First it was the backup off the coast of California, when shipping containers sat at port for up to eight days. Now the backup has shifted to the East Coast, causing port delays at the Port of New York and New Jersey, the US’s second-largest port behind the Port of Los Angeles and the largest on the East Coast. Instead of just waiting for the congestion to clear, the Port of New York and New Jersey has an innovative—and potentially costly—solution.
The Situation: The Port of New York and New Jersey Implements Tariffs to Combat Port Delays
As announced at the beginning of this month, the Port of New York and New Jersey plans to implement a quarterly “container imbalance fee” starting September 1. The goal of the tariff is to reduce the number of containers sitting at the port, whether empty or full. The port has been seeing the same issues that other ports have faced: an increase in imports throughout the pandemic, which has led to containers taking up space as they wait to be exported. And that, in turn, creates port delays as ships are stuck waiting at anchor off port.
At the end of July, 19 carriers were sitting off the Port of New York and New Jersey, waiting an average of four days to dock. One of the main reasons for the wait is because of a lack of space to offload containers. And the increase in traffic is a result of rerouting from the West Coast. In the past year, imports on the East Coast have jumped 9.6% while the West Coast has only seen a 0.3% bump. Regardless, both coasts are seeing the same issue: port delays.
The Specifics: A Per-Container Fee Is Being Implemented
To combat the backup, the Port of New York and New Jersey has created a new tariff, charging $100 per container to shippers who don’t move out empty containers in a timely manner. Essentially, carriers need to export 110% or more of their incoming container volume, but if that doesn’t happen, they’ll be assessed this fee. It applies to full and empty containers equally. The goal in implementing the fee now is to get ahead of the projected holiday peak season.
The container imbalance fee isn’t the first measure the Port of New York and New Jersey has taken to reduce port delays. For nearly two years, operations have been expanded into evenings and weekends. Unfortunately, only 4% of cargo is moved on Saturdays, which isn’t making a dent in the overall 30% increase in cargo.
Additionally, the port has been using a 12-acre plot in the Port Newark and Elizabeth-Port Authority Marine Terminal to store long-dwelling import containers and is looking for additional storage space to help reduce port delays caused by an overabundance of containers.
Projections: Hopes Are High
As we’ve reported before, port delays, congestion, and supply chain issues are ongoing challenges for the shipping industry. Perhaps this tariff will help incentivize carriers to move their containers more swiftly, but only time will tell. As the world continues to return to normal, expectations are that we will see improved efficiencies, but in the interim, ports are being innovative in their solutions.
Cyclone Shipping: A Calm in the Storm
At Cyclone Shipping, we keep our ears and eyes open for any changes that occur in the shipping industry. We’ve been following the port delays for years now, and we continue to stay abreast of future changes and challenges so that we can inform our customers and provide viable alternatives. Our goal is to eliminate the worry of getting your products from point A to point B so you can focus on running your business.
If you’re looking for a freight forwarder with the experience and insight to make a difference in your shipping efforts, give us a call!