Federal Maritime Commission Considers US-Canada Shipping Dispute, Journal of Commerce Provides Issue Analysis and Background

NEWARK, N.J., Oct. 3, 2011 /PRNewswire/ -- With the U.S. Federal Maritime Commission preparing to consider whether to investigate a cross-border container shipping dispute between the United States and Canada, Journal of Commerce editors who cover this issue extensively are available for comment or background information and analysis on the topic.

The FMC is scheduled to vote Wednesday on a request from member of Congress to investigate so-called "diversions" of U.S.-bound container cargo through Canada ports such as Vancouver and Prince Rupert, British Columbia. Some shipping U.S. industry officials believe Canada unfairly subsidizes service that brings Asia-origin cargo into the United States via Canadian rail services.

Sens. Patty Murray and Maria Cantwell have received complaints from ports in the Pacific Northwest about the diversion and have written to the FMC about the issue.

At the same time, U.S. West Coast ports have floated the idea of a new tax on ocean containers arriving in the U.S. via Canada ports to neutralize the impact of those containers not having to pay the Harbor Maintenance Tax, a $137 per container (on average) fee assessed on containers arriving directly at U.S. ports.

The combined West Coast market share of Seattle and Tacoma has dropped from 18.4 percent in 2005 to 15.6 percent last year, while British Columbia ports increased their share from 7.8 percent to 12.4 percent during that same period, according to data from West Coast ports. The West Coast ports have been losing market share to these Canadian ports, and see the Harbor Maintenance Tax as a culprit. The HMT is a 0.125 percent ad valorem tax levied on cargo imported or domestically moved through U.S. ports, originally imposed in the mid-1980s. Its purpose is to fund the dredging required to maintain the depth of channels needed for safe navigation.  

Canada argues that there is nothing amiss with U.S. cargo transiting through Canadian ports. Importers see advantage in using Canadian ports, which can cut days off the transit time from Asia to markets in the U.S. Midwest, saving in inventory costs and getting goods to market faster.

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SOURCE The Journal of Commerce