Port Congestion Surcharge

Oakland Port Update – Terminals Open for Container Pickup, But No Shipside Labor for Container Unloading

February 23, 2015

We were hopeful that the ILWU and PMA agreement would lead to both sides working hard to get operations moving back to normal. However this apparently was not the case in Oakland. The terminals did request labor on Sunday to start unloading containers. However the ILWU labor was fired from the job for taking a break at the same time. This is not allowed by rule.

Labor was hired on Sunday evening to continue working shipside to unload containers. However I spoke with a carrier representative today, Monday morning, and it looks like the first shift working shipside at Oakland was fired AGAIN. While Oakland terminals are currently open for truckers to go into and pick up containers, no one is working to unload containers off of vessels during the day.

So far, this problem has only manifested in Oakland as we have not heard the other major West Coast ports (Los Angeles/Long Beach/Seattle/Tacoma) run into this issue the last two days.

-Jimmy Ting
Great World
jimmyting@gwlcorp.com
t: 650-873-9050 x1019

PMA and ILWU Announce a Tentative Contract Agreement!!!

February 20, 2015

The ILWU and PMA have finally come to a tentative contract agreement. The ILWU has been working without a contract since July 2014. In that time, we have seen the West Coast ports come to a virtual standstill.

Details about the contract are still unknown. Both the PMA and ILWU have to ratify the contract. It does look like having the Secretary of Labor, Tom Perez, join in the contract negotiation process earlier this week has helped push the two sides come to a contract agreement.

Assuming the contract is ratified by both sides, it still is going to take months for the congestion to unwind. Importers and exporters should not expect ports to suddenly start operating efficiently. There is still a backlog of containers that need to be picked up from the ports as well as export and empty containers that need to be returned to the port. Furthermore, vessels are all over the place. Carriers will need months to get their schedules back on track. Most importantly, the basic infrastructural issues that have contributed to port congestion remain unresolved.

I will look on the bright side and say that we hopefully have the worst behind us (at least until this five year contract expires). I am happy to finally have some good news to announce after months of negative news.

Have a great weekend everyone.

-Jimmy Ting
Great World
jimmyting@gwlcorp.com
t: 650-873-9050 x1019

Are We On The Verge of a Complete West Coast Port Shutdown?

Update on Port Conditions

I don’t want to be the boy who cried wolf, and I certainly have been ringing the alarm often these last few months. However recent actions at the West Coast port terminals have undeniably put us right on the brink of a complete port shutdown. With all three major ports areas (Seattle/Tacoma, Oakland, Los Angeles/Long Beach) discontinuing longshoremen labor at night to unload containers off vessels, the port conditions will only continue to get worse.

In the past few weeks we have seen the following:

  • SSA and BENT terminal in Oakland shut down last Thursday due to disagreement between the ILWU and PMA..
  • Five strings calling the port of Oakland have been eliminated. This will significantly decrease the capacity coming to Oakland. Those with containers on vessels that eliminated the Oakland port calling will have containers railed to the port of Oakland from the port of discharge.
  • Vessels continue to sit at the port of Los Angeles/Long Beach for multiple weeks before departing.
  • Containers that are unloaded from vessels have an increased likelihood of being put into a closed area.
  • Steamship lines and terminals are in some cases barely extending any free time when containers are put into closed areas.
  • Some terminals are refusing to accept empty container returns for extended periods of time.
  • For export shipments, some terminals are refusing to accept loaded containers that are ready to be delivered to the terminal. This only acerbates the chassis shortage problem as many of these loaded containers are sitting on chassis that are much needed on the import side. One of our trucking partners indicated to us that they have over 300 loaded export containers sitting in their yard or at their customer’s dock waiting for the terminals to accept them.

I mentioned that the PMA and ILWU agreed to Federal Mediation at the beginning of the year. Mediation was supposed to be accompanied with a news blackout. However both the PMA and ILWU have been trading public attacks leading us to believe that mediation is not working.

My feeling is that the next step will be a complete port shutdown. There’s no where left for the situation to progress to. One local carrier representative mentioned to me that we should pull out from the ports as many containers as we can right now as a shutdown could happen any moment. I found this comment amusing as no one is holding back on pulling out containers. We’ve been desperately trying to get containers out as quickly as possible these last few months. The trucker who has 300 export containers waiting to be returned to the terminal also believes that this situation cannot go on for long.

Monday, January 19th, is MLK holiday. Some terminals are open. Others will be closed. A few will be open in limited capacity only. One less day to pull out containers will not help.

I hope I am wrong about a shutdown, but all signs indicate that we are sitting on the precipice and staring straight at a shutdown.

What alternatives do shippers have?

Many shippers have come to me asking me what alternatives they have.

