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HomeNewsPort of New York/New Jersey's "container imbalance fee" could be counterproductive

Port of New York/New Jersey’s “container imbalance fee” could be counterproductive

On the 2nd of August 2022, the Port of New York and New Jersey announced the  implementation of a new quarterly container imbalance fee which will come into effect from the 1st of Sep 2022 pending a mandatory federal 30-day notice period.. This new charge targets ocean carriers who have excess empty containers stored in the port for long periods..

The fee will reduce the number of excess empty containers dwelling at the port and free up much-needed capacity for containers that are full of imports and ready to be picked up by cargo owners.” a press release from the Port Authority of NY/NJ said..

While this is important to achieve better fluidity in the terminal, this could also be counter-productive to the initiatives by the Biden Administration to give preference and priority to American exports.. Here’s why..

As per below. the average full exports out of NY/NJ between 2005 and May 2022 has been around 116,000+ containers, equating to around 48% of import containers being returned as full exports on average for this period..

Port of New York - full vs mty stats

In 2018, 43% of inbound containers went out as full exports compared to 53% empties.. In Jun 2022, that full export container percentage dropped to 25% while empties increased to 70%..

If we look at the numbers from 2018 to 2022, the full exports has been dropping Y-O-Y while the empty out has been increasing Y-O-Y..

Port of New York - full vs mty

As per the port, this new container management fee, will be assessed on a quarterly basis, and ocean carriers whose total outgoing container volume does NOT equal or exceed 110% of their incoming container volume during the same period will be liable for a fee of $100 per container..

As of June 2022, the port’s total outgoing container volume is sitting at 94% of its incoming volume.. Different carriers may have different percentages depending on their market share..

To avoid the penalty, the carriers may simply increase the empty repositioning which could mean reducing export fulls which is already going down..

The application of this penalty at a port where it appears that the carriers have been performing more than reasonably well in clearing out empties month on month seems to be counterproductive to the initiatives like the Ocean Shipping Reform Act 2022 that the Biden Administration has taken to promote the movement of export fulls..

Remember this quote from President Biden “ocean carriers are refusing to take American exports back to Asia, leaving with empty containers instead. That’s costing farmers and ranchers—and our economy—a lot of money.“..

The East Coast ports have been facing increasing port congestion due to the shift in vessels from the West Coast to East Coast.. As of this article, Savannah had 41 vessels (85%) waiting while New York had 19 vessels (54%) waiting compared to 4 vessels (24%) and 3 vessels (16%) at Long Beach and Los Angeles as per data from eeSea..

As per the release, “The seaport has been handling a cargo increase of nearly 12 percent year-to-date compared to the same period last year and an astounding rise of 34 percent in cargo volume compared to the same period during pre-pandemic 2019.

Our seaport has largely managed to avoid many of the national supply chain challenges affecting other U.S. ports due to our continued collaboration and communication with port partners and stakeholders. This new proactive container management approach is an example of our Port Department’s ability to identify and implement solutions before they cause logjams in our region,” said Port Authority Executive Director Rick Cotton.

The Port of New York and New Jersey is facing record import volumes, leading to empty containers accumulating in and around the port complex that are now affecting the regional supply chain that is already under stress from various sources across the country,” said Bethann Rooney, director of the Port Department at the Port Authority of New York and New Jersey. “We emphatically encourage ocean carriers to step up their efforts to evacuate empty containers quicker and at higher volumes to free up much needed capacity for arriving imports in order to keep commerce moving through the port and the region.

The Port Authority has published the tariff detailing the new container imbalance fee on its website for a 30-day public comment period.. The fee is expected to be reassessed when the global supply chain crisis eases, with a review as needed..

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