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Businesses Want FMC to Act on Possible West Coast Port Congestion Surcharges

Monday, June 30, 2014
Sandler, Travis & Rosenberg Trade Report

Importers, retailers and others are seeking greater involvement by the Federal Maritime Commission to mitigate the impact of congestion surcharges that could be imposed at 29 West Coast ports if their current contract with nearly 20,000 dockworkers expires June 30. While there currently appears to be little expectation of a strike or a lockout if negotiations on a new contract proceed beyond that date, the National Retail Federation and the National Association of Manufacturers recently warned that even a short work stoppage could have an economic impact that is “significant and widespread.”

The FMC issued an advisory May 29 stating that any tariff rule of an ocean common carrier that results in an increased cost to a shipper (e.g., a congestion surcharge) may not be effective earlier than 30 days after it is published. Further, the rules applicable to any given import or export shipment are those in effect on the date the cargo is received by the carrier or its agent. Thus, the FMC stated, if any cargo-related disruption were to occur at a port after cargo has been tendered by a shipper, a carrier could only lawfully charge the rates in effect on the day the cargo is tendered. 

However, business interests want more clarification. In a June 20 letter, dozens of organizations representing U.S. manufacturers, farmers, wholesalers, retailers, distributors, importers, and transportation and logistics providers said they believe the FMC “has an obligation to seek more information from carriers” on this topic, including the specific trigger mechanism that carriers will use to determine the assessment of a surcharge or the rights beneficial cargo owners have to negotiate the level of surcharges. The groups therefore asked the FMC to consider developing and making publicly available an internal clearing house for information on surcharge-related issues, including guidance on what constitutes labor-related unrest and answers to frequently asked questions such as how long congestion surcharges may last. They also want the FMC to require carriers and marine terminal operators to establish disruption-related demurrage and detention tariffs that, during any such event, either would eliminate potential congestion surcharges completely or at least would not include any penalty portion of those charges. “If a shipper is unable to move its container during a period of significant labor unrest or force majeure events,” the letter said, “it is not appropriate for them to be assessed demurrage or detention charges during that period.”

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