Carriers should not be allowed to profit from congestion for which they are at least partially responsible, says agriculture group.
The Federal Maritime Commission should call for a waiver of demurrage and detention charges against shippers for the period late last year and early this year when West Coast ports were mired with congestion, says Peter Friedmann, a Washington attorney who serves as executive director of the Agriculture Transportation Coalition and represents several other groups including the Pacific Coast Council of Customs Brokers and Freight Forwarders, and the Coalition of New England Companies for Trade.
Friedmann praised the FMC’s Consumer Affairs and Dispute Resolution Service (CADRS), which is helping shippers resolve complaints about disputed detention and demurrage charges, but said the FMC needs to go further.
“In our view the Federal Maritime Commission needs to look at itself as the Consumer Product Safety Commission and the Federal Trade Commission. Those are real commissions that are looking out to protect consumers and the FMC needs to see itself as protecting the consumers of ocean transportation services. That’s one of the very first purposes of the Ocean Shipping Act. The Ocean Shipping Act does not say that the Federal Maritime Commission should protect the providers of ocean transportation services.”
In coming days, Friedmann said, “There is going to be communication signed by many organizations to the FMC asking them to take firm steps to make sure the carriers waive these per diem charges.”
CADRS is “probably one of the most useful things the Federal Maritime Commission is doing for the U.S. taxpayer right now,” said Friedmann, but he said AgTC and other organizations “have been meeting with the FMC, commissioners and staff, to emphasize the need for the FMC to take strong steps to protect the exporters and importers from these very, very unfair per diem charges.”
“This is something that needs to be decided at the commissioner level and not the staff level,” he added.
Friedmann said the commission could issue an edict or have behind the scenes conversations with shippers, noting that shipping lines backed down from imposing heavy port congestion surcharges last fall when challenged by the FMC. “Either of those approaches is fine,” he said.
He said charges have been imposed on shippers “for delay on returning containers to terminals when it’s absolutely…not the importers and exporters fault. The ports were so congested that they couldn’t get the containers back in.
“We’re talking, at some of the ports, of people waiting in line three days to get in…many terminals were closed for drop off, they were closed for pick up, sometimes they were just closed for a half day, three days in a row – that means the congestion is such that you don’t get through the gates for a week.
“There was absolutely nobody who had any desire to hold onto containers any longer than they needed to. People have been ripping their hair out on the West Coast for the last nine months getting containers back to the carriers. None of them have taken any action that justifies a carrier imposing per diem charges. Particularly since – according to ILWU, and at least to a certain extent they’re correct – much of this congestion is due to the introduction of these massive new ships. So to a certain extent the congestion delays are caused by the carriers themselves, so how should they be able to profit by imposing these per diem charges?
“When an exporter is being assessed a per diem they think is unfair and they go to CADRS, CADRS has been requiring significant documentation. Such as being able to prove that the gate was closed, being able to prove how long the wait time was.
“These are all things that people in the middle of a harvest season just don’t have that documentation and in many cases we’re finding the terminal also did not have a record of exactly when it’s open and closed. Or whether it’s limited to just picking up empty containers, dropping off empty containers. The terminals had different rules virtually every day, and CADRS has been wanting to have that data.
“Frankly we think it’s grossly unfair to make the shippers do the research as to when the terminals were delayed, closed, open, or congested. That’s something the terminals need to provide,” said Friedmann.
He added there should be “Mandatory waiver of all per diem charges during this period of congestion unless the carrier is able to show any reason to the contrary they have a mandate that all per diem charges during that period – which could be Nov. 15 through the end of March – be waived.” Those dates could be adjusted, but Friendmann also noted that shippers have been hit with unfair detention and demurrage charges caused by congestion at some East Coast ports such as New York and Norfolk.
“Carriers cannot, should not be allowed to profit by the congestion of which they are at least partially responsible,” he said.
Bruce Carlton, the president and chief executive officer of the National Industrial Transportation League said terminal congestion and detention and demurrage charges were a major topic of discussion at a meeting of the NIT League’s Ocean Transportation Committee this week.
“Committee members were undivided in their view that when the shipper/receiver is not at fault and cannot perform their obligation to pick up/drop off containers and other equipment due to terminal congestion or other inefficiencies, then these charges should be suspended,” said Carlton. “They absolutely believe such charges are an unfair practice, and they want the League to press this view at the FMC.
“League members are grateful the FMC has taken a good first step in defining the problem and potential solutions, but they are equally anxious to see the Commission take an action to prevent the reoccurrence of these kinds of monetary penalties for problems they did not create.”
He added that “Our members were also quick to point out that the dray truckers are equal victims, and that they need the same protections.”
Carlton said, “Some NIT League members have used the CADRS process with good results. But in this case, League members would like to see the FMC take action to stop the imposition of demurrage and detention charges at the front end so that shippers don’t have to go to CADRS to seek redress. We are working with our colleagues in other associations to explore the appropriate next steps in addressing this matter at the FMC.”
“It took several months for the PMA and ILWU to reach agreement and resume working fully staffed shifts. During this time, it cost American shippers and industry billions of dollars, lost markets for exports along with acute anger and distress experienced by all parties,” said Pisano.
“It will likely take another month for terminal operations to return to a normal level of service. But to the American shipping community, normal is just not good enough,” he added. “We cannot afford to remain silent while shippers and our draymen, which are extensions of ourselves, are being subjected to the unilateral application of unfair tariff rules and business practices. The shipping community should establish a platform of acceptable conditions and work cooperatively to effect the necessary changes at ocean seaports throughout the United States.”
The call for a demurrage and detention waiver comes as the backlog of ships outside the ports of Los Angeles and Long Beach has largely disappeared. Normally container ships can proceed to a berth as soon as they arrive in San Pedro bay.
On Friday there were only six vessels, including two containerships waiting for berths outside the port compared to 28 containerships on March 14.
