A SIMPLISTIC VIEW OF A COMPLEX PROBLEM

The problem of excessive costs being incurred has risen to prominence due to the disruption caused by COVID-19 which has resulted in port congestion and as a consequence of this increased terminal dwell times for containers. Shippers are complaining that they have to pick-up the tab for all these costs when they are not wholly to blame for the problem itself.

Accordingly, the shipper advisory group, made up of 24 importers and exporters, voted to recommend the FMC adopt a new rule that aims to prevent ocean carriers from passing along costs related to terminal dwell times.

The Committee further puts the case that the FMC should have oversight spanning all the parties involved in a Bill of Lading. It contends, for example, that as rail carriers are sub-contractors to ocean carriers that they too should be subject to FMC regulation.

Generally, the fundamental contention of the Committee is that: “The spirit of the FMC’s oversight should be founded at the Bill of Lading through to the final destination defined by the shipment parties.”

To take this approach is quite understandable from the shipper point of view and it is not difficult to have a degree of sympathy with it. Bottom line, shippers feel ocean carriers should be picking up these charges and not themselves.

Intertwined with this initiative, however, the Committee has additionally pushed back on the dwell fees that some US West Coast ports have recently applied; again arguing that such costs should not be passed on by carriers. Specifically, the charges that are in their sights are those such as the US$100 fee implemented last October by the ports of Los Angeles and Long Beach for containers left in terminals for nine days or more. The shipper view is that carriers should be responsible for these charges and the resolution of disputes associated with them.

This, however, can be construed to be a rather simplistic view of a complex problem. It can be argued that placing the onus on the importer to achieve timely box pick-up is the most appropriate course of action in order to generate results. Indeed, this is reflected in San Pedro Bay port experience where since the application of the fee in October a 50 per cent reduction in long dwell cargo has been reported.

Also, to draw a parallel, where Vehicle Booking Systems for terminals do not apply fees for no shows etc it is a matter of record that they do not function as efficiently as systems where charges do apply. Whatever new arrangements the Federal Maritime Commission comes up with, it is not seen to be desirable to take any power away from ports and terminals regarding the effective policing of their businesses. The ability to apply discipline in the business environment is essential.