Seems like broadly the right call on an econ 101 level, though the fact that this was ever free is a Chesterton’s Fence, $100 seems like a suspiciously round number, and I’m not sure about the differing thresholds for truck-bound vs. rail-bound containers (or thresholds at all, really).
Maybe someone who knows anything about the shipping industry can comment?
Ports and shipping companies have complex contracts covering all kinds of services. Container storage for a few days is just part of normal operations, included in the docking fee. Longer-term storage is often included as well.
Even if your “free storage” clause has some built-in limit, it is not trivial to invoke such an exception. Keep in mind that this is an industry with few players where people know each other, and have to work together on a long-term basis. If the port tries charging, then maybe the shipping company replies “well, technically you guys aren’t upholding the guaranteed turn-around times, which we have been very gracious about” etc etc.
And yes, $100 per container-day is a ludicrous number. It’s meant to exert pressure, not to clear the market. It’s easily more than 10x of a reasonable fee (I can’t put an exact figure on this, since it’s usually not charged on a per-container basis, and varies a lot by location).
Further update: the port of Long Beach has made a deal with Union Pacific to haul containers to Salt Lake City that would previously have been picked up by trucks.
As a follow-up to point 8, it looks like the ports are going to start charging money for extended use of their scarce storage capacity: https://polb.com/port-info/news-and-press/san-pedro-bay-ports-announce-new-measure-to-clear-cargo-10-25-2021/
Seems like broadly the right call on an econ 101 level, though the fact that this was ever free is a Chesterton’s Fence, $100 seems like a suspiciously round number, and I’m not sure about the differing thresholds for truck-bound vs. rail-bound containers (or thresholds at all, really).
Maybe someone who knows anything about the shipping industry can comment?
Ports and shipping companies have complex contracts covering all kinds of services. Container storage for a few days is just part of normal operations, included in the docking fee. Longer-term storage is often included as well.
Even if your “free storage” clause has some built-in limit, it is not trivial to invoke such an exception. Keep in mind that this is an industry with few players where people know each other, and have to work together on a long-term basis. If the port tries charging, then maybe the shipping company replies “well, technically you guys aren’t upholding the guaranteed turn-around times, which we have been very gracious about” etc etc.
And yes, $100 per container-day is a ludicrous number. It’s meant to exert pressure, not to clear the market. It’s easily more than 10x of a reasonable fee (I can’t put an exact figure on this, since it’s usually not charged on a per-container basis, and varies a lot by location).
Further update: the port of Long Beach has made a deal with Union Pacific to haul containers to Salt Lake City that would previously have been picked up by trucks.