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FMC reviews U.S. port congestion charges

WASHINGTON, DC: As severe congestion continues in several U.S. ports, the Federal Maritime Commission (FMC) has announced it is reviewing any "labor unrest" surcharges imposed by ocean carriers that lead to an increase in shipper costs.

On November 17, the Transpacific Stabilization Agreement (TSA), said several of its 15 carrier members have, or soon will implement, a port congestion surcharge. For import cargo, they would be US$800 per 20-foot container, US$1,000 per 40-foot container, US$1,125 per 40-foot high-cube container, and US$1,256 per 45-foot container.

port of long beach congestionTwo days later FMC Commissioner William Doyle said ocean carriers had contributed to the current situation and adding congestion surcharge fees on cargo to and from West Coast ports was not helpful: "I believe the ocean carriers should not be adding surcharges for port congestion under any circumstance now or into the foreseeable future for imports or exports." He added it was time carriers did their part and find ways to assist in eliminating port congestion.

Noting that some are now reconsidering the surcharge, he went on to say: "The carriers have forced ports around the world to react to their business model of building larger and larger vessels. Five years ago, 8,000 TEU vessels calling on ports in the U.S. was an uncommon event. Today vessels of up to 14,000 TEU of capacity are calling on the U.S. West Coast."

Acknowledging that U.S. ports are spending "tens of billions of dollars" on upgrades in response to the new capacity, he said larger ships had entered the liner trades quicker than expected and were "significantly exacerbating" port congestion by arriving simultaneously and unloading ever-larger volumes of containers.

Doyle explained that the decision by ocean carriers three years ago to get out of the business of supplying container handling chassis to shippers had caused disruption to a 50-year practice that the rest of the industry was now trying to sort out.

Shippers have reportedly spoken to the FMC about the surcharges but chairman Mario Cordero said their reasonableness was secondary to the analysis of whether they meet the Commission's requirements of being "clear and definite".

According to law firm Venable LLP, while many carriers earlier in the year said they would implement such tariff rules, they had to be clear and definite that any surcharge was based upon specific criteria related to "labor unrest."

The International Longshore and Warehouse Union (ILWU) has been working without a contract since its previous agreement with the Pacific Maritime Association expired on July 1. Last week the PMA alleged the ILWU was intentionally slowing down traffic at the ports, leading to congestion. The ILWU denied the charge saying it was other factors including a shortage of chassis and truck capacity.

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