FMC Asking for More Info on TSA Proposal

The US Federal Commission plans to request additional information from the Transpacific Stabilization Agreement (TSA) parties, as confirmed by Commissioner of the Federal Maritime Commission, William P. Doyle on Wednesday.

The Commission voted 3 to 2 to request more information on the plans.

The TSA parties proposed an amendment to permanently include the westbound trans-Pacific trade as part of the TSA. TSA previously filed an amendment seeking a 24-month trial period to expand the geographic scope of TSA to include westbound trans-Pacific trade. That 24-month trial period began on April 14, 2013.

The Commissioner said that he would take this opportunity to address the separate issue of port congestion.

“I believe it is time that the ocean carriers do their part and find ways to assist in eliminating port congestion. As has been pointed out by many industry stakeholders, the actions of the carriers have in part led to where we are today. Certainly, adding congestion surcharge fees on cargo to and from West Coast ports is not helpful. I appreciate that many carriers are stepping back and reconsidering the surcharge,” he went on to say.

According to Commissioner Doyle,  the carriers have forced ports around the world to react to their business model of building larger and larger vessels.

“Five years ago, 8,000 TEU vessels calling on ports in the U.S. was an uncommon event. Today vessels of up to 14,000 TEU of capacity are calling on the U.S. West Coast,” Doyle said.

Figures show that these large vessels regularly generate 5,000 container moves per vessel call, reaching up to 8,000 to 10,000 container moves.

“This large volume places a severe strain on terminal resources. With containers stacked higher due to congestion, dockworkers are forced to dig through stacks to retrieve boxes. In the U.S., ports are spending tens of billions of dollars upgrading their ports in anticipation of larger vessels. The larger ships have come onto the market quicker than the ports can react by way of construction and upgrading, thereby, significantly exacerbating port congestion by unloading ever larger volumes of containers,” the Commissioner pointed out.

“I believe the ocean carriers should not be adding surcharges for port congestion under any circumstance now or into the foreseeable future for imports or exports. Indeed, the ocean carriers have a substantial hand in the formation of port congestion matters as identified above,” the Commissioner went on to say, adding that things will get better over time as the supply chain adjusts to the ongoing changes in ocean transportation.

Triggered by FMC’s decision to revise the announced congestion surcharges for cargo moving via U.S. West Coast ports, that was supposed to enter into effect on November 17, 2014, a number of ocean carriers decided to suspend the surcharges.

Press Release; Image: Port of Los Angeles