September 13, 2012

Ashley Craig quoted in American Shipper about freight surcharges related to possible dockworkers strike

2 min

Venable partner Ashley Craig was quoted in an American Shipper article on September 12, 2012 regarding the freight surcharges that many container carriers intend to impose in the event of dockworkers strikes in U.S. East and Gulf Coast ports. Dockworkers and their employers are currently struggling to agree to a new contract to replace the current labor pact which expires on September 30.

If the labor dispute is unresolved, then many carriers have said they will implement freight surcharges, which according to the Agriculture Transportation Coalition (AgTC), will "increase the cost of transportation to the extent that foreign customers could not afford U.S. agriculture products, and will turn to sources in other countries."

Offering his assessment of the incidence of surcharges, Craig said "the surcharges appear to reflect a carrier industry business decision since they would be faced with increased costs of handling cargo all over the country if there is a strike by longshoremen on the East and Gulf coasts." He highlighted the implications of port work stoppages, saying "It's going to affect everyone, even if you are a West Coast shipper and don't move anything through East Coast ports, you are going to be hit indirectly. The collateral damage is going to be congestion, delays and costs associated with carrier operations."

Craig suggested that "It doesn't mean they have to apply it (a surcharge), they can always wave it if they want to under contract or other agreement." He concluded that "If the ports are down, carriers, being good corporate citizens will attempt to move shipments to their destination, somehow, someway. But they also realize that is going to be pretty complicated. So if they have to invoke force majeure under their bill of lading, that is what they are going to do first and foremost, but also their service contract. That will give them an out for non-performance or if they can't reroute or find an alternative service to move the cargo to the destination point."