• ILWU Contract Negotiations Could Result in Congestion Surcharges

    Carriers Announce Congestion Surcharges Ahead of ILWU Contract Negotiations 

    The ILWU contract negotiations are set to begin on May 12th, ahead of the July 1st expiration of the current contract. According to the JOC, “Hapag-Lloyd informed its customers that it will be prepared to levy what could be large congestion surcharges on shipments to and from the United States in the event that work stoppages occur during West Coast longshore contract negotiations this summer”. Maersk explains, “a congestion surcharge is possible, if the carrier incurs significantly higher costs that could result from port congestion associated with the negotiations”. ¬†Hapag-Lloyd has said that it will not impose congestion surcharges on any shipments before June 10th.

    As many as 12 carriers have announced their plans for congestion surcharges with the Federal Maritime Commission. According to the JOC, the tentative surcharges include:

    • $800 per 20-foot container
    • $1000 per 40-foot container
    • Even higher surcharges for containers with larger capabilities

    Long work stoppages on the West Coast can have a domino effect on other modes of transportation coming to and leaving from the West Coast ports. “Vessels could back up at the ports with nowhere to go because most of the vessels calling at West Coast ports are too large to transit the Panama Canal. Also, intermodal trains would back up, and equipment would begin to generate per diem charges.” U.S. based shippers and importers should be aware of potential delays and congestion surcharges if an agreement cannot be reached in the ILWU contract negotiations, resulting in work stoppages at West Coast ports.

    Topics to be discussed in the ILWU contract negotiations include: stronger safety precautions, wages, more secure benefits, greater respect for ILWU jurisdiction, and reasonable approach to technology.

    JOC Article: Carriers Reach Surcharges in Case of US West Coast Disruptions