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Wednesday, May 18, 2022

Maritime Logistics Professional

Lines quick to lay off costs of any US port strike

Posted to Far East Maritime (by on September 11, 2012

Never slow to miss a levy-laying opportunity, container lines are announcing a “port congestion surcharge” in the event of a slowdown or work stoppage at any US port.

The congestion surcharges are hefty, too. OOCL, for instance, is preparing a surcharge of $600 per TEU, $750 per FEU and $950 per 45 foot container that it will levy if labour unrest hits the US, as threatened by the ILA should an agreement not be reached by September 30.

NYK is talking of $1,000 per FEU on cargo from Asia, India and Australia.

It is hardly an unexpected move. With container lines making heavy going this year, no carrier wants to have to absorb the cost of idling away off a port waiting to unload boxes. On a full 5,500 TEU vessel, the congestion surcharge will add several million to carrier coffers.

But the interesting thing about the congestion surcharge announcement was the wording. The levy will be applied in the event of a slowdown or stoppage in “any” US port. The contingency plan of shippers should a strike shut down the East Coast is not exactly a complicated one – they will route boxes through the West Coast.

So if there is to be any congestion at US ports, it will not be on the Eastern Seaboard where all ports will be closed, anyway. If all East Coast shipments are routed via the West Coast, congestion is a certainty.

Even though the peak season has been weak, the National Retail Association expects import containers to increase by 8.5 percent in September as shippers try to get them in before a strike. Strong increases are also expected into the holiday season, so a strike will probably see the busy ports of LA and Long Beach taking most of the additional cargo.

Of course, there are other ports on the West Coast and they will all face increases in volume. Just how sharp those increases will be is anyone’s guess.

An indication of the containers that could potentially swamp West Coast ports can be found by looking at the top 10 carriers of imports from China to Savannah. The Georgian port is the fastest growing in the US and the second busiest on the East Coast.

CMA CGM brings in the most China boxes with 81,469 TEUs in 2011, followed by Maersk and the rest. The number of containerised imports carried from China to Savannah by the top 10 lines last year was close to half a million TEUs.

That’s just one port. New York-New Jersey has double the throughput of Savannah. Shut them down and there could be a tsunami of containers heading for the West Coast, and plenty of port congestion surcharges being coughed up by Asia’s shippers.