What Importers Need to Know About Billing During a Port Strike

As the Ports strike in the East and Gulf Coasts and potentially Canada will now most likely happen, many importers are unprepared for the financial fallout. While delays are expected, the real challenge often lies in the unexpected charges that can rapidly deplete a company's budget. Understanding how billing works during a strike and the nuances of regulations and guidelines is crucial to protecting your bottom line.

Is the FMC Involved in the Strike Negotiations?

Despite its role in overseeing the industry, the Federal Maritime Commission (FMC) is not a party to the negotiations between the United States Maritime Alliance (USMX) and the International Longshoremen's Association (ILA). These negotiations are strictly between the labor unions and shipping alliances involved. However, the FMC continues to monitor the situation, providing oversight on charges and fees that could impact importers.
They also offer support in charges complaints.

How Does the Interpretive Rule on Demurrage and Detention Affect BCOs?

The FMC's interpretive rule on demurrage and detention was designed to ensure that these charges encourage the timely movement of Cargo. However, during a strike, this rule doesn't necessarily work in favor of Beneficial Cargo Owners (BCOs):

⚖️ Penalty Accrual: Currently, if your container is in a penalty state—such as accruing demurrage or per diem fees—these charges continue to apply until the container is retrieved, even if retrieval is impossible due to the strike. This means that fees can mount up despite the lack of access.

⚖️ Potential for Change: The FMC's stance could evolve, but BCOs need to operate cautiously for now. Ocean carriers are quick to bill, and disputes can take considerable time to resolve.

Preparation Tips for BCOs:

• Retrieve Cargo ASAP: Whenever possible, expedite the retrieval of your Cargo before the strike begins or escalates.
• Document All Challenges: Keep thorough records of any difficulties accessing containers, whether due to terminal closures or other strike-related obstacles. Documentation is critical for contesting unwarranted charges.
• Use Off-Dock Return Locations: Some ocean carriers may provide off-dock return facilities. These can help avoid additional per diem charges when terminal access is restricted.
• Monitor Containers and Charges: Vigilantly track your containers and review charges regularly to catch any discrepancies early.

How Does the Billing System Work Once the Strike Starts?

A critical aspect that many importers overlook is how the billing system adapts (or doesn't) during a strike:

🧾 Tier-Based Fees: If your container is already accruing tier-based penalty fees when the strike begins, those rates should not increase. For example, if your container is in Tier 1 when the strike starts, all charges during the strike should remain at Tier 1 rates. Monitoring this can prevent you from being overbilled.

🧾 Who Can Bill You?: Both terminal operators and Steamship Lines (SSLs) can issue penalties during the strike. The FMC guidelines apply to all, meaning fees for container storage and equipment use must be justified and properly applied.

Operational Surcharges: Timing and Approval Process

Operational surcharges are another financial burden importers must watch for during a strike. These surcharges often take 30 days to come into effect and are typically applied to Cargo arriving at the affected ports.

🚢 Review and Justification: The FMC reviews these surcharges to ensure they are "reasonably related to the services provided." However, these charges are often deemed reasonable when multiple carriers impose similar fees due to widespread industry agreements.

🚢 Delayed Implementation: Importantly, operational surcharges cannot be charged until the Cargo is delivered to the affected port, adding another layer of complexity to how these costs are applied.

Managing Financial Exposure During a Strike

Importers often underestimate the impact of a strike on their financial operations. The accumulation of demurrage, detention, and operational surcharges can drain resources faster than anticipated. By understanding how the billing system operates during these disruptions, maintaining thorough documentation, and actively managing container movements, importers can better shield their supply chain budgets from unexpected and excessive costs.

Staying informed and vigilant about your charges is your best defense against the financial pitfalls that accompany port strikes.

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Other articles of ressource during the Ports Strike HERE.