NCBFAA asks FMC to set preconditions for approval of vessel sharing agreements

The National Customs Brokers & Forwarders Association Of America says its members want issues related to vessel coordination, chassis, drayage availability, dwell times, container turnaround times, demurrage and detention to be addressed.    The National Customs Brokers & Forwarders Association Of America, Inc. (NCBFAA) says it generally supports a proposal by the Federal Maritime Commission to require additional information about ocean carrier vessel sharing agreements (VSAs).
   In a response to an Advanced Notice of Proposed Rulemaking (ANPRM) from the FMC regarding discussion agreements and vessel sharing agreements (VSAs), the NCBFAA said it wanted the FMC to “require additional data in the hope that the Commission would be able to take a closer look at VSAs’ involvement of mega-ships and the potential effect on port congestion.”
   “In fact, the FMC should require the carriers to demonstrate that VSA approval will not lead to severe congestion that ends up putting the burden of significant demurrage and detention costs on shippers and OTIs,” the association added.
   “Over the past few years, severe congestion has been a chronic problem at a number of U.S. ports and, in particular, the ports of Los Angeles-Long Beach and New York-New Jersey. Some of the primary factors contributing to this congestion are the current inadequate infrastructure of the ports as well as a number of operational problems that severely limit the efficient movement of cargo in and out of the ports. The resulting delays frequently translate into significant demurrage and detention charges, which the ports and vessel operators typically attempt to pass through to the ocean transportation intermediaries (“OTIs”) and beneficial cargo owners,” said the association.
   NCBFAA says use of larger ships will “almost certainly exacerbate problems” at ports.
   “In addition to making the industry vulnerable to infrastructure deficiencies, usage of super-vessels exacerbates other pre-existing inadequacies of the supply chain which already contribute to port congestion to a significant degree,” it said. “Prior to the introduction of super-vessels, it took terminals a day or two to unload the vessel with smaller cargo volumes and another couple of days to ‘clean up the mess’ that was created in the yard.
   “As the number of containers carried on the super-vessels increased, so did the time required for loading these containers off and back on to the vessels. The surge in the number of containers which require handling results in truck volume surges which in turn create long lines at gates and congestion inside terminals. Moreover, the carriers do not currently vary the free time allowed for pulling containers off the pier depending upon the size of the vessel. So parties have the same free time whether the vessel holds 5,000 TEUs or 18.000 TEUs even though the vessel operators, NVOCCs and merchant hauler alike are challenged to find adequate trucking capacity to dray double and triple
the volume in the same free time.
   “While supervessels may save costs for carriers, the utilization of those ships imposes additional costs on other participants of the supply chain. So, in most cases the usage of super-vessels results in the increased equipment costs for terminal operators, dredging costs for port authorities, inland infrastructure improvements costs for governments and congestion costs for transportation companies, including trucking, barge and railway companies and OTIs,” the NCBFAA told the FMC, citing a study published last year by the International Transport Forum called The Impact of Mega-Ships.
   “Because recent economic discussions hint at diminishing cost savings from use of these mega-ships, the NCBFAA is asking the FMC to consider whether using these mega-ships will increase port congestion and how any costs that are generated due to that congestion are to be allocated,” the group said.
   The NCBFAA has suggested a list of preconditions the FMC require from carriers before approving VSAs addressing vessel coordination, chassis availability, efficiency of chassis pools, chassis contractual restrictions, drayage availability, effect on dwell times, container turnaround times, and procedures to avoid imposition of unfounded/unfair demurrage or detention costs on customers.
   It also said carriers should be required to provide the FMC with contingency plans for handling the cargo when they can’t access the port of destination. In that way, instead of trying to find the information within the carriers, OTIs and other parties would be able to access that information from the Commission.