New Excess Dwell Time Fees

November 10, 2021

By now everyone with interests in trans-Pacific trade is aware of the $100 fee that will be charged for containers that sit too long at Los Angeles and Long Beach Ocean Terminals. What we do not yet know, is how these fees will be invoiced and collected.

As from November 15th, containers moving by truck will have 8 days to dwell before being penalized. Containers moving by rail will have only 6 days. After these minimum thresholds, each container will accrue a fee of $100 on the first day, $200 on the second day, and so on.

If this fee were in effect today, nearly 60,000 containers would be racking up charges. In other words, more than 60,000 containers have been sitting in the terminal for more than 8 days. No matter how you do the math, this represents a lot of money!

However, there remains some confusion. In fact, right now there are probably more questions than answers about the excess dwell time fee.

The Port of Los Angeles announced: “The Port will charge ocean carriers in these two categories $100 per container, increasing in $100 increments per container per day until the container leaves the terminal.” If that is the case, then ocean carriers and NVOCCs will need to file these charges in their tariffs so they can be invoiced or passed through to the importer.

A trade announcement from MSC last week stated: “MSC expects that all costs will be passed through to shippers, although it remains unclear whether the Marine Terminal Operator (MTO) or the carrier will be rebilling this.” Other industry trade announcements have indicated that the ocean terminal will be invoicing and collecting the fee before the cargo is allowed to exit the terminal.

Shippers have been asking whether the excess dwell fee replaces demurrage or whether it is to be added to demurrage as an accelerated demurrage charge.

The National Industrial Transportation League (NITL) wrote to FMC chairman Daniel Maffei asking the agency to weigh in on the new fees. In May the FMC formalized its view on demurrage and detention, saying storage fees that do not incentivize the retrieval of cargo and return of equipment would be considered unreasonable. As a result, it now appears that the FMC must rule against the White House — which pushed Los Angeles and Long Beach to institute the fees in the first place. That is interesting!

All Trade Tech customers would be well advised to immediately file a rule in their tariff in order to pass the fee along to their customers. A Maersk announcement confirms it has published a new surcharge in its tariff on November 1 under the name “Emergency Government Port Storage Charge”.

Contact your local Trade Tech representative to ask how Trade Tech’s new Demurrage & Detention tracking tool can help you run your business and avoid excess dwell fees.

Tracking Demurrage & Detention is essential for NVOCCs in today’s environment.