  • If they have the ability to ship to the East Coast or perhaps to Houston, this is an alternative. Note that transit time is long (but perhaps not as long as having to wait it out at the West Coast ports). Furthermore, capacity on vessels to the East Coast is also very tight.
  • What about Canada? If you ship to the Midwest, you should undoubtedly be looking at rail through Vancouver or Prince Rupert as an alternative. However for those on the West Coast, is Vancouver really a viable option? The product would have to be removed from the container and transloaded onto a trailer before being trucked to the most locations in the United States. I recently priced this service out with a few various truckers. The current rough estimated cost to get a container of product from Vancouver to the San Francisco Bay Area would be somewhere between $4500 and $5000. There would be some variation depending on the size of the shipment and whether or not the product floor-loaded or palletized. This is a very rough estimate that could certainly change in the coming months/
  • What about air freight? This would have to be a last resort as air freight rates will assuredly surge during this time.

We will be watching this situation closely and providing updates as we receive them.

– Jimmy Ting
Great World
jimmyting@gwlcorp.com
t: 650-873-9050 x1019

Port Congestion Surcharge Returns! (November 21, 2014)

As expected, carriers are starting to announce the return of the Port Congestion Surcharge. Carriers postponed the PCS earlier this week due to concern from the FMC. However the carriers are indeed struggling with the congestion at the ports. As long as congestion continues, it is of no surprise that the carriers would try to find a way to implement the PCS.

Here is the latest breakdown from the various carriers and where they currently stand. I have indicated in bold below the carriers that have confirmed the PCS again. Please be careful to distinguish the effective dates and whether they are based on the Gate-In date at the port of origin or whether it is base don the discharge date at the destination port.

I do believe other carriers will soon be jumping back in and assessing the PCS. I will keep everyone updated.

US PORT CONGESTION SURCHARGE 2014 Last update Nov 21 2014
Carrier Applicable on shipment Discharge or Via $20 40′ HQ 45′ Effective Date on/after Remark
APL All US Ports 800 1000 1125 1265 TBA Gate in Date at origin (based on last container gate in date in B/L)
CMA LGB/LAX Ports 800 1000 1000 1266 Suspend the implementation until further notice Discharge Date at USWC Ports
COSCO All US Ports + Canada Ports 800 1000 1125 1266 TBA Discharge Date at Ports
CSCL USWC Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
EMC USWC Ports 800 1000 1125 1266 21-Dec-14 Discharge Date at USWC Ports
Hamburg USWC Ports 800 1000 1125 N/A Suspend the implementation until further notice Discharge Date at Ports
Hanjin USWC Ports + Canada Ports 800 1000 1125 1266 26-Nov-14 Gate in Date at origin
Hapag Lloyd USWC Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
Hyundai USWC Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
K-line All US Ports 800 1000 1125 1270 TBA Gate in Date at origin
Maersk USWC Ports + Canada Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
Matson USWC Ports 500 500 500 500 3-Dec-14 ETD of the Vessel at Origin
MSC USWC Ports 800 1000 1125 N/A 26-Nov-14 Gate in Date at origin
NYK USWC Ports 800 1000 1000 1000 26-Nov-14 Gate in Date at origin
OOCL USWC Ports + Canada Ports 800 1000 1125 1265 Postpone until further notice Gate in Date at origin
PIL USWC Ports 800 1000 1125 Postpone until further notice Gate in Date at origin
UASC USWC Ports 800 1000 1125 Delay the implementation until further notice Discharge Date at Ports
WANHAI USWC Ports 800 1000 1125 1266 24-Dec-14 Discharge Date at Ports

-Jimmy Ting
Great World
t: 650-873-9050 x1019
jimmyting@gwlcorp.com

Port Congestion Surcharge Postponed (Update – November 19, 2014)

As reported late yesterday, carriers began announcing that they were postponing the Port Congestion Surcharge. We received confirmation today from all remaining carriers that had announced a PCS that they would be postponing the fee. The reason for the postponement is apparently due to intensive scrutiny from the FMC. The FMC sent out a notice on November 17th that they would be closely reviewing the application of the PCS.

The fact that the carriers have postponed the PCS gives a brief breather to importers who are now seeing their containers finish arriving at the peak of the shipping season. However importers and exporters should not assume that the PCS has gone away. From reports, carriers seem intent on finding a way to charge the PCS. Carriers are still sustaining losses due to the extreme congestion they are facing at U.S. West Coast ports. Whether it is through a formal PCS or a General Rate Increase, carriers are looking for ways to pass along the added operation cost that has resulted from the port congestion. In fact, two carriers (Matson and Wan Hai) have given specific dates (Dec.3 and Dec.18th respectively) for charging the PCS again. Those dates will apply based on discharge dates at the destination port. I would not be surprised if other carriers follow this lead and announce a PCS to be implemented sometime in mid-December.

