Tuesday, January 12, 2016

Retailers Oppose Free Time Reduction Proposal

By Mark Edward Nero

The National Retail Federation on Jan. 7 sent a letter to the Port of Long Beach expressing concerns about the port’s plan to reduce the amount of time import containers can be stored for free on the docks.

Since 2005, the length of time containers can stay on the dock – known as “free time” – has been four days. Beyond that, terminals are charged storage fees. Port officials said last October that they’re proposing changing free time to six shifts – the equivalent of as few as three days – in order to encourage terminals to more consistently operate at night and move imports off the docks faster.

The National Retail Federation’s letter, which was addressed to the POLB CEO Jon Slangerup and Chief Commercial Officer Noel Hacegaba, was signed by NRF Supply Chain & Customs Vice President Jonathan Gold. In the three-page missive, Gold said that the NRF applauded the port’s efforts to reduce congestion on the docks, but that it wanted to express its concerns about the plan.

“Unfortunately we do not believe that reducing free time from four days (essentially eight shifts) to just six shifts (three days) on its own will address the ongoing congestion and throughput issues,” the letter stated. “Reducing free time as proposed will only lead to additional congestion and operational issues, and most importantly potentially additional costs to NRF members by way of demurrage.”

Gold argues that without uniform shifts across the terminals, determining the last free day will become a manual process, and that this will render the current automated systems being used to determine the last free day “useless,” because different terminals will have different shifts that change weekly, the importer will be required to manually manage the last free day for each container and bear the repercussions that this manual environment will produce.

“The proposed calculation based on shifts could lead to more congestion in the ports because of the uncertainty over the last free day,” Gold wrote. “This uncertainty will lead to missed container pick-ups, resulting in more containers trapped at the terminal.”

Among his proposed solutions to congestion: an increase in terminal operating capacity, lanes and gates to support increased and improved daily throughput.

A more balanced proposal, he wrote, would address the actual congestion issues happening within the terminals. We would like to see the terminals sharing in the financial responsibility for said congestion by, among other things, paying drivers for their wait time at the docks.

The port says that staffers are working with stakeholders to develop a final plan on the free time reduction that will be sent to its harbor commission for consideration later this year.