American ShipperIntermodalShippingTrade and ComplianceWarehouse

Businesses want FMC to address ‘unfair’ charges

A coalition of 25 business groups has asked the Federal Maritime Commission to address fees imposed when shippers can’t pick-up and return cargo, containers and chassis for reasons beyond their control.

   A coalition representing retailers, manufacturers, truckers, transportation intermediaries and other business groups filed a petition on Wednesday with the Federal Maritime Commission (FMC) asking it to establish a new policy that prevents terminal operators and ocean carriers from charging unfair fees when uncontrollable incidents, such as storms and strikes, keep cargo from being picked up from ports on time.
   “Recent events involving port congestion, labor strife, an ocean carrier bankruptcy, inclement weather and other disruption events have had crippling effects on U.S. ports and the stakeholders who rely on the efficient movement of goods,” the 25-member Coalition for Fair Port Practices said in a petition filed with the commission.
   Since 2014, U.S. ports have experienced worsening congestion, a trend that has been variously attributed to the growing size of containerships, new large alliances among carriers, and the decision by many carriers to no longer provide their own fleets of chassis to move cargo to and from ports.
   In addition, the difficult and protracted labor negotiations between the International Longshore and Warehouse Union and its employers in 2014 and 2015 was accompanied by severe congestion at many West Coast ports. Employers accused the union of slowdowns at the time, while the union said employers were not providing enough workers to move cargo off the docks.
   Many shippers were outraged by long delays in retrieving their import containers or being able to get exports loaded on ships in a timely manner, as well as detention and demurrage charges that were imposed on them.
   FMC Chairman Mario Cordero told American Shipper earlier this year that the commission needed a formal complaint or petition about detention and demurrage charges in order for the agency to engage the issue.
   Cordero did say he was interested in reviewing the petition, noting that issues having to do with port congestion as well as detention and demurrage have been a focus of the FMC in recent years.
   In April 2015, the FMC issued a report on detention and demurrage that said, “U.S. importers and exporters have expressed their belief that the demurrage and detention practices of MTOs (marine terminal operators) and VOCCs (vessel operating common carriers) are unfair.”
   At that time, Cordero had invited petitions like the one filed Wednesday, saying back in April 2015, “Though the commission has received anecdotal evidence, the industry is encouraged to submit substantive documentation and information of unreasonable practices regarding the application of demurrage or detention.”
   Wednesday’s petition appears to be the action needed for the FMC to address the issue.
   Fellow FMC Commissioner William P. Doyle said, “It’s about time. I’ve been waiting for this thing for like two years now. This is another fairness issue – U.S. truckers, exporters, farmers, retailers and the like should not be saddled with tens of thousands of dollars in extra charges and fees through no fault of their own. There are arguments on the other side as well – from both the ocean carriers and terminals. Let’s get to it. I look forward to closely examining the Petition once it is officially received by the Commission.”
   The 25 members of the coalition that filed the petition are: the American Apparel & Footwear Association; American Chemistry Council; Association of Bi-State Motor Carriers; Association of Food Industries; Auto Care Association; Foreign Trade Association; Green Coffee Association; Harbor Association of Industry & Commerce; Harbor Trucking Association; Intermodal Motor Carriers Conference of the American Trucking Associations; International Association of Movers; Juice Products Association; Juvenile Products Manufacturers Association; Meat Import Council of America; Motor & Equipment Manufacturers Association; National Customs Brokers & Forwarders Association of America; National Pork Producers Council; National Retail Federation; New York/New Jersey Foreign Freight Forwarders and Brokers Association; North American Meat Institute; Retail Industry Leaders Association; Tea Association of the USA; National Industrial Transportation League; Transportation Intermediaries Association; and U.S. Hide, Skin and Leather Association.
   The petition claimed that during port incidents, storage and use charges have continued “even though shippers, consignees and drayage providers had no control over the events that caused the ports to be inaccessible and prevented them from retrieving their cargo or returning equipment.”
   Cargo owners and trucking companies are normally given a certain number of free days to pick up containers of imported goods from ports after they have been unloaded from ships. After that, they can be charged demurrage, a fee intended to ensure that containers are removed quickly and efficiently. In addition, detention and per diem fees can be charged if the cargo containers and the chassis used to haul them are not returned within a specified time.
   “That system was thrown into disarray this fall when the bankruptcy of South Korea’s Hanjin Shipping left cargo owners unable to pick up containers on time and later prevented them from returning containers and chassis,” according to a press release issued by the National Retail Federation. “Delays have also occurred during other port disruptions cited in the petition, including the 2014-2015 labor slowdown at West Coast ports and Hurricane Sandy on the East Coast in 2012.”
   The coalition said fees were charged in various instances, including:
     • A retailer being charged $80,000 because it took up to nine days to retrieve containers when only four free days were allowed;
     • A trucking company being charged $1.2 million after long lines at New York and New Jersey ports kept it from returning containers on time;
     • And a transportation company being charged $1.25 million after containers it tried to return were turned away at West Coast ports (the amount was eventually reduced to $250,000, but only a year after the company was forced to pay the fees upfront).
   “Shippers, consignees and drayage providers do not create and cannot avoid these events,” the group said. “They cannot control the weather. They do not choose the terminals that carriers use. They are not parties to port labor collective bargaining agreements.”
   They noted how the Shipping Act requires that the fees and related practices be “just and reasonable.”
   In the petition, the group asked the FMC to adopt a policy that would require free days to be extended during times of port congestion, weather-related events, port disruptions, or delays caused by government actions or requirements beyond the control of the parties picking up or returning containers.
   Demurrage and similar fees charged during such incidents would be declared “unreasonable.” In some cases, “compensatory” fees could be charged, provided that they did not exceed actual storage or equipment use costs. The proposed policy would apply to ocean carriers and marine terminal operators.
   The World Shipping Council, the main trade organization for the container liner shipping industry, had no immediate comment on the petition.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.