Newsflash: Some carriers pull the trigger on container congestion surcharges
Carriers are set to charge $1,000 per FEU, also poised to start charging on intermodal door deliveries this week.Some ocean carriers are beginning to say they will implement a hefty port congestion surcharge on their customers next week.
Hanjin and CMA CGM both sent notices to shippers saying they will implement a port congestion surcharge starting Nov. 17.
Hanjin said the charge will apply to all U.S. and Mexico destined shipments received by Hanjin or its agent and discharged at West Coast ports in the U.S. or Canada.
It said the charge “is to cover the massive increase in costs arising from significant increases in port congestion and serious disruption to our normal course of operation due to labor unrest or action” as provided in its tariff.
Hanjin said the amount is $800 per TEU, $1,000 per FEU, $1,125 for 40-foot high cube containers and $1,266 for 45-foot high cube containers.
CMA CGM cited the “ongoing labor difficulties on the U.S. West Coast” in a customer advisory announcing the surcharge.
“The situation has impacted terminal and vessel operations to the point where normal business is simply not possible to continue, and extraordinary costs are being incurred at every step of cargo movement," it said.
“The unfortunate result of this is that we will be forced to trigger the Port Congestion Surcharge that was filed in 2012 in anticipation of possible labor action. The surcharge will be effective for all cargo discharging at U.S. West Coast ports on or after Nov. 17. The surcharge will remain in effect until advised otherwise, and will be applicable for all cargo and equipment types," the carrier said.
CMA CGM said it remains “hopeful that the PMA and ILWU will resolve the pending labor issues and that the situation will thereafter quickly return to normal, allowing us to withdraw this surcharge.”
It said its surcharge was $800 per TEU, $1,000 for 40-foot containers of all sorts, $1,266 for 45-foot containers, and $1,600 for 53-foot containers.
In addition to these overall container surcharges, most carriers have announced much smaller intermodal door delivery (IDD) congestion surcharges that will take effect later this week.
The Transpacific Stabilization Agreement (TSA), a discussion agreement of 15 container carriers, has said its members are moving forward individually with charges of $100 per FEU and $90 per TEU, effective on or around Nov. 15, but by no later than Dec. 1. The charges apply to all cargo moving under intermodal store-door delivery through rates from Asia to the U.S. There are higher charges on high cube and 45-foot containers announced by some companies.
APL, for example, said the tariff will apply on cargo originating in Asia, Australia, the Middle East and West Asia to the U.S. and Canada. It said it was announcing the charge “in view of unexpected increases in the cost of inland transport and door delivery in recent months, including extensive port congestion, truck driver shortages, sharply increased rail volumes with increasing limitations on rail shipments, extreme weather, and increased inland carriage costs.”
James E. Devine, Jr., president of the tariff publisher Distribution Publishing Inc. in Oakland, Calif., said, “Most carriers serving the transpacific have similar rules in their tariffs.”
These $100 surcharges are one-tenth as large as the congestion surcharges that many carriers filed this spring in advance of the ILWU contract expiring.
Devine added that many NVOCCs have similar port congestion surcharge rules filed in their tariffs, with the proviso that “nevertheless, if there is no aforementioned circumstance, or the underlying ocean carrier utilized to move the shipment does not assess additional charges to address these circumstances, this charge will not be applied.”
He continued, “The IDD surcharge is new this week, but many NVOCCs have already filed rules in their tariffs to authorize them to pass along this cost to their shipper customers. Some are charging more than $100 per FEU because they are trying to recover both the IDD surcharge and other cost increases they are incurring when they handle door shipments. Others are simply building this new cost into their all-inclusive selling rates for ocean transportation.”
Meanwhile, the Pacific Maritime Association issued an update Thursday afternoon saying that union slowdowns and work actions at the major West Coast ports are continuing
The organization said:
• Since Oct. 31, ILWU members have continued to work slowly in the ports of Tacoma and Seattle. "Various reports have detailed the dramatic impact these slowdowns are having at this critical harvest season for Washington State apples, potatoes, Christmas trees and other perishable produce."
• In recent days, longshoremen on several shifts have walked off the job in Oakland, shutting down their terminals for the remainder of the shift. The union has said some of these walkoffs have related to safety issues and other cases having to do with irregularities in the hiring of workers.
• In the critical ports of Los Angeles and Long Beach, where growing congestion has been a recognized issue for some time, the ILWU continues to short-shift crews by withholding qualified yard crane operators.
“These actions — slowing down, walking off the job and not sending the crews that are needed – will continue to push the West Coast ports closer and closer to outright gridlock,” said PMA spokesman Wade Gates. “With two weeks before Black Friday, the last thing our economy needs is a shutdown.”
The PMA said it remains deeply concerned about the operational situation at the major ports along the coast. The ILWU’s slowdown actions threaten West Coast port competitiveness, and are complicating an already challenging holiday shipping season. In the meantime, ILWU and PMA representatives continue to meet daily in contract negotiations.
“For the sake of our economy, we call upon the ILWU to agree to a temporary contract extension while we continue to work on a new agreement,” Gates said. “A contract extension and a full return to work will give everyone — from shippers to consumers — the confidence that is needed before the critical holiday shopping season.”
A spokesman for truck drivers that are striking the trucking companies TTSI and Pac 9 (the drivers have put up pickets at company offices and a half-dozen container terminals) said she understands trucks from those companies are being turned away at terminals.