Avoiding extra costs as a member of the Apollo Cargo Alliance
Many of the global trade delays we are seeing today are caused by the current congestion at container ports all around the world. Because port congestions can be very expensive to freight forwarders and their clientele, we would like to clarify when you can be held responsible for any extra charges.
Like most things in the freight forwarding industry, port congestion is a complex issue and the answer will differ from case to case. Luckily, the Apollo Cargo Alliance will be happy to personally assist you in such situations.
Why does port congestion happen?
Due to the surge of ecommerce, the shipping industry has exploded over the last 20 years and the majority of merchandise is transported by sea. The main problem is that international ports have not caught up with this growth, resulting in insufficient capacity.
In 2020, the COVID-19 pandemic brought a much higher demand of import goods from China to the United States and Europe. Combine this with labor and equipment shortages due to local lockdowns, and you get critical ocean freight delays.
Port congestion in the United States and China
On the US West Coast, severe congestion at the ports of Los Angeles and Long Beach are being caused by a combination of high import demand and limited workforce due do the COVID-19 pandemic.
At the Yantian International Container Terminal (YICT) in Shenzhen, China, the emergence of the new Delta variant in May of 2021 was accompanied by a strict lockdown, resulting in a capacity of just 30% for several weeks.
What is the impact of port congestion for freight forwarders?
Since freight forwarders are responsible for handling goods from one destination to another, port congestion can severely affect the efficiency of their transport along the way. For example, vessels that have to wait several days before unloading can result in thousands of dollars in losses each day.
When is a freight forwarder liable for port delays?
If a shipping delay is the direct result of negligence on the part of the freight forwarder, it speaks for itself that liability can be expected here. Examples include faulty documentation or customs declarations.
In general, port delays are out of the control of the freight forwarders however, they should avoid to be held accountable for the extra costs associated with it.
Check your contracts
As exceptions can always apply, the best advice we can give is to clearly determine in the shipping terms of your contract which party is responsible for the extra costs caused by port congestion and delays. We are listing a couple of important terms which may indicate your liabilities.
Delivered at place (DAP) simply means that the freight forwarder is responsible for the shipment until it is delivered at the point of destination. Consequently, the freight forwarder may also be liable for any costs gathered along the way.
Free on Board (FOB) implies that the seller or buyer is responsible for the goods, not any other party such as the freight forwarder.
In case that the parties agree upon a “100% on-time delivery”, it is possible that the freight forwarder can be held responsible if he does not succeed in doing so. This should be clearly stated in the contract, however.
Become a better freight forwarder with the Apollo Cargo Alliance
In conclusion, we do not expect a miracle solution for the worldwide port congestion anytime soon. However, this does also means that all freight forwarders are in this together and we can only make the best of the situation.
At the Apollo Cargo Alliance, we believe that the best way to battle these daily challenges is to forge new business relationships and work together with other trustworthy freight forwarders around the globe.
Are you interested to become a member of the Apollo Cargo Alliance? Feel free to register here. We will get in touch with you as quickly as possible.