Issue 375, October 21, 2002
As reported by the Journal of Commerce on Friday, October 18, 2002, "Lines Set Surcharges If Port Talks Fail", By Bill Mongelluzzo

LOS ANGELES - Shipping lines in the trans-Pacific are firing a pre-emptive shot to protect themselves from cargo handling costs if West Coast port employers and union longshoremen don't agree on a new contract by December.

Several lines are said to have forward-filed congestion surcharges of $500 per 20-foot container to take effect on Dec. 6. Many lines in the trade are discussing a congestion surcharge internally but have not yet published any new charges in their tariffs.

Hyundai Merchant Marine forward-filed a $500 per-TEU congestion charge to protect the carrier "in the event there's another lock-out or slowdown after [the] Taft-Hartley [Act] expires," said Dan Robinson, vice president of eastbound pricing. The filing covers only imports from Asia, Robinson said.

President Bush earlier this month requested an injunction under the Taft-Hartley Act, which prohibits employer lock-outs as well as strikes or work slowdowns during an 80-day cooling off period. West Coast ports have experienced severe congestion over the past 10 days even though work resumed on the docks more than a week ago. Both sides have blamed each other for the slow movement of cargo.

Since the forward-filings by shipping lines would not become effective until December, importers would not be charged for any costs the carriers incur before then. If Taft-Hartley fails to produce a settlement and job actions occur in December, carriers will be in a better position to quantify the costs they incur, Robinson explained. For example, if a carrier diverts a vessel to another port and then moves the shipment to the final destination by rail or truck, the congestion surcharge would cover those costs, he said.

The charge of $500 per TEU, or $1,000 per 40-foot container, may turn out to be too high. Carriers often set such charges high to protect themselves, but Robinson said Hyundai could lower the charge to cover only the actual costs it incurred.

Bill Mongelluzzo can be reached at bmongelluzzo@joc.com

Please note that due to the complex nature of the subject matter, DHL Danzas Air & Ocean cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with DHL Danzas Air & Ocean.