The ports of Los Angeles and Long Beach are reportedly discussing a new plan with major container shipping lines to incentivize carriers to load more containers than they unload, thereby clearing empty containers at crowded terminals without affecting the export of full-container cargo.
Ports, shipping lines and terminal operators are working on the plan with John Porcari, the Biden administration’s special port envoy for port mobility.
Congestion at the ports of Los Angeles and Long Beach reached historic levels during an 18-month surge in cargo traffic.
If the so-called overmatch plan is enacted, it would replace an earlier proposal by the Port of Los Angeles to impose detention fees on loaded containers held for long periods of time.
Port of Los Angeles Executive Director Gene Seroka said at the Jan. 13 Los Angeles Port Commission meeting that port staff will consult with stakeholders to obtain further input before deciding whether to bring the proposal to the board.
Noel Hacegaba, deputy executive director and chief operating officer of the Port of Long Beach, said there are approximately 120,000 empty containers stranded at its 12 terminals.
Empty containers are now a major contributor to terminal congestion in Long Beach and Los Angeles as the port has fewer long-term fully loaded import containers after the port announced high detention fees for containers in October.
Ports have repeatedly delayed imposing exorbitant detention fees, citing their success in removing long-detention containers.
“The number of inbound containers stuck at terminals for nine days or more has dropped by 60% and now accounts for just 10% of terminal container stocks. We hope to build on this progress and shift attention to empty containers, which are Containers currently account for 47% of all containers at the Long Beach terminal. This number is approximately double the pre-pandemic level,” Hacegaba said.
Hacegaba said the super-matching scheme would incentivize shipping companies to move more outbound containers per month relative to inbound containers, and would need to do so in the least disruptive way for them.
Details on the incentive program are being worked out with port stakeholders.
The working group has determined that scheduling how many outbound containers a ship must pick up cannot be applied to every ship call. Many ships enter ports already fully loaded with import cargo, so it is mathematically impossible to load more than 100% of their capacity.
Hacegaba said the scheme would be based on each carrier’s monthly total inbound and outbound container volumes, rather than on a per-terminal basis. The carrier calls at multiple terminals in the Ports of Los Angeles and Long Beach under its vessel-sharing alliance.
Hacegaba said it was also important for ports to be careful not to allow carriers to favor empty containers over full export containers for return trips.
Over the past year, U.S. exporters have expressed concerns that carriers may reject relatively low-paying exports and instead ship empty containers back to Asia to be refilled with more high-paying imported consumer goods.
Although transpacific shipping lines have deployed several single-voyage sweepers at the Port of Los Angeles and Long Beach since last fall specifically to transport empty containers back to Asia, empty containers continue to occupy space at terminals.
Alan McCorkle, president of Yusen Terminals in Los Angeles, said the sweepers are having an impact and port liquidity conditions are much better now.
McCorkle added that some new services deployed in recent months by shipping lines that have never operated across the Pacific are receiving empty containers from other shipping lines that have a surplus of empty containers. “They sell empty containers to other shipping companies that call here so they can free up space,” McCorkle said.
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