In the meantime, terminals continue to operate slowly. One week away from the Thanksgiving holiday, there is no real timeline for improvement.

-Jimmy Ting
Great World
t: 650-873-9050 x1019
email: jimmyting@gwlcorp.com

Port Congestion Surcharge Update (November, 18, 2014)

The situation regarding the Port Congestion Surcharge (PCS) remains fluid and changing on a seemingly daily, if not hourly basis. We received confirmation overnight from carriers (Maersk and MSC) who had as of yesterday not made a decision yet regarding the the PCS that they would indeed begin charging the PCS. This left APL, Cosco, and K-Line as carriers who had not confirmed the PCS. However we also learned today that Evergreen and CMA-CGM would be postponing the PCS. We have also heard that other carriers may consider postponing the PCS as well. We expect to be hearing more updates throughout the next 24 hours and will keep you posted.

Please keep in mind that the congestion at the ports remains an EXTREMELY serious problem. We are seeing delays throughout the USWC ports. Therefore importers/exporters should be conscious of the fact that the PCS could be reinstated at any time.

I did review a letter from the FMC indicating that they are investigating the PCS very closely. It is possible that the FMC is the reason why carriers are announcing the postponement of the PCS. If that is indeed true, we may see carriers look for alternative ways to implement the PCS in the near future.
-Jimmy Ting
Great World
email: jimmyting@great-world.com
tel: 650-873-9050 x1019

Carriers Begin Collecting Port Congestion Surcharge (PCS) as USWC Ports Continue to Teeter Along, November 14, 2014

Carriers Begin Charging Port Congestion Surcharge
As expected, steamship lines have begun announcing that they will begin charging the Port Congestion Surcharge. We received announcements from the following carriers that they will begin charging the PCS for all containers arriving at U.S. West Coast Ports on or after November 17, 2014.

  • Evergreen
  • Hyundai –
  • CMA-CGM
  • Hanjin
  • NYK

The amount of PCS that we are seeing applied to IMPORT containers is currently as follows:

  • $800/20′
  • $1000/40′
  • $1125/40’HQ
  • $1266/45’HQ

The original PCS that most carriers announced gave them the latitude to levy the charge on containers at all U.S. ports. However currently, the announcements we have seen are only applying to West Coast IMPORT containers. We are expecting most of the other carriers to join in and begin collecting the PCS.

For EXPORT containers, thus far we have only seen Evergreen announce a PCS ($240/20′, $300/40′, and $375/45′). I would imagine other carriers might be joining in to announce a PCS on export containers as well.

Current Status of the USWC Ports
The USWC port terminals are open and operating today. Reports have come out that the Teamsters have been striking at six Los Angeles / Long Beach terminals. However thus far, the ILWU has not honored the picket line and have kept the terminals in Southern California open.

In Oakland, all four major terminals are open today. SSA remains a terminal of concern as we have seen the terminal close twice in the past week. Heavy congestion and backlog remain.

The PMA sent out the following message yesterday, critical again of the ILWU’s behavior in recent weeks. With this message, we are seeing a continued escalation of tensions at the USWC ports.

We are still monitoring this situation closely and will provide updates as soon as we receive them.

-Jimmy Ting
Great World
t: 650-873-9050 x1019
email: jimmyting@gwlcorp.com

Port Congestion Surcharge Update

As I’ve mentioned over the past few months, the carriers will charge a Port Congestion Surcharge (PCS) in case there is a strike at the East and Gulf Coast ports. Here is the latest update on the PCS amounts from the various carriers. Please pay particular attention to the remarks on how the PCS will be charged.

PCS (Port Congestion Surcharge)

