Member lines of the Europe/Mediterranean Trade Agreement (EMTA) have slashed their Ashdod congestion surcharge from 7% to 3.5%, effective from November 1st 2005.
The decision to slash the surcharge is seen as a victory for the Israel Shipper's Council whose chairman Mr. Gad Schaefer, protested for the last several week to Mr. Peter Webber, Manager EMTA Europe Mediterranean Trade Agreement concerning the wrongful collection of congestion surcharge in Ashdod Port.
During the negotiations Schaefer warned that :"If the congestion surcharge in Ashdod Port is not cancelled, we will have no alternative but to appeal to the Israel Antitrust Authority and to other authorities in order to put an end to this exploitation using this baseless surcharge".
Mr. Peter Webber who announced the decision said that reduced congestion rate is a direct result of increased efficiency of the port in handling containerships. Webber noted, however, that since the Eitan port was unable to handle ships with capacity exceeding TEU 3,000, make it impossible to waive the surcharge. The management of EMTA would re-consider the situation again at the end of December.
Background
The position put forward by the Israeli Shippers' Council has been expressed several times by Mr. Schaefer who argued that: "For over three years since April 2002, the EMTA Israel sector has been collecting "Congestion Surcharge" in Ashdod Port at the high rate of 7% of the freight".
However, according to Schaefer, there was no agreement between EMTA and ISC representatives because the EMTA representatives demanded that the surcharge be set at the unprecedented rate of 7% and were not only not willing to accept a third party objective check but were not even willing to quantify themselves the damages.
The EMTA, Conference which carries almost all of the trade between Northwest Europe and Israel, decided unilaterally to implement the Congestion Surcharge of 7% and without declaring an end date.
ISC protested against this surcharge and called the shippers to object to paying the surcharge. Many shippers objected and many succeeded in having the payment waived. Nevertheless, the Conference members persisted declaring that this surcharge is due to ongoing congestion in Ashdod Port. Actually, they have turned a temporary surcharge into a permanent addition to the freight charge at Ashdod Port.
Following the successful ports reforms in February 2005, the Shippers' council argued that as a result of the reform and new management of Ashdod Port, there had been consistent improvement in Ashdod Port service reflected in significant decrease in congestion and wait time in the port. Additionally, the capacity of container decks has been increased following the initiation of part of the new Ashdod Port. Container wait time has decreased 76% between March and July 2005.
The Israel Shippers' Council were prepared to agree to the surcharge on the following conditions, which were in force and acceptable for decades with all conferences serving Israel:
1) congestion damages following specific strike or port sanctions measured by an objective third party.
2) 50% congestion damages covered by shippers and 50% by the carriers.
3) agreed in advance payment schedule spread over a few months, at least and setting the rate so that it would be a marginal addition, never more than 3-4% of the freight charge.
The EMTA, Conference which carries almost all of the trade between Northwest Europe and Israel was set up in 2000. its members are: Hamburg Sued, Iscont Lines, K Line, A.P. Moller-Maersk, MSC, P&O Nedlloyd, Safmarine, Zim Integrated Shipping.
