Ship Line Adding Charge

A shipping firm will impose a congestion charge on export cargoes leaving the United States West Coast and others look set to follow, effectively doubling freight rates, U.S. metal traders said.

West Coast ports still face backlogs following a labor dispute earlier this month which imposed burdens on shippers.

A major U.S. non-ferrous scrap metal exporter received the following message from shipping company Senator Lines GmbH's Transpacific Westbound Trade Manager, Steve Subrani.

"Please note the following new rule which has been filed regarding the 'Temporary USWC (United States West Coast) Congestion Surcharge'.

"This rule is scheduled to go into effect November 24th, so please advise customers accordingly -- all cargo from and via U.S. west coast ports will be subject to the following amount of congestion surcharge, as indicated ... per 20-feet container $800, per 40-feet container $1,000, per 40-feet high cube container $1,000, per all other sizes $1,000.

"This charge is to be paid together with the ocean freight.," said the message, obtained by Reuters.

The standard cost of freight off the West Coast is $1,000 per container.

The trader said he expected other shipping companies on the to follow Senator's lead and suggested exporters were likely to take rapid legal action to try to have the charges halted.

"We're going to re-route our scrap shipments through Vancouver and the Gulf (of Mexico). But if we've thought of doing that, so will others," he said.

Exporters are still reeling from the recent dockyard dispute between unionized dock workers on the West Coast and the Pacific Maritime Association (PMA) which resulted in a 10-day lockout of and a backlog of shipments that has yet to be cleared.

Asia, particularly China, is largely driving U.S. non-ferrous scrap business, so the new congestion charges could spin the market into a panic, said the trader.

South Korean and Japanese buyers typically require that containers make it to the dock and onto the ship before the seller in the U.S. can bill them.

While payments from Chinese buyers is easier - sellers can bill the buyer once the container is filled with material at the U.S. scrapyard - this is a difficult period for a squeeze to occur.