continues to be at an all-time high, ”Seroka said. “It is imperative to remove this product from the docking station. We have tried almost every possible angle, and now some people are thinking a little more than they thought in recent weeks and months. “

Sea containers at the Port of Los Angeles in Los Angeles, California, USA, Wednesday, October 13, 2021.

Kyle Grillo | Bloomberg | Getty Images

According to a press release from the Port of Los Angeles, about 40% of import containers at terminals are idle there for at least nine days. That’s above the pre-coronavirus average of four days for containers destined for trucks and two days for containers bound for railways.

US container port volumes, including the port of Los Angeles and its nearby port at Long Beach in California, rose during the coronavirus pandemic after an initial downturn in early 2020, according to the Department of Transport.

The rise in inbound cargo has challenged the Port of Los Angeles since last year. For example, in December 2020, Seroka warned CNBC that the port was under strain, citing a pandemic-related shift in consumer spending towards more non-service goods.

However, general public attention to supply chain bottlenecks has indeed intensified in recent months, and the Biden administration has stepped up efforts to address these issues, which have contributed to inflationary pressures hitting the U.S. economy. Last month, a White House-backed initiative was launched to work around the clock in the ports of Los Angeles and Long Beach.

In an interview with Mad Money on Monday, Commerce Secretary Gina Raimondo told CNBC correspondent Jim Kramer that the administration is doing “everything in our power” to reduce port congestion, along with the business community. “Basically, the private sector has to solve this problem, and we are working with them in partnership,” she said, adding that “we are seeing progress.”

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