Hapag-Lloyd Announces Work Disruption Surcharges Amid Labour Strike Concerns at U.S. Ports
While these surcharges provide operational stability for shipping companies, the added costs will likely be passed down the supply chain and impact both businesses and consumers.
In a pre-emptive move to address potential labour disruptions at U.S. East and Gulf Coast ports, Hapag-Lloyd has announced the introduction of work disruption surcharges (WDS) and work interruption destination surcharges (WID).
These surcharges, effective January 20, 2025, aim to mitigate the financial fallout from strikes, slowdowns, or other operational delays that may arise due to ongoing tensions between dockworkers and port operators.
The charges will apply to imports from key global regions, with rates of $850 per 20-foot container and $1,700 per 40-foot container. However, they will only be applied if labour disruptions do materialize.
The WDS targets imports from regions like North Europe, Africa, and the Middle East, while the WID focuses on East Asia, including China, Japan, and Vietnam.
The timing of this announcement is critical. The International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) had extended their master contracts during the October strike.
The contracts will expire on January 15, 2025, and negotiations between dockworkers and port authorities remain at an impasse.
Similar to Hapag-Lloyd’s move, Maersk and CMA CGM have warned their customers that the situation remained unresolved and rolled out their contingency plans.
Hapag-Lloyd’s decision to implement work disruption surcharges is not just a reactive move. It is part of a broader risk management strategy to ensure service continuity.
Introducing the WDS and WID offers a more pragmatic approach to handling the uncertainties surrounding U.S. port operations.
Despite their potential negative impact on supply chains, the surcharges will help the company absorb additional costs and ensure minimal disruption to its operations.
Days after Hapag-Lloyd’s message about the new surcharges, the ILA and USMX announced plans to resume contract negotiations to avert potential strikes at U.S. East and Gulf Coast ports.
These talks follow months of stalled discussions over key issues such as automation and wage increases, both of which have fueled tensions between the two parties.
The ILA has expressed strong opposition to automation, with concerns about job security and the future of its workforce.
Meanwhile, the USMX has emphasized the need for operational efficiency to keep U.S. ports competitive on the global scene.
With no agreement yet in sight, the possibility of a strike remains a significant risk. It threatens disruptions to critical trade routes and makes it more probable for shipping companies to implement surcharges.
The lack of a resolution has a compounded effect on supply chain stability, leaving businesses and consumers vulnerable to possible economic ripple effects.
Please reach out to one of our trade professionals to discuss the potential impact of these surcharges on your U.S. imports.