Port Surcharge Has Led to 'Incredible Progress,' LA Port Director Says
The threat of a California port surcharge meant to incentivize the movement of dwelling containers has proved very successful at clearing cargo off docks, Gene Seroka, executive director of the Port of Los Angeles, said during a Jan. 19 House Homeland Security subcommittee hearing. He said the fee threat has substantially helped trade flows at both Los Angeles and the Port of Long Beach, which announced the charge in October but has postponed enforcing it each month since (see 2201140055). “That fee has never been implemented and we've not collected a dime, but incredible progress has been made to move cargo off our docks,” Seroka said.
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The fee, if implemented, will impose additional charges for containers moving by truck and dwelling for nine days or more and for containers moving by rail and dwelling for six days or more. The fee announcement was originally met with strong backlash from the shipping community, which said ocean carriers would likely pass on the extra charges to shippers (see 2110280031).
But no charges have been issued, partly because the ports have seen a combined 61% drop in aging containers since the charge was first announced, Seroka said. “It's working,” Seroka said. “What we attempted to do was not point fingers or publicly shame anybody, but [say] if you didn't need your product to market, move it aside for right now.”
He also suggested the port will continue to postpone enforcing the fee. “The time that containers sit on our docks has basically been cut in half since we've instituted some of our policies,” Seroka said. “We need to further reduce that and get into a position where cargo is flowing through these ports safely and securely.”
Seroka also said the L.A. port is working to address issues facing agricultural exporters, including ocean carriers that prioritize imports over exports and leave the U.S. with empty containers (see 2112170020). The port is working closely with the Dairy Farmers Association, the Agricultural Transportation Coalition and other export representatives to “find ways to bring more exports into the flow,” he said. “We've got a lot of empty containers.”
But he also suggested some exporting obstacles can be solved through U.S. policymaking and trade deals. He said the U.S. needs to reexamine the phase one trade deal with China, which “has created non-compensatory pricing for the American farmer from the moment product is harvested.”
Seroka also said the U.S. needs a national export policy (see 2104220033) to “bring people back” into the export sector. A clear strategy could “get more productivity out of both agriculture and manufacturing, reconnecting our American exporters with their partners overseas,” he said.
Other witnesses said Congress can do more to ensure U.S. seaports move trade more efficiently, including through more funding and resources for CBP. Christopher Connor, CEO of the American Association of Port Authorities, said CBP is facing a staffing “crisis” at U.S. ports, which is leading to “processing capacity” issues. “Ports are unable to bear the burden of the financial demands,” Connor said. “Congress must act to provide CBP with the resources they need to effectively carry out their important mission.”
Anthony Reardon, national president of the National Treasury Employees Union, said “there is no greater roadblock to the nation's economic and border security than the lack of sufficient CBP staff at the ports,” adding that U.S. seaports “continue to be chronically understaffed.” CBP didn’t immediately respond to a request for comment.