Shipping rates are falling steeply but we are not out of the logistic woods yet with the Ports of Los Angeles and Long Beach proposing very punitive charges for containers that are not collected quickly enough. The initiative is intended to decrease bottlenecks at the ports by clearing the docksides more quickly, but the reason why there are delays is often out of the shippers' and buyers’ hands as it is a lack of truck drivers and rail capacity that is at issue. The penalty rates proposed are steep and might discourage some shipments – especially of polymers and other low-value products. If it takes you an extra 20 days to offload a container from the port the cost of shipping polymers from Asia would double – very few importers would take that risk given the small margin opportunity that exists in the trade already. The penalties might encourage trucking companies to increase driver compensation to attract more drivers, but only if they can pass the potential penalty through to their customers. While this move proposed for containers may help drive down some of the port congestion times it is not a good sign for inflation as someone will have to pay – either pay the fines or pay up to improve resources to clear the containers more quickly.
Source: Zerohedge, FreightWaves, October 2021