With congestion on the West Coast showing no signs of abating, carriers have attempted to recover their costs for this congestion through a series of on-again, off-again surcharges.
They are of the mindset that the combination of a surge in imports, chassis problems and the lack of a contract between the ILWU and the PMA leading to coastwise slowdowns means that they need an extra $1000.00/FEU to offset their losses.
What they seem to have forgotten, however, is that they’re not the only ones suffering. Businesses around the United States who are unable to get their imports off the pier and their exports out of the country are similarly affected, and charging people extra for the privilege of feeling worse strikes a sour note with shippers.
Take the case of a business owner in Indiana who went so far as to post a sign in front of his movie theatre, placing the blame squarely on the PMA and ILWU’s lack of a contract for the reason he couldn’t complete renovations to his movie theatre, costing him potentially hundreds of thousands of dollars in lost revenue.
Shippers are also finding themselves having to turn to air freight at a time of year when those rates are already astronomical, adding millions of dollars in additional transportation costs to their bottom lines and having to divert otherwise ocean-planned cargo for a the far costlier modality.
This past week, the Transportation Stabilization Agreement apparently got the message from shippers, trade groups and the FMC that imposing surcharges with less than 30 days notice was not only unpalatable, but potentially illegal.
Their remedy? The tried and true General Rate Increase for the same $1000.00 with a scheduled effective date of December 15th.
At a time when it appears the economy is coming back and inventories are being restocked and there is a resurgence in global trade, there couldn’t be a worse confluence of continuing events that seek to squash these gains at a critical point in the recovery.