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May 14 2018

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40 The Journal of Commerce | May 14 2018 www.joc.com Government THE FEDERAL MARITIME Commission (FMC) is investigating claims from beneficial cargo owners (BCOs) that some container lines are unilater- ally canceling store door deliveries because of the recent rise in drayage costs, as truck capacity, exacerbated by the electronic logging device (ELD) mandate, tightens. The federal agency declined to elaborate on the identity of the BCOs that issued complaints or which ocean carriers received letters sent out on April 20. "In this inquiry, the commission is seeking information that will assist in understanding the timing, fairness, and lawfulness of the alleged unilater- al changes to ocean carriers' obliga- tions for inland trucking services," the FMC said in a statement. Ocean carriers have been restricting door deliveries and implementing surcharges on door deliveries, in which they are respon- sible for the end-to-end transpor- tation, because of the rising costs on inland transportation. Like the US truckload market, drayage costs have risen double digits year over year. In addition, draymen charged detention fees when waiting in line for several hours to pick up contain- ers when the rail networks were gridlocked this winter. Railroads charged demurrage fees on contain- ers in these situations, too. The carriers defend this prac- tice by indicating that the average detention fee is about $75 to $150 per hour when a trucker is waiting several hours at a railyard. Demur- rage fees can also run about the same amount per day per container, according to published tariffs from the Class I railroads. The electronic logging mandate is also adding extra fees to the drayage costs, according to Cura Freight, a freight broker. A recent example is a $3.95 ELD tech- nology fee charted by a driver. "I spoke with our driver, and he said he wanted to be transparent about the additional rate increase," said Iggy Torano, Cura Freight vice president of import and export drayage. "Rates are elevated by our drivers adding layover fees to shipments that have the potential to run over hours. This is an increase of $150 to $300. It is becoming more cost effective to transload some containers than to pay the [ELD-re- lated] layover and delivery charge." Shippers, however, have been skeptical about these calculations and whether the carriers are going after a revenue grab. A logistics manager for a fast food restaurant chain told The Journal of Commerce that the emergency truck fees levied by carriers are dubious. "How do you measure how tight trucking capacity is?" the logistics manager asked. "I don't want to give them a blank check." CMA CGM, Hyundai Merchant Marine and Mediterranean Shipping Co. are charging $300 surcharges per container, while APL, Evergreen, Ocean Network Express, and Yang Ming have charged $100 to $400 per dry or reefer container. Maersk Line and Zim Integrated Shipping Ser- vices addressed these costs through their inland tariffs, and Cosco Group said the topic would be covered in annual contract negotiations. MSC also ceased honoring door deliveries in low-volume markets, the carrier told The Journal of Commerce. MOL was also restricting door delivery bookings in certain markets in the weeks before the merger into Ocean Network Express (a merger of "K" Line, MOL, and NYK Line) on April 1. Carriers receiving letters from the FMC are expected to provide their responses within 30 days. JOC email: ari.ashe@ihsmarkit.com twitter: @ariashe_joc FMC on the case Agency takes on BCO complaints of carriers unilaterally canceling store door deliveries By Ari Ashe Carriers have implemented surcharges or restricted door deliveries because of higher inland trucking costs. Shutterstock.com "How do you measure how tight trucking capacity is? I don't want to give them a blank check." International | Washington | Customs | Security | Regulation

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