FMC Commissioner Opposes Congestion Surcharges as Industry Postpones New Fees

Ocean carriers should not be adding port congestion surcharges “under any circumstance,” said Federal Maritime Commissioner William Doyle in a statement issued Nov. 19 (here). Carriers have a “substantial hand” in creating the congestion that now exists, by completing larger ships before ports had the chance to build new capacity and by introducing cost-cutting measures related to the provision of chassis, said Doyle. Carriers need to “do their part” in finding ways to help resolve congestion issues, and adding surcharges for west coast cargo is “not helpful,” he said.

Ocean carriers uniformly withdrew the surcharges over the past several days (see 1411180015), apparently in response to scrutiny from the FMC (see 1411190026). The withdrawal appears to be temporary, however, with nearly all steamship lines calling the move a “suspension” or “postponement” of surcharges, according to an emailed alert from James J. Boyle. Two carriers, Matson and Wan Hai, said surcharges would resume on Dec. 3 and Dec. 18, respectively, according to a blog run by Great World Logistics (here). The American Companies (here) said steamship lines “may just be getting their ducks in a row before implementing once again.”

Any eventual addition of surcharges would likely face opposition from Doyle, who said in his statement that he “appreciates” that many carriers are “stepping back and reconsidering the surcharge.” Congestion surcharges should not be imposed “now or into the foreseeable future for imports or exports,” he said. According to Doyle, actions by ocean carriers have been a direct cause of the congestion issue. Larger ships have come onto the market quicker than ports can react by way of construction and upgrading, he said. Carriers also decided three years ago, “as part of a major industry-wide cost cutting measure,” to stop providing chassis. By doing so, steamship lines disrupted a “fifty year model,” and the supply chain industry is now “sorting out how to make the new model work,” said Doyle. Congestion charges are unnecessary, because “things will get better over time as the supply chain adjusts to the changes we are experiencing in ocean transportation and services,” he said.