With the looming threat of labor unrest on the U.S. East Coast and Gulf Coast, the shipping industry is bracing for significant rate increases. Several major carriers, including Evergreen, HMM, CMA CGM, Maersk, and Yang Ming, have issued announcements about impending surcharges designed to mitigate the operational disruptions expected if strikes or other labor-related slowdowns materialize. These rate hikes, set to take effect in mid-to-late October 2024, reflect the growing uncertainty surrounding negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX).
As these surcharges begin to take effect, businesses shipping goods to and from the U.S. East Coast and Gulf Coast ports should prepare for elevated costs and potential delays in their supply chains.
Evergreen: Emergency Port Charge (EPC)
Evergreen Line has announced an Emergency Port Charge (EPC), effective October 23, 2024, for shipments discharging at U.S. East Coast and Gulf Coast ports. This surcharge is meant to cover operational disruptions related to strikes, lockouts, slowdowns, or other labor-related issues.
The charges are significant:
- $2,400 per 20′ container
- $3,000 per 40′ container
- $3,000 per 40′ high-cube container
- $3,000 per 45′ high-cube container
These costs will be collected from customers upon delivery. Evergreen has emphasized that this surcharge applies equally to dry cargo and specialized equipment like reefers, open tops, and flat racks. As these disruptions become more likely, businesses should anticipate and plan for these added expenses in their logistics strategies.
HMM: Destination Port Charge (DPC)
Similarly, HMM has announced a Destination Port Charge (DPC) effective October 19, 2024. This charge will be assessed for all shipments discharging at U.S. East Coast and Gulf Coast ports. The amounts are as follows:
- $1,500 per 20′ container
- $3,000 per 40′ container
- $3,000 per 40′ high-cube container
- $3,000 per 45′ container
Like the Evergreen EPC, the HMM DPC is designed to cover increased costs during any period of labor unrest, including strikes or slowdowns. HMM has made it clear that this charge will be applied universally, regardless of container type or cargo origin.
CMA CGM: Local Port Charge (LPC)
CMA CGM (America) LLC will implement a Local Port Charge (LPC) starting October 11, 2024. This surcharge will cover all shipments originating from or arriving at U.S. East Coast and Gulf Coast ports, with charges as follows:
- $1,500 per 20′ container
- $3,000 per 40′ container
- $3,000 per 40′ high-cube container
- $1,000 to $1,500 for specialized containers (reefer, open top, flat rack, etc.)
This LPC will remain in effect during any period of labor unrest, with CMA CGM noting that this charge could extend or evolve based on the situation at the ports. Given that this surcharge is assessed on all shipments, businesses should adjust their budget forecasts accordingly.
Maersk: Port Disruption Surcharge
Maersk has also announced a Port Disruption Surcharge, effective October 21, 2024, to cope with potential strikes on the East and Gulf Coasts. The surcharge is as follows:
- $1,500 per 20′ container
- $3,000 per 40′ and 40′ high-cube container
- $3,780 per 45′ container
Maersk has stated that this surcharge will help cover the operational costs incurred by disruptions at the ports, ensuring that their services remain sustainable throughout the period of labor unrest. Businesses should keep a close watch on further developments as the situation evolves.
Yang Ming: Port Congestion Surcharge
Yang Ming is preparing to implement a Port Congestion Surcharge, which will be triggered in the event of labor unrest at any U.S. or Canadian port. The surcharge is as follows:
- $800 per 20′ container
- $1,000 per 40′ container
- $1,125 per 40′ high-cube container
- $1,266 per 45′ container
This surcharge will apply to both tariff and service contract rates. Businesses shipping to the U.S. East Coast and Gulf Coast should be aware of these potential additional costs and consider alternative solutions to avoid disruptions.
Preparing for Rate Hikes and Disruptions
The labor negotiations on the East Coast could result in substantial operational challenges for shipping companies, and the announced surcharges are a direct reflection of the increased costs carriers expect to face. For businesses, these rate increases can lead to significant financial impacts, especially for those heavily reliant on East Coast or Gulf Coast ports for their supply chains.
To mitigate these risks, businesses should:
- Consider alternative ports: Shifting shipments to U.S. West Coast ports or other unaffected regions can help avoid higher costs and potential delays.
- Increase inventory levels: Anticipating possible shipping delays by holding additional inventory can help ensure product availability even if supply chains slow down.
- Negotiate with carriers: Companies should engage in discussions with their carriers to explore options for minimizing the impact of these surcharges.
- Partner with 3PL providers: Leveraging the expertise of third-party logistics (3PL) providers like Global Logistical Connections (GLC) can help businesses navigate these disruptions more smoothly. GLC has a deep understanding of the complexities surrounding labor-related port disruptions and can offer customized solutions that ensure minimal impact on your supply chain.
- Stay informed: As the situation develops, businesses should stay updated on labor negotiations and potential disruptions to adjust their logistics strategies accordingly.
How GLC Can Help
As a leading 3PL provider, Global Logistical Connections (GLC) is prepared to support its clients in managing the challenges posed by these potential strikes. With extensive experience in navigating port disruptions, GLC can help businesses minimize risks through proactive planning, alternative routing strategies, and expert advice on how to manage increasing operational costs. GLC’s global network and flexible solutions will be critical for companies seeking to maintain smooth shipping operations in light of these expected surcharges.
GLC’s partnerships with major carriers and its vast logistics infrastructure enable it to provide customized shipping solutions even during periods of labor unrest. From rerouting shipments to alternative ports to ensuring timely delivery, GLC helps businesses adapt to ever-changing supply chain conditions.