Japanese carrier NYK Line notified customers Thursday that it would impose a congestion surcharge
of $1,000 per container moving through U.S., Canadian or Mexican ports if East Coast ports are shut down by a strike or lock out next month.
The fee is applicable to shipments from origins in the Far East, the Indian Subcontinent, and Australia.
The existing contract between the International Longshoremen's Association and terminal operators, represented by the U.S. Maritime Alliance, is set to expire Sept. 30. Negotiations abruptly stalled
last week over an impasse about how to increase the efficiency of terminals, overtime pay and guaranteed payments
for work not done. One ILA local has already authorized union leadership to recommend a strike.
NYK said the surcharge would take effect Oct. 1 due to labor unrest that could lead to shut downs or work slowdowns at East and Gulf coast ports. The surcharge would apply to the entire continent, not just the ports directly impacted by the dispute between longshoremen and management. The reason is that diversion of cargo from those ports would increase congestion and delays at ports on the U.S. West Coast, as well as ports in Mexico and Canada, according to the notice.
The size of NYK's proposed surcharge is notable. It would represent an increase in total ocean freight costs of around 40 percent of projected base rates between Asia and the U.S. West Coast, and around 30 percent to the U.S. East Coast. The surcharge is nearly double the size of the largest surcharges typically imposed by ocean carriers for peak season transport, increases in bunker fuel or other factors.
Many shippers are already implementing contingency plans, such as rerouting cargo through other ports in preparation for a work stoppage. That could lead to further tightening of vessel and equipment capacity in other ports, a reduction in intermodal rail supply and a corresponding rise in rates, and declarations of force majeure by ocean carriers to absolve themselves for liability for late deliveries. - Eric Kulisch