Lawmakers and regulators seek to cap fees charged by carriers at ports

Mark Boone reluctantly agreed that the cost of shipping a container of wax melters from Pakistan to Charleston, SC doubled in the past year to more than $17,000.

But the shipping company’s additional $6,820 charge in December for a single container that U.S. Customs and Border Protection set aside for inspection for 20 days fell outside commercial market forces, in terms of the concerned.

“When you get hit by something you have nothing to do with at all, it hurts,” said Boone, managing director of Markus Group Ltd., a contract manufacturer in Raleigh, North Carolina. North.

Shipping carriers have increasingly imposed such charges for boxes that have sat for longer periods, sometimes weeks at a time, in traffic jams that have rumbled through supply chains during the Covid pandemic. -19. U.S. lawmakers and regulators are scrutinizing fees and other shipping practices that critics say have sharply increased costs for U.S. importers and crippled exporters’ ability to reach overseas markets.

New measures in Congress and actions by the US maritime regulator, the Federal Maritime Commission, target a container shipping sector dominated by foreign carriers which made profits last year estimated by London-based Drewry Shipping Consultants Ltd. , at about $150 billion.

The senses. Amy Klobuchar, a Democrat, and John Thune, a Republican, on Thursday introduced a bill to amend the 24-year-old Shipping Reform Act. The measure would impose new restrictions on how carriers can coordinate their operations in alliances and prohibit shipping lines from “unreasonably” lowering their exports. It would also limit the ability of carriers to impose additional charges on container handling.

Shippers from furniture and apparel importers to soy and dairy exporters hailed the new legislation, which the American Apparel & Footwear Association said would “end these predatory practices.”

The World Shipping Council, a Washington-based trade group representing container shipping companies, said some of the proposed changes could be broadly helpful, but will not relieve supply chains. He called a similar bill that passed through the U.S. House in December “deeply flawed” because of provisions he said gave regulators too much control over contracts and operations.

The FMC recently launched enforcement actions against several carriers that could lead to fines for companies and forcing them to reimburse costs.

The moves follow a year in which importers have suffered severe shipping delays and skyrocketing shipping costs, while exporters say carriers have refused shipments in a rush to return boxes. empties in Asia for eastbound trade which results in much higher rates.

Average prices for shipping a container from Asia to the US West Coast rose by about 500% last September from a year earlier, reaching more than $20,000, according to the Freightos Baltic Index. Some shippers have paid more than that to expedite deliveries. Once the boxes arrived, shippers say they were charged extra fees if the containers weren’t picked up or returned to ports quickly enough.

Freight forwarders, who book space on ships on behalf of shippers, say carriers won’t release containers until these charges are paid, leaving freight forwarders no choice but to pay and dispute charges. charge later.

“It’s almost like legalized extortion,” said Jim Burke, president of IGL Logistics Inc., a freight forwarder based in Charlotte, North Carolina.

In a recent carrier audit, the FMC estimated that from July to September last year, eight of the largest shipping carriers charged fees totaling $2.22 billion. The sum represented a 50% increase on the previous three months, although it is unclear how many of the charges were questionable.

“The problem is, we don’t know,” said FMC President Daniel Maffei.

More logistic report

Shippers say charges are unfair when delays are beyond their control, a common occurrence during the pandemic. Port truckers say they often cannot pick up containers because they are crammed at port terminals or because of a shortage of trailers needed to pull the crates. They can’t return empty containers because the terminals are so full they won’t accept boxes for days.

“It’s kindergarten advocacy, ‘It’s not my fault,'” said John Butler, president and CEO of the World Shipping Council. The fee is necessary, he said, to ensure that shippers return the boxes as quickly as possible instead of using them as mobile warehouses for their goods.

Some shipping officials, including FMC members, say the financial boost from fees is a good way to speed up the flow of boxes. Rebecca Dye, commissioner of the CMF, said the fee should not apply in cases where shippers are delayed due to factors beyond their control.

The commission says carriers are making it easier to dispute charges and that in the third quarter of 2021, there was a 48% increase in waived charges. He also brought enforcement actions against Hapag-Lloyd HER

and Wan Hai lines ltd.

to collect fees from shippers for days when containers could not be returned because terminals did not accept them. Representatives for both carriers declined to comment.

Yet many freight owners say they have little success challenging charges at port terminals, and that railways and other logistics companies also add their own charges, driving up shipping costs. to an unreasonable degree. Flexsteel Industries Inc.,

a Dubuque, Iowa, furniture importer, said additional charges wiped out its profits in the last quarter.

Derek Schmidt, the company’s chief financial officer, said ancillary shipping costs rose to $15 million in the last quarter, from $5 million in the prior quarter and around $100,000 before the pandemic. The company challenged the charges with little success, he said.

Schmidt said Flexsteel will reduce logistics spending this year by cutting container imports in the first quarter of 2022 to between 250 and 300 per month, from 880 per month in the third quarter of last year. The company will also hire an outside firm to verify the additional charges and “if necessary, roll them back”, he added.

The Covid pandemic has strained global supply chains, causing freight backlogs that have driven up costs. Today, some companies are looking for longer-term solutions to prepare for future supply chain crises, even though these strategies come at a high cost. Photo illustration: Jacob Reynolds

Write to Paul Berger at [email protected]

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