Chinese Carrier BAL Files Ground-breaking Complaint Regarding Congestion Surcharges with Federal Maritime Commission

Chinese Carrier BAL Files Ground-breaking Complaint Regarding Congestion Surcharges with Federal Maritime Commission

October 24, 2023

An Unconventional Twist in the Congestion Fee Saga

In a surprising development, BAL Container Line, a Chinese carrier, has filed a complaint with the Federal Maritime Commission (FMC) against SSA, a Long Beach terminal operator.

This marks a departure from the usual pattern of complaints related to congestion surcharges, which typically involve shippers and trucking companies filing complaints against carriers and terminals.

BAL’s Expansion into Transpacific Trade

BAL, a rapidly expanding Chinese shipping company with expertise in logistics and intra-Asia transportation, briefly ventured into the transpacific trade during a surge in 2021.

At the height of this surge in transpacific volumes, BAL announced ambitious plans to expand its operations by chartering a series of vessels.

They commenced service in June 2021 with a 2,190 TEU vessel chartered to California and unveiled additional plans for services to Europe and Mexico.

 Agreements with SSA and Operational Shift

In their quest to streamline operations, BAL entered into four agreements with SSA for terminal services at Terminal A in the Port of Long Beach.

Between August and December 2021, BAL utilized SSA’s terminal capacity to provide its services.

However, as container volumes began to taper and prices decreased, BAL underwent a shift in its services.

They discontinued European services in 2022, transitioned from vessel charters to slot charters for California, and eventually halted long-haul services by early 2023.

 The Complaint: Challenging Unjust and Unreasonable Charges

BAL’s complaint to the FMC outlines their receipt of two substantial congestion surcharge fee invoices from SSA, one for nearly $4.3 million in November 2021 and another for over $4.5 million in January 2022.

These fees were incurred when BAL delivered over 4,600 containers to Long Beach, exceeding the agreed-upon free time. BAL contends that these charges are “unjust and unreasonable,” asserting that SSA placed the containers in an “inaccessible area of the terminal,” making it impossible for shippers or their agents to retrieve them.

 Lack of Transparency and Clarity

BAL’s complaint highlights that when seeking explanations for the fees from SSA, they received a brief response citing a clause in the service contract.

Although BAL had agreed to pay full demurrage and a daily terminal congestion fee of $100 per unit beyond the free time, they claim that SSA failed to provide a clear explanation of the congestion charge or how it would alleviate congestion – something they believe is a requirement under the Shipping Act.

 Seeking Relief from the FMC

BAL is now turning to the FMC to request relief from the over $8.8 million in congestion fees incurred for containers deemed “unremovable from the port”.

This complaint breaks from the usual pattern, as it involves a carrier seeking relief from fees rather than imposing them.

 A Wider Perspective on D&D and Congestion Fee Complaints

Most of the complaints related to congestion fees and D&D (Demurrage and Detention) submitted to the FMC have historically been due to challenges in returning containers, often resulting from a shortage of reservation slots and yard capacity.

Shippers have also voiced their grievances about fees incurred when door-to-door services were hindered due to insufficient chassis availability for moving containers out of the yard.

 

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