Biting the hand

that feeds you

Having held executive positions on both the carrier and shipper sides of the transportation relationship, I feel compelled to comment on the reports that trans-Atlantic carriers intend to assess a West Coast port congestion surcharge of $500 per TEU on eastbound and westbound cargoes.

During previous PMA-ILWU showdowns, shippers put pressure on the carriers to settle quickly. In addition, carriers seemed to feel that a costly settlement was preferable to allowing their ships to lay idle during a strike or lockout. But things were much different as the current situation began to unfold. The employers seemed unified to insist on a prudent, sound business-oriented outcome. And wanting to avoid being backed to the wall, they enlisted their shippers (most industries call them customers; I wonder why this industry doesn't?) to stand by them, which they did.

Now, it has been no secret for a long time that in reality, the carriers and their terminal operators, many of which are subsidiaries, do not really control their own labor. And, it also was no surprise that the union, as it had in the past, would resort to "hard timing" if it did not get what it wanted and the contract expired.

So now let us connect the dots. Time went by and there was no agreed contract. The employers cannot control their labor. Slowdowns are reported. The lockout takes place and the terminals cease to handle cargo. While the idle ships are costly, the carriers avoid having to pay hefty wages to "slow going" labor; plus the cargo is, for the most part, still going to be there when work resumes. The shippers refrain from pressuring the carriers to settle, against their best interests. Finally, not surprisingly, congestion occurs.

Now the carriers have the audacity to assess a surcharge on their customers! And as if that is not enough, the carriers' word processors are working overtime on "force majeure" notifications advising that they are invoking their right to deliver the customer's cargo at its respective existing place of rest (Mexico, Panama and who knows where); Forward the customer's cargo to a place as per their instructions with all costs and additional costs to be for the account of the cargo and to be debited to the customer; or forward the customer's cargo at their discretion to the place of delivery specified in the relevant bill of lading, with all costs and additional costs to be for the account of the cargo and to be debited to the customer.

But out of all of this, the real surprise is that carriers wonder why they often have adversarial relationships with shippers, why they find it difficult to build "partnering" relationships with shippers, and most of all why they believe they are losing money because the rates are too low!

Talk about a lesson in biting the hand that feeds you.

Hudson R. Warren Jr.

Herbalife International

Torrance, Calif.