Shippers are warning ocean carriers to avoid the temptation of profiteering from any U.S. port shutdown by rolling cargo or implementing unjustifiable surcharges.
Bjorn Vang Jensen, vice president of global logistics at consumer electronics manufacturer Electrolux, said he was confident lines would comply with contracts signed in good faith rather than risk jettisoning improving relations with shippers.
“We have not been approached about surcharges, but we would obviously take a dim view, as would all the BCOs with whom we have discussed this, of any surcharges on existing allocations into the West Coast, and for that matter into the East Coast after the end of any labor action,” he said in an interview.
“Our take on the strike surcharge proposal is that there is no legal basis for placing these surcharges on currently contracted volumes, and I have yet to meet a BCO who thinks otherwise,” Jensen added. “We feel that we have bought a certain number of tickets. It may well be that external factors dictate that we can’t get more tickets at the same price for a period of time, but we certainly want the tickets we’ve already purchased and we will then manage our own world within those constraints.”
A number of carriers have announced congestion surcharges and warned that shipping capacity through U.S. West Coast ports will be squeezed if the International Longshoremen’s Association strikes or is locked out at East and Gulf Coast ports next month.
The ILA’s existing contract with terminal operators covering ports from Maine to Texas, represented by United States Maritime Alliance, expires at midnight on Sept. 30. Talks, which broke down on Aug. 22, will resume the week of Sept. 17.
Any port disruption will hurt shippers and add extra costs into international trade flows, which are already under pressure because of weak demand, said John Lu, chairman of the Asian Shippers’ Council. “I’m not optimistic the strike can be resolved in time,” he said.
Electrolux, like most shippers, already has examined its risk profile in the case of a port shutdown.
Jensen said the equipment shortages and cargo rollovers that happened during 2010’s rate surge may have permanently reduced shipping peak seasons, a factor that could help mitigate the overall impact of a port closure or any other major supply chain disruption.
“The 2010 capacity management fiasco taught many shippers to ‘flatten the curve’ by shipping early and trading slightly higher inventory for less seasonality and volatility in equipment, space and cost,” he said. “And until capacity availability stops seesawing the way it has for the last four years, I do not see shippers — at least not those who have a choice — going back to the old shipping patterns, neither in the U.S. nor in Europe.”
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