Shippers contend with a volatile shipping industry during uncertain West Coast labor negotiations. Ocean carriers have proposed and delayed general rate increases (GRIs) and peak season surcharges (PSSs) numerous times over the last few months. These uncertain rates are compounding confusion caused by re-routings amid concerns of tumultuous labor negotiations taking place between the Pacific Maritime Association (PMA) and the International Longshoremen and Warehouse Union (ILWU).
Proposed Transpacific Carrier Fees: GRI/PSS
For many shippers, the GRI and PSS charges proposed previously in the year for ocean freight from the Far East did not come to fruition. The GRI notice for the Far East to Canada trade lane did not materialize in May as announced, but some carriers are announcing a mid-June mitigated GRI. Meanwhile, for shipments from the Far East to the U.S., GRIs were implemented on a case-by-case basis. Most shippers realized a mitigated GRI of $80/20’ standard container, $100/40’ standard container, and $100/40’ high cube container.
A new PSS has been announced from the Far East and Indian sub-continent to the U.S. and Canada with an effective date of June 15. Those in the trade anticipate this PSS will go into effect as announced and will not likely be postponed or cancelled.
$320 USD per 20’
$400 USD per 40’ STD
$450 USD per 40’ HC
$506 USD per 45’
$8 USD per CBM LCL ($8 w/m, $8 min)
Shippers should contact their Deringer representative to determine if their quoted ocean rates will be impacted by a GRI or PSS.
West Coast Labor Talks
The contract for the ILWU, which represents port workers along the U.S. West Coast, expires at midnight on June 30. Both the ILWU and their management, represented by the PMA, have presented their initial contract requirements which remain far apart. Given the disparity in demands, trade professionals are anticipating some level of West Coast shipping disruption in the form of work slowdowns or stoppages. Many shippers have diverted cargo to Canadian ports or U.S. East Coast/Gulf ports to avoid interrupted supply chains associated with the negotiations. According to a Journal of Commerce survey of 221 shippers, two-thirds of respondents planned or had already arranged for alternate shipping routes by Mid-May. Bookings for all-water routes to the East and Gulf Coasts and to Canada have quickly filled, leaving other shippers to potentially ride out the negotiations.
In the event of any labor unrest associated with the West Coast port negotiations, ocean carriers have announced intentions to assess a Congestion Surcharge.