Several shipping companies began attaching surcharges to container rates this week to offset increased costs related to recent slowdowns at West Coast ports. The congestion is tied to an impasse in contract negotiations between the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA). According to media reports, the congestion surcharges will range from $240 to $375 for exported containers through Evergreen Line and Hyundai Merchant Marine and $1,000 for each imported container through Hanjin Shipping.
Earlier this month, the PMA accused the ILWU of intentionally slowing down traffic, cutting container movement at West Coast terminals in half. Workers at the Port of Oakland have even walked off the job, the PMA said, where congestion has led to frustration for everyone from truckers and retailers to ad specialty suppliers.
“Alphabroder (asi/34063) is seeing some delays in our shipments at West Coast ports,” said Norm Hullinger, the Top 40 supplier’s CEO. “We are working diligently with our freight forwarders to ensure we have daily updates on any delays. A $1,000 surcharge has been added to each 40 foot container. We might start to move some shipments via the East coast.”
Other Top 40 firms like Prime Line (asi/79530) have not been impacted so far, but are watching the slowdowns carefully. “Prime’s forwarder uses their own docks so fortunately this hasn’t affected us,” said Jeff Lederer, president of Prime Line. “For the industry overall, I think suppliers would just absorb the costs in the short term – but it is the delays that would affect customers.”
Trade groups, including the National Association of Manufacturers, the Toy Industry Association and the Consumer Electronics Association, met with White House officials this week to ask for a federal negotiator to intervene in the contract dispute. Reports suggest federal officials did not immediately pledge intervention, although discussions were labeled as positive.
Neither the ILWU nor the PMA have publicly admitted what sticking points remain in negotiations, although dockworkers’ future salaries and benefits are likely in dispute. A six-year contract for 20,000 port workers officially expired in July, but employees have mostly stayed on the job as talks have continued. More than two-thirds of all U.S. international trade moves through West Coast ports, but recent delays have been more closely scrutinized because of the upcoming holiday shopping season.