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FMC Warns Carriers on Port Congestion Surcharges

Friday, November 21, 2014
Sandler, Travis & Rosenberg Trade Report

The Federal Maritime Commission warned ocean carriers this week to follow the rules when imposing congestion surcharges related to labor unrest at U.S. West Coast ports. The notice came on Nov. 17, the same day a group of major shipping lines said they would begin implementing congestion charges of up to $1,000 per 40-foot container for imports and exports of cargo moving via West Coast ports affected by labor-related terminal delays. Press reports subsequently indicated that some of these carriers were suspending these surcharges but reserved the right to impose them at any time. In response to “numerous inquiries,” the FMC reiterated that the rules applicable to any given shipment shall be those in effect on the date the cargo is received by the carrier or its agent. This means that if any labor 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.

The FMC notes that congestion surcharges or any other rule in a carrier tariff that results in increased costs to shippers may generally not be effective earlier than 30 days after publication. The Commission acknowledges that many carriers have previously published in their tariffs advance or conditional notice of their intent to implement surcharges in the event certain conditions are experienced but cautions that all such rules must be clear and definite as to the implementation and termination of those surcharges based on specific criteria related to labor unrest.

In a Nov. 14 press release the Transpacific Stabilization Agreement, a group of 15 carriers engaged in the U.S.-Asia trades that have previously given notice of possible congestion surcharges, cited a number of labor issues that have prompted its members to move ahead with those fees. Terminal operators at Seattle and Tacoma are reporting 40-60 percent productivity reductions in the loading and discharge of vessels; 14 ships were at anchor in Los Angeles-Long Beach harbor awaiting a berth and cargo handling operations fell to a low of 11 containers per hour; increased longshore container and chassis safety inspections have contributed to average truck turn times of two to three hours at terminal gates and yards; and Oakland terminals have reported work slowdowns and disruptions involving equipment operators. TSA members say these problems are causing them losses and expenses due to blanked sailings, skipped port calls, and speedup of existing vessels or chartering of added ships and equipment to maintain schedules. There are also “extraordinary” shoreside costs such as container detention and storage charges, additional longshore gangs and associated overtime, extended gate hours and fees, tug services and increased trucking charges relating to inter-terminal transfers.

The FMC notes that it continues to review congestion surcharge rules published in carrier tariffs and is gathering information from carriers regarding implementation of these surcharges.

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