Against the Tide: A Carrier Challenges Terminal Operator
In a striking departure from the typical narrative, a grievance against a Long Beach terminal operator was lodged by a shipping line at the Federal Maritime Commission. Most of the previous protestations about congestion surcharges had come from shipping firms and trucking companies, targeted at carriers and harbors. Tipping the scales in a different direction, BAL Container Line, a Chinese-based carrier, broke with tradition to petition the FMC regarding the alleged $8.8 million worth of charges accrued at the SSA terminal.
Baptism by Fire: New Entrant’s Experience in the Transpacific Trade
Parading impressive growth as an intra-Asia carrier and logistics provider, BAL emerged on the scene rather swiftly. Enticed by increased transpacific trade volumes at the height of its peak in 2021, BAL sailed into these waters by expanding its fleet and chartering a series of vessels. The new California service started operation in June 2021, utilizing a chartered 2,190 TEU vessel. Meanwhile, the company disclosed that schedules for European and Mexican routes were also on the horizon to offer alternative options to clients struggling with capacity crunch.
Turbulence Ahead: The Challenges of Operating in the Port of Long Beach
To smoothen sailing operations, BAL confirmed agreements for terminal service with SSA in Long Beach’s Terminal A. As the dust settled, BAL’s California operations transitioned from vessel charters to slot charters, with its operations experiencing a significant wind-down by early 2023. With weakening container volumes and dwindling prices, the firm retreated from its expansion plan, halting its long-haul services. Undoubtedly, this transition resulted in a dispute with SSA over a $4.3 million ‘congestion surcharge’ in late 2021, with a second invoice totaling over $4.5 million making its way onto BAL’s desk two months later.
Congestion Charge Conflict: BAL Versus SSA
BAL alleges the mounting congestion surcharges, incurred after exceeding the permitted free container storage time, are “unreasonable and unjust.” The carrier argues that SSA’s lack of communication and the obstructed access to containers at the terminal left them vulnerable to these charges. The terse response from SSA, referencing a clause in their service contract, did little to assuage BAL’s discontent.
The Battle Round: The Allegations and Calls for Intervention
In the primary contract, BAL consented to pay a 100% demurrage fee and a $100 terminal congestion fee per unit per day beyond the agreed free time. However, BAL insists that SSA failed in its responsibility to clarify the congestion charge, arguing that the Shipping Act necessitates a precise roadmap for invoking and terminating these fees. As such, BAL has asked the FMC to provide relief and suspend the $8.8 million in congestion fees it collected for the containers ‘stranded’ at the port, presenting a challenge of a different kind to the Maritime Commission.
Generally, the burden of congestion fees and D&D complaints stems from a lack of reservation slots and inadequate yard capacity. Issues like failure of door-to-door services due to a deficit of chassis also often incite complaints from shippers. This new claim from BAL turns the tables on the traditional complaint pattern in the industry, spotlighting a carrier grappling with these fees instead.
