Biden hopes fines on lingering cargo ships ease congestion at major U.S. ports
- The Biden administration is hopeful new fines imposed on carriers at the nation's busiest port complex will ease the intensifying logjam of cargo ships.
- The twin ports of Los Angeles and Long Beach will charge carriers $100 per day for each container lingering past a given timeline starting Nov. 1.
- The nation's knotted supply chain is bearing the brunt of surging consumer demand, high transportation expenses, crippling labor shortages, overseas manufacturing delays, trade policies and inflation.
WASHINGTON – The Biden administration is hopeful new fines imposed on carriers at the nation's busiest port complex will abate the intensifying logjam of cargo ships.
The twin ports of Los Angeles and Long Beach announced Monday that containers moved by trucks will have nine days before fines start accruing and containers scheduled to move by rail will have three days.
In accordance with these deadlines, carriers will be charged $100 for each lingering container per day starting Nov. 1.
"The terminals are running out of space, and this will make room for the containers sitting on those ships at anchor," explained Port of Long Beach Executive Director Mario Cordero in a statement announcing the measure.
White House press secretary Jen Psaki told reporters Tuesday that the administration continues "to press on ways to address issues in the supply chain," adding that Biden plans to discuss global commerce disruptions with leaders at the G-20 meeting this weekend.
"Both ports are moving 19% more containers than at the same point in 2018, which was the previous record and the ports remain on target to outpace the previous record of 17.5 million containers processed in 2018," explained Psaki.
Earlier this month, the Biden administration unveiled a plan to run operations 24/7 at the ports of Los Angeles and Long Beach, which account for 40% of sea freight entering the United States, in order to address bottlenecks.
And while round-the-clock operations at the twin California ports are expected to alleviate the backlog of container ships, it's far from solving the compounding issues impacting the global supply chain.
"It's not just fixing the ports, that's one component in a very long supply chain" explained Awi Federgruen, a production and supply chain management expert and professor at Columbia University Business School in New York.
"Extending the working hours of the ports in California by some 60 hours, and then shaving off 25% of the unloading time will not be the savior of the entire problem. There are several factors that are compounded by each other," Federgruen, who chairs Columbia Business School's Decision, Risk and Operations division, told CNBC.
The nation's knotted supply chain is bearing the brunt of surging consumer demand, high transportation expenses, labor shortages, overseas manufacturing delays, trade policies and inflation.
What's more, the approaching holiday season has intensified the situation as loosened public health measures and coronavirus vaccines point to larger celebrations this year compared to 2020.
"We haven't seen something of this magnitude in quite some years," Federgruen added. "The individual consumer will feel enormous inflation together with not being able to purchase the goods if this persists," he added.
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