Long Beach port considers new way to reduce free container storage time

By Bill Mongelluzzo, JOC.com

The Port of Long Beach is considering a creative approach to reducing the amount of time that containers sit idle at marine terminals, a measure that could reduce congestion at the second largest U.S. port by changing how free storage time is calculated.

By changing the measurement of free storage time to six work shifts, from four calendar days at present, terminal operators could cut container dwell time by an entire day, and this would increase container velocity.

“When containers stack up in terminals, it leads to extra handling that makes the process slower for longshore workers, the shippers that depend on them, truckers who move the goods and ultimately the consumer. This approach will keep the system more fluid and help avoid congestion,” said Jon Slangerup, Long Beach CEO.

Long Beach, like many U.S. ports, specifies in its tariff how long an imported container can be stored at marine terminals without charge. In Long Beach, the free-time allotment is four days. After that, a storage charge, known as demurrage, is levied to discourage lengthy container dwell times from taking up valuable terminal space and contributing to overall port congestion.

As ships get bigger and cargo surges stress the resources of terminals, ports are looking for ways to discourage abuse of free-time provisions without alienating customers. Shipping lines, in their service contracts with retailers and other large importers, often pick up the tab for customers who leave their containers on the docks for days after free time has expired.

Carriers themselves are saying they can no longer afford to absorb demurrage charges on behalf of their customers. The Transpacific Stabilization Agreement, a discussion group of 15 carriers in the eastbound Pacific, announced Friday its member lines in their 2016 contracts will consider changes in the absorption of equipment storage charges.

In the coming weeks, Long Beach will work with all of the port’s stakeholders to develop a plan that will be proposed to the Board of Harbor Commissioners for consideration. The port is proposing a measure it is calling flexible free time.

“Truckers have told us their containers are not always accessible because of fewer evening shifts, and terminal operators want to clear space in their yards while giving their customers enough time to get their cargo. Our idea, flexible free time, is an innovative use of the tools we have to balance those needs,” said Noel Hacegaba, the port’s chief commercial officer.

By changing free-time calculation from four calendar days to six work shifts, the intention is to encourage terminals to more consistently operate at night. This would reduce container dwell time to the equivalent of as few as three days, thus knocking one day off of the time many containers are stored on the docks.