13 carriers reinstate congestion surcharges to US West Coast

Corianne Egan, November 25, 2014, JOC.com

JOC.com has confirmed 13 carriers will assess port congestion fees on cargo shipped on or after Nov. 26. Those fees average $800 per 20-foot container, $1,000 per 40-foot container, $1,125 per 40-foot high cube container and $1,266 per 45-foot container.

 

As of Tuesday, the list of carriers lifting surcharge suspensions includes Mediterranean Shipping Co., CMA CGM, Hanjin Shipping, Maersk Line, NYK Line, Zim Integrated Shipping, Hyundai Merchant Marine, Evergreen Line, OOCL, APL, Yang Ming, China Shipping and Mitsui O.S.K. Lines. MOL’s surcharge will be implemented on cargo shipped on or after Nov. 27.

 

Carriers first announced the surcharges on Nov. 14, but backtracked days later due to pressure from shippers and scrutiny from the Federal Maritime Commission. One by one, however, beginning with MSC, carriers announced they would again implement a congestion surcharge on cargo heading to the congested West Coast ports where carriers are incurring huge incremental costs. By Nov. 21, six carriers had announced they would again attempt to implement the surcharge.

 

“We continue to experience reduced productivity and difficulties obtaining labor to work our ships,” CMA CGM said in its release announcing the surcharge. “These labor slowdowns are exacerbating existing congestion and the Pacific Southwest and creating new congestion in Oakland and the Pacific Northwest.”

 

Maersk Line’s surcharge won’t apply to cargo discharged in Oakland or Seattle.

 

Congestion at the Los Angeles-Long Beach port complex has been worsening since late summer, but hit crisis-levels in October. In November, the delays were compounded by slowdowns by the International Longshore and Warehouse Union, according to the Pacific Maritime Association which continues to negotiate with the union to replace the prior contract which expired back on July 1. Only shippers moving goods on a spot basis or with contracts that don’t preclude surcharges will be hit by the charge, called the PCS, and carriers may still institute it selectively.

 

Because of the delays, carriers are incurring increased costs associated with container storage, labor overtime, and increased trucking charges. Carriers are also spending more on fuel as ships are forced to idle off of Los Angeles-Long Beach, then occasionally to speed ships up to be on time for port calls elsewhere.

 

Shippers reacted negatively to the news of the re-imposed congestion surcharges, saying that not only were they dealing with heavy delays, some reportedly topping three weeks, but would have to also pay extra for the poor service. The immediate implementation of the charges also had tensions boiling over.

 

“The most reasonable thing to do was to provide an advanced notice, or a polite warning, of at least two weeks and implement PCS based on the cargo-receive date at origin,” Brian Kim, import export specialist with ViewSonic, told the JOC. “The way PCS is being implemented is wreaking havoc into our entire year of expectations. This sudden implementation is crippling shippers’ ability to adapt to the situation.”

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