Ship Lines Boost Late Fees
Maersk, Sea-Land, Hapag-Lloyd, Mitsui-OSK Lines, NYK Line and other steamship companies that belong to the Transportation Stabilization Agreement rate conference sent notices to all motor carriers participating in the Uniform Intermodal Interchange and Facilities Agreement about the rate hikes. Draymen with individual contracts also are being required to sign on to the new rates.
The increases are an attempt by the steamship lines to alleviate the shortage of containers in the Far East due to the Asian financial crisis.
The per diem charges for open top containers and flatbeds went from $15 to $30. Charges for refrigerated-tank containers jumped from $50 to $100, and the late fees for bare chassis doubled from $6 to $12.
The rate changes are a sign of the desperate need for containers in the Far East. All the boxes are going west, and none are returning because of the trade imbalance caused by the Asian financial crisis. Steamship lines are hoping the higher penalties for late equipment will lead to quicker, more efficient turnarounds, providing more containers for eastbound trade.
“Basically it comes down to the fact that because of the Asian situation, there’s a lack of equipment going over the ocean back to the Far East,” said Troy Shephard, manager of coastal field services at the California Trucking Assn. “It’s making it difficult for the Asian shippers because they’re running out of containers and they can’t get their imports over here to the U.S. That’s the justification for doing this.”
Motor carriers likely will attempt to get their customers, the receivers of the intermodal equipment, to absorb the dramatic rate increases, but Mr. Shephard is worried that some won’t be able to do that.
There’s a lot of motor carriers that just don’t have the clout to pass off that expense onto their shippers,” he said.
Bruce W. Rossio, the president of Valley Intermodal Systems in Modesto, Calif., has already notified his customers of the possibility of extra costs.
“I’m sure not going to eat those charges,” he said. “I can’t afford it.”
Charges of $44 a day aren’t an option either for Ronald Guss, president of Intermodal West in Commerce, Calif.
“I wouldn’t pull them if they’re not going to pay me for it,” he said. “We’ve already told our customers that this is going to happen, so no more holding containers. They have to get them back to us.”
What it comes down to, said Mr. Guss, is having the right kind of relationship with your customers.
“You’ve got to have customers that believe in your service, and you have to believe in their payment. If you have a partner situation, then it shouldn’t be a problem.”
Whether this move will actually result in more containers going back to Asia is another story.
“Whether it works depends upon the warehouse,” said Mr. Rossio. “For some of these warehouses, $44 isn’t a big deal, and it would be cheaper to leave it in a box than to have to offload it and then move it again in the warehouse.”
According to Mr. Guss, the solution isn’t higher fees but opening the ports on a 24-hour basis.
“Here’s the steamship lines penalizing their customers for the ineptness of their system,” he said. “You could turn a lot more equipment for them from the customers if they would pay for three shifts to keep the terminals open around the clock.”
It’s unclear whether the rate hikes will be reduced if the trade imbalance with Asia improves.
I think they’ll stay at that rate to see what the reaction of the marketplace is,” said Tom Malloy, chairman of the American Trucking Associations Intermodal Conference. “If there’s a large
utcry from the shipping public, then the steamship lines will have to re-evaluate and change tactics.”