CARRIER

TRADE

20’GP

40’GP

40’HQ

45’HQ

EFFECTIVE DATE

REMARKS

ANL

USA

$800

$1,000

$1,100

$1,266

5-Oct-12

Basis on gate-in date

APL

USA

$800

$1,000

$1,125

$1,266

30-Dec-12

Basis on gate-in date

CMA

USA

$800

$1,000

$1,100

$1,266

30-Dec-12

Basis on arrival date

COSCO

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

CSAV

USA

$800

$1,000

$1,125

n/a

6-Oct-12

Basis on gate-in date

CSCL

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

EMC

USA

$800

$1,000

$1,125

$1,266

5-Dec-12

Basis on gate-in date

HAMBURG

USA

$800

$1,000

$1,000

n/a

10-Jan-13

Basis on on-board date

HAPAG

USA

$800

$1,000

$1,125

$1,266

1-Dec-12

Basis on arrival date

HANJIN

USA

$800

$1,000

$1,125

$1,266

1-Dec-12

Basis on gate-in date

HMM

USA

$800

$1,000

$1,125

$1,266

2-Oct-12

Basis on origin cargo receipt date

KLINE

USA

$800

$1,000

$1,125

$1,266

30-Dec-12

Basis on gate-in date

MAERSK

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

MASTON

USA

$500

$500

$500

$500

10-Jan-13

Basis on gate-in date

MSC

USA

$800

$1,000

$1,125

n/a

1-Oct-12

Basis on gate-in date

NYK

USA

$1,000

$1,000

$1,000

$1,000

29-Dec-12

Basis on gate-in date

OOCL

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

UASC

USA

$800

$1,000

$1,125

n/a

29-Dec-12

Basis on arrival date

 

We will continue to monitor the situation closely.

Jimmy Ting

jimmyting@great-world.com

Port Congestion Surcharge – update 9/7/2012

I have no positive news on labor dispute between the longshoremen and the East Coast ports. I am surprised that the potential strike hasn’t made more headlines and isn’t getting the attention of our Federal government. Even a “short” one to two week strike could have huge implications on our national economy, especially during the peak shipping season.

More carriers have filed a Port Congestion Surcharge in case of a labor dispute. Here is the latest that we have seen:

Carrier Item

20′

40′

40’HC

45’HC

APL Congestion Surcharge

$320

$400

$450

$505

ANL/US Line Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

CMA Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

CSCL Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

ZIM Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

UASC Port Congestion Surcharge

$800

$1,000

$1,125

n/a

Maersk Congestion Surcharge

$800

$1,000

$1,125

$1,266

Cosco Congestion Surcharge

$800

$1,000

$1,125

$1,266

EMC Congestion Charge At POD

$800

$1,000

$1,125

$1,266

NYK Port Congestion Surcharge

$1,000

$1,000

$1,000

$1,000

Hanjin Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

K Line Congestion Surcharge

$800

$1,000

$1,125

$1,266

YML Port Congestion Charge

$800

$1,000

$1,125

$1,266

HMM Port Congestion Surcharge

$1,000

$1,000

$1,000

$1,000

Hamburg Sud Port Congestion Surcharge

$800

$1,000

$1,000

n/a

Matson Port Congestion Surcharge

$500

$500

$500

$500

Please keep in mind that the surcharge will only take effect in the event that a labor related slowdown/stoppage occurs (strike / lockout / etc.).

We are seeing more importers change their all-water US East Coast bookings to the US West Coast. This has resulted in increasing congestion on vessels coming to the US West Coast.

-Jimmy Ting

jimmyting@great-world.com

 

Port Congestion Surcharge Filings for US Inbound/Outbound Containers

As mentioned in my previous blog, the East Coast ports are in the midst of a labor dispute. With the longshoremen’s contract set to expire on September 30, 2012, many in the shipping community are bracing themselves for a strike.

Many carriers have announced Port Congestion Surcharges (PCS) to be implemented only if a labor dispute does affect operations at the ports. Here is a list of the surcharges that we have seen carriers file thus far:

Carrier Item

20′

40′

40’HC

45’HC

UASC Port Congestion Surcharge

$800

$1,000

$1,125

n/a

Maersk Congestion Surcharge

$800

$1,000

$1,125

$1,266

Cosco Congestion Surcharge

$800

$1,000

$1,125

$1,266

EMC Congestion Charge At POD

$800

$1,000

$1,125

$1,266

NYK Port Congestion Surcharge

$1,000

$1,000

$1,000

$1,000

Hanjin Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

K Line Congestion Surcharge

$800

$1,000

$1,125

$1,266

YML Port Congestion Charge

$800

$1,000

$1,125

$1,266

HMM Port Congestion Surcharge

$1,000

$1,000

$1,000

$1,000

Matson Port Congestion Surcharge

$500

$500

$500

$500

What many in the shipping community may not be aware of is that the way the PCS was filed by many carriers, it sounds like the surcharge may be applicable to ALL US inbound and outbound cargo if a port-strike occurs. My initial thought when I first heard about the PCS was that it would be applicable only to US East Coast containers that were passing through the US East Coast ports. However if I am reading the PCS correctly, the carriers will charge the PCS to containers passing through all US ports (West Coast included). This makes some sense as we have already seen various customers begin to divert their US East Coast containers away from all-water service to East Coast Ports. They have begun to book these containers via rail service through the US West Coast. In the likelihood of a port strike, there is bound to be congestion on the West Coast.

Importers and exporters alike should be preparing themselves for the likelihood of the strike as well as the resulting surcharge.

-Jimmy Ting

jimmyting@great-world.com