West Coast Strike Could Trigger Surcharges by Container Lines

June 13, 2014
SGB Update

At least three major container-shipping lines would be allowed to impose a surcharge to handle cargo if labor related unrest causes congestion at West Coast ports next month, according to a trade alert Outdoor Industry Association issued to its members last week.

The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) are continuing their negotiations to renew a six-year collective bargaining agreement before it expires on July 1. The agreement covers nearly 20,000 longshore, clerk and foreman workers at 29 ports along the West Coast, which process the bulk of America's imports of Asian goods. The National Retail Federation (NRF) recently forecast that it expects import volume at major U.S. container ports to spike 7.5 percent in June as shippers rush to import goods before a potential strike.
 
PMA member Hapag Lloyd has published tariffs that would allow it to levy a surcharge of $800 per 20-foot container and $1,000 – $1,125 per 40-foot container, while Zim American Integrated Shipping Service Company Inc. could levy a surcharge of $1,000 on containers of all sizes and types. Maersk Line last year updated congestion surcharges to $320 per 20-foot container and $400-$450 per 40-foot container, according to OIA.
 
The OIA notes that it is unclear what these companies would deem as “labor related unrest,” and, therefore, what would trigger the surcharges. Carriers along the trade route have recently tried to pass through other surcharges in a bid to increase rates, which they complain are to low. In its trade advisory, OIA said it is seeking clarification on what might trigger the surcharges in tandem with NRF and other trade groups.
 
In the meantime, Seatrade Global reported that shippers are making other contingency plans. During the last management lock-out in 2002, US importers start bringing goods in earlier in the year and planned used alternative ports in Canada or the US Gulf Coast that do not have ILWU workers. 
Ports like Savannah thrived.

According to Supply Chain Business, the 2002 management lock-out of port workers lasted 10 days with the stand-off ending when then-President Bush invoking the emergency provisions of the Taft-Hartley Act. Estimates at the time put the cost of the action to the US economy at more than $10 billion.
 

West Coast Strike Could Trigger Surcharges by Container Lines

June 11, 2014
SGB Update

At least three major container shipping lines would be allowed to impose a surcharge to handle cargo if labor related unrest causes congestion at West Coast ports next month, according to a trade alert Outdoor Industry Association issued to its members Wednesday.


 

The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) are continuing their negotiations to renew a six-year collective bargaining agreement before its expires at midnight on June 30. The agreement covers nearly 20,000 longshore, clerk and foreman workers at 29 ports along the West Coast, which process the bulk of America's imports of Asian consumer goods. The National Retail Federation (NRF) recently forecast that it expects import volume at major U.S. container ports to spike 7.5 percent in June as shippers rush to import goods before a potential strike.

 

PMA member Hapag Lloyd has published tariffs that would allow it to levy a surcharge of $800 per 20-foot container and $1,000 – $1,125 per 40-foot container, while Zim American Integrated Shipping Service Company Inc. could levy a surcharge of $1,000 on containers of all sizes and types. Maersk Line last year updated congestion surcharges to $320 per 20-foot container and $400-$450 per 40-foot container, according to OIA.

 

The OIA notes that it is unclear what these companies would deem as “labor related unrest,” and, therefore, what would trigger the surcharges. Carriers along the trade route have recently tried to pass through other surcharges in a bid to increase rates, which they complain are to low. In its trade advisory, OIA said it is seeking clarification on what might trigger the surcharges in tandem with NRF and other trade groups.

 

In the meantime, shippers may want to consult a recent advisory issued by the the Federal Maritime Commission (FMC), which notes  that common carriers cannot levy surcharges, or any other fee increases that result in increased costs to shippers, until 30 days after publishing them, unless done pursuant to a waiver or exemption.

 

The Shipping Act and FMC 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. 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.

 

The FMC urges anyone with questions or concerns about a tariff publication to contact Gary Kardian, Director, Office of Service Contracts and Tariffs at the Bureau of Trade Analysis, (202) 523-5856. For questions about the Shipping Act or the Federal Maritime Commission’s regulations, please contact: the Office of the General Counsel, (202) 523-5740.
 

 

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