As reported in our news section last week, proposed surcharges from leading ocean cargo carriers are being met with the “disapproval” of The European Shippers’ Council. A much stronger reaction was announced by The Global Shippers Forum which says the idea simply “stinks.”
Based on the information released by Maersk, the new charges, which are additional to agreed contract rates, are based on two factors - an average cost of fuel and a “trade factor” that upscales the costs on head trades and discounts the fuel cost on reverse trades.
“But because the charge is per box, the greater number of revenue-earning boxes sailing west will collectively pay far more than they need to in order to compensate for the same boxes returning east when empty,” observes GSF Secretary General, James Hookham.
He adds that this has the effect of applying higher than average surcharges on their most profitable routes. For example, the Far East to North Europe route has a trade factor of 1.3, but North Europe to Far East of 0.7. In addition, Maersk has decided to help itself to a whole year of higher fuel surcharges, a full 12 months before the rules requiring them to use surcharges actually come in.
“And the new charging structure would apply to all variations of fuel price, not just due of the introduction of low sulphur fuel,” he says.
Similar to the ESC position, GSF feels that while shippers can be expected to contribute to new environmental costs, but this charge lacks transparency.
“GSF will be taking this piece of financial engineering apart piece by piece as we suspect this has more to do with rate restoration than environmental conservation,” warns Hookham, who suspects that other carriers may be tempted to follow suit.
“These new charges may be all about low-sulphur fuel,” he concludes, “but they still stink to us!”
While much of today’s mainstream news, as it relates to the supply chain, is focused on topical trade-related things like tariffs and the future of NAFTA, one constant that remains intact, although it does not receive the commensurate amount of attention, is the state of our nation’s infrastructure.
One organization, though, that is always paying attention to the national infrastructure outlook, though, is the Washington, D.C.-based Coalition for America’s Gateways and Trade Corridors (CAGTC), long an ardent support and advocate for pushing Congress to take the needed and necessary steps to move our infrastructure, which is far from effective and efficient, and essentially chipping away, in the right direction.
CAGTC Executive Director Elaine Nessle made that clear when speaking on a panel this week for Congressional staffers, explaining how there remains a vital need “for a program that reliably funds our nation’s multimodal freight system, allowing it to grow in lockstep with our national economy and population,” according to CAGTC officials.
The theme of this week’s infrastructure-focused Congressional briefing, which was put together by Rep. Earl Blumenauer (D-OR) and Rep. Alan Lowenthal (D-CA), was entitled “Funding to Rebuild and Renew America,” and it focused on various funding proposals to improve the U.S. transportation system.
CAGTC said that at the hearing executive director Nessle spoke about Lowenthal’s National Multimodal and Sustainable Freight Infrastructure Act, legislation which requests a 1% fee for the cost of moving goods.
This bill has been kicking around since 2014, with a chief objective to dedicate about $8 billion per year towards U.S. freight-related infrastructure projects, while focusing on intermodal-related projects and projects geared towards alleviating freight transportation system-related bottlenecks.
“Targeted, sustained, and robust investment in our nation’s freight system is necessary to maintain the strength of American industry in a competitive world marketplace,” said Nessle. “To maintain and improve freight infrastructure, dedicated funding, such as what Congressman Lowenthal has suggested, is required. The 2020 reauthorization is swiftly approaching and necessitates serious consideration of how Federal transportation infrastructure programs will be funded,” said Nessle. “We look forward to continuing our work with Congress and the Administration to identify solutions that will benefit our national economy for years to come.”
It goes without saying that more Congressional time, attention, funding, and resources are allocated for out nation’s many infrastructure needs. Some members of Congress, albeit not enough, have their collective eye on the ball, but many more truly need to get in the game.
When President Trump took office, there was a feeling of optimism that more would get done on the national infrastructure front, as that was a key talking point of his campaign. To date, the expected progress has not occurred, but that does not mean it won’t happen at some point. With the nation’s state of infrastructure in a constant state of disrepair and in need of far more than a paint job, more needs to happen. Let’s hope other members of Congress can follow the lead of Reps. Lowenthal and Blumenauer and the CAGTC to get things truly moving.