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Canada’s Freight Management Association slams carriers for imposing ‘low water surcharges’ on Montreal cargo

 

By Leo Ryan, Editor

Global carriers are “gouging shippers” when they are at their most vulnerable by slapping a Low Water Surcharge (LWS) on top of already sky-high rates for all containers discharging at the Port of Montreal, declared John Corey, President of the Freight Management Association.

“It’s a Wild West out there, with three big carrier alliances controlling the market,” he told Maritime Magazine in an exclusive interview. 

“Shippers are being squeezed both ways, with less equipment available due to widespread congestion and with prices going up and up,” said the head of an industry association whose member companies purchase approximately $2 billion in transportation services by ship, truck, rail, courier and airfreight.

Some shipping lines, he suggested, are capitalizing on the circumstances by beefing up their bottom lines.

And quite candidly, he remarked: “The question is: how much money is too much money.”

During the interview, he stressed the importance of the Port of Montreal for Quebec, Ontario and the Canadian economy as a whole as the country’s second-biggest maritime gateway.


At the end of last week, Hapag-Lloyd, citing latest forecasts by the Canadian Coast Guard predicting “further reductions” in St. Lawrence water levels, announced the implementation of a LWS of US$150 per TEU (20 ft equivalent unit) on Atlantic trade from North Europe.

Affirming that the water levels have “restricted the intake of vessels,” Maersk, the world’s largest container operator, announced a US$300 LWS on all container types.

MSC is charging an additional US$150 for every 20 ft container and CMA-CGM has increased its existing low water fees to US$150 per TEU and $200 per FEU.

In normal times, Mr. Corey said it “may be a reasonable practice” to charge lower water surcharges to make up for lost revenue – “but these times are not normal.”

“The carriers are already charging historically high rates, the low water surcharge goes straight to their bottom line (icing on the cake) at the expense of the shipper and ultimately the consumer.

“The FMA feels these additional low water surcharges are an attempt to squeeze shippers when they are at their most vulnerable and is something only a monopolist can do.”

Earlier, Mr. Corey dwelt at some length on the present chaotic world shipping environment and the impact on Canadian exporters and importers.

“Due to Covid-19, marine transport in 2020 and continuing into 2021, has been inconsistent, restricted, and ultimately unavailable for many Canadian exporters. Many international shipping lines have been shipping empty containers back to Asia, containers that are usually made available to Canadian exporters, especially exporters of pulse crops and forest products. 

“Canadian importers, retailers that Canadians depend on for essential goods, are also facing delays in receiving goods due to shortages of containers and congestion at Asian ports.

“This high demand and limited supply of containers has caused international ocean shippers to raise rates to all-time highs. Containers which usually cost $4,000 now cost $20,000. The international carriers are reaping record profits, at a time when their expenses are virtually the same as pre-pandemic expenses.”

 Port of Montreal clarification on water level

For its part, the Port of Montreal declined to publicly comment on the surcharges, but summarized its view on the water level situation. 

“The water level today is 11.9 metres above the charted level,” Melanie Nadeau, Director of Communications of the Montreal Port Authority, told Maritime Magazine. “As far as water levels in general are concerned, this is not a particular concern for the Port of Montreal, although it is something we are monitoring closely.

“The winter of 2020-21 was mild, and the low snow pack resulted in a low spring freshet. This was coupled with a historically warm and dry May. The water levels in June are therefore below the average level for this time of year.

“The summer flooding also started earlier than usual. As far as land-based operations are concerned, the Port is busy and operations are very fluid (e.g. 10 to 12 container ships per week and a dwell time of less than two days for import containers).”

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Canada’s Freight Management Association slams carriers for imposing ‘low water surcharges’ on Montreal cargo

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