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Top Shipping Lines Face Enquiry from US FMC over Congestion Surcharges

The shipping industry has been facing many challenges for almost 2 years now. The covid-19 pandemic has set new records in every sense. Industries all over the world have still not recovered from the restrictions imposed due to the pandemic.

The US Federal Maritime Commission has launched an inquiry about the reports of surcharges. These have been imposed by eight major shipping container lines all over the world. There are many shipping carriers that have said to be implementing congestion-related surcharges. Some of them are CMA CGM, HMM, Matson, Hapag-Lloyd, OOCL, SM Line, MSC, and ZIM respectively.

According to the FMC, they have asked these shipping container providers to offer details that confirm any surcharges. Another question is if the imposition of these charges was in accordance with legal as well as regulatory obligations.

A statement recorded from Commission Chair Daniel B. Maffei states the following. “The spike in demand for cargo imports has increased rates to record heights, especially due to the Covid-19 pandemic. Ocean carriers have been assessing new additional fees like congestion surcharges, with no explanations. “

He also added that the reason for this port congestion is due to the colossal traffic. This is coming from ocean carriers through seaports to meet the highly increasing demand for cargo imports. FMC is asking for clarifications from the end of the shipping carriers for these additional fees. They make sure that these add-on fees fully comply with laws and regulations.

Port congestion began escalating around 2020, leading to disruptions in the working of many other ports in the USA. The container lines have anticipated even larger congestion in the upcoming months. Exporters and importers are rushing to deliver cargo orders before the winter holiday shopping season. Most of these cargo shipments include automobiles, furniture to even essential items like medicines and food items.

Ever since the pandemic hit the world in an unanticipated way, all activities were put to a stop. Complaints have been pouring in from shippers as the shipping rates have risen during the course of last year.

Many shipping container companies have announced many surcharges. Israel’s Zim imposed a congestion surcharge of US$ 5000 per container. Similarly, CMA CGM levied a US$ 1000 congestion surcharge for LA. Hapag-Lloyd also announced additional charges of US$ 5000 for all US and Canadian ports respectively.

The latest developments involve a complaint from MCS, a home decor provider. Cosco and MSC, two top shipping lines, are in news recently due to imposition of detention and demurrage charges.

The shipping costs are soaring continuously with the rates going up by more than 500% in the last year. The most popular routes preferred by shippers all over the world incur the maximum shipping rates.

For example, if we talk about routes like Shanghai to Rotterdam, the cargo shipping rates have increased. The numbers have ascended by an astonishing figure of 570% in the past year.

Statistics suggest the average price of a 40ft cargo container has surpassed US$ 10,000. This is a record increase of 323% as compared to the previous year, according to the Drewery World Container Index.

The demand for cargo import and export has picked up now ever since the pandemic triggered a sharp slump. The lockdown restrictions had caused major disruptions in countries all over the world.

Another major reason for this disturbance was the shortage of workers when the restrictions were softened a bit. To avoid the spreading of the virus, a lot of people could not come together and work.

The protocols suggest that shipping companies should provide a 30-day notice to shippers in lieu of changes in shipping charges. They should also ensure that published tariffs are clear and easily understandable by all.

The US FMC will review the responses and explanations deposited by the shipping companies. Then they will decide whether the surcharges were imposed with prior notice, and clearly defined. There should be some information stating what conditions will trigger and terminate the surcharge.

The organization will then make a decision on how to go further with this matter. The global supply chains are under extreme pressure to meet a historic rise in demand for goods globally. It is understandable that there will be some shortcomings and issues to fulfill the needs in such emergencies.  Until then, the shippers will have to pay some additional prices for transporting their cargo across the world.

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