Liner carriers in the transpacific say they will begin to impose a $1,000-per-FEU surcharge on Monday.
As several container shipping companies have announced surcharges
effective Monday related to congestion at U.S. ports on the West Coast,
Mario Cordero, chairman of the U.S. Federal Maritime Commission, is
questioning their ability to impose the surcharge on cargo that has
already been accepted for delivery or is in transit.
On Friday, the Transpacific Stabilization Agreement, whose members
include 15 of the largest container carriers moving cargo between the
United States and Asia, said, “Earlier this year, shipping lines
individually published congestion charges specifically to cover
labor-related service disruptions. Beginning Nov. 17, carriers will
assess and collect their respective charges on an individual basis for
eastbound and westbound cargo.”
The charges amount to $1,000 per 40-foot container in many cases,
and some carriers are citing labor issues as the reason for imposing the
tariff.
The Pacific Maritime Association and International Longshore and
Warehouse Union are negotiating a new contract to replace a labor
agreement that expired on July 1, and the PMA has accused the ILWU of
“slowdowns and work actions.” It said since Oct. 31, ILWU members have
continued to work slowly in the ports of Tacoma and Seattle, walked off
the job in Oakland during several shifts, and withheld “qualified yard crane operators” in the Port of Los Angeles
and Port of Long Beach. PMA and the ILWU continued to negotiate over the
weekend.
The letters to shippers announcing the surcharges vary from
carrier to carrier, but for example, Mediterranean Shipping Co., the
world’s second-largest container carrier, told customers it “will
implement a congestion surcharge for all cargoes discharged or gated in
at USWC (U.S. West Coast) ports on or after Nov. 17,” citing a tariff
that was filed back on May 20.
MSC said the amount of the tariff will be $800 for 20-foot
containers, $1,000 for 40-foot containers, and $1,125 for 40-foot
high-cube containers.
Maersk, the largest container shipping line, said Friday it will
implement a $1,000 per FEU general rate increase on all
cargo moving from the Far East to the U.S. and Canada effective Dec.
15, but made no mention of congestion at U.S. ports nor did it give any
reason for the increase in a customer advisory.
Many other carriers have announced similar charges for inbound
containers, which is relatively high when compared to the cost of moving
a shipment across the Pacific. For example, the Shanghai Shipping
Exchange polls forwarders and carriers each week on what the spot rate
is for cargo moving from Shanghai to the U.S. West Coast. On Friday,
Nov. 14, the exchange said that amount was $2,090 per FEU.
Carriers must give 30 days notice for rate hikes in their tariffs,
and Cordero said by pre-filing they have met that requirement. But in an interview Friday, he said they would not apply to cargo that’s already in California or in transit.
If a container is on a ship in the middle of the Pacific Ocean, he
said his understanding was the “surcharge would not apply to that
cargo.” Cordero was reiterating a position the FMC stated on May 29.
In an announcement on its website, the FMC said, “The Shipping Act
and the commission’s regulations require that the rules applicable to
any given shipment shall be those in effect on the date the cargo is
received by the common carrier or its agent. 46 CFR § 520.7. Thus, if
any cargo-related disruption were to occur at a port after cargo has
been tendered by a shipper, a carrier may only lawfully charge the rates
in effect on the day the cargo is tendered. These regulations apply
both to import and export cargo.”
Cordero also said if surcharges are appealed there could be
questions about whether there actually was a slowdown and to what extent
it took place.
“Is a 5-percent slowdown sufficient to declare this surcharge that
amounts to $1,000 a box, or a 50-percent slowdown? There is the
ambiguity in terms of what has to be determined,” he said.
David Street, an attorney with GKG Law, which represents the National
Customs Brokers and Forwarders Association of America, said there is a
requirement under the FMC’s regulations that tariffs be “clear and
definite” and questioned whether the tariffs allowing the congestion
surcharges meet that standard.
Peter Friedmann, executive director of the Agriculture
Transportation Coalition, said other carriers are announcing congestion
surcharges on exports that are different than those imposed on imports.
“Most are $240 per TEU and $300 per FEU, although one carrier says
theirs will be $100. These follow the $850 per $1,000 surcharges
previously announced on import containers. Until this action, shippers
and carriers were sort of in this (port labor disruption) together,”
he said.
“With the announcement of these surcharges, that is apparently no
longer the case. The carriers want the exporters and importers to
subsidize their losses — who is going to subsidize the importers’ and
exporters’ losses, which are significantly greater — lost or damaged
cargo, rejected delivery and payment by the customer, etc.?” he added.
Asked about the surcharge announcements, Craig Merrilees, an ILWU
spokesman, said, “My initial thought is that this amounts to little more
than a stunt to deflect attention to the root causes of congestion that
lie with the carriers and companies who are imposing these fees, but
refuse to take responsibility for the mess they have created. … They are the ones that have
caused the chassis shortage, the driver shortage, mega-ships that
overwhelm the port, and other factors within their control that are at
the root of the congestion nightmare.”
Cordero said he is hopeful the ILWU and employers will rapidly agree on terms for a new contract.
In a letter to James McKenna, the PMA’s president, and Robert McEllrath,
president of the ILWU, on Thursday, Cordero urged them to move quickly to
a contract settlement. He wrote, “We must not underestimate the
ramifications of service disruption on the entire shipping community and
the national economy.”
Monday morning, the Marine Exchange of Southern California said there
were seven ships at anchorage waiting to berth at container terminals
in Los Angeles or Long Beach, one fewer than on Sunday. Normally,
containerships arriving in the two ports are immediately able to go to
berth and do not have to go to an anchorage.
FMC questions carriers’ ability to impose surcharge on in-transit cargo
