SDDC Message on Bunker Surcharge, War Risk, and Related Items

Last Friday, SDDC sent out this email clarifying their position on Bunkers Surcharges, War Risk, Port Congestion Charges, Security Charges, etc. Overall, we believe most TSPs will be very pleased with the content in this message. First of all, any clarification would have been an improvement, as we have had to deal with some bases automatically denying these items, some that were disputing every one and asking for documents, while many bases were approving each one.

The interpretation presented in this message is fairly close to how a majority of TSPs seem to be interpreting them as well. SDDC is pretty much validating the use of these billing items for most codes of service, with a few exceptions and limitations. It is a lengthy message that each TSP should read carefully, but we will present some comments on a few of the items below:

“War Risk Surcharge (WAR) – Insurance coverage for loss of goods resulting from any act of war or as a result of the vessel “entering” the war risk area when billed by the ocean/air TSP. This charge is only applicable to areas deemed “war risk” areas, as provided for on the SDDC website, www.sddc.army.mil, Personal Property/POV, International, War Risk Areas. This surcharge is applicable to codes of service 2, 3, 4, 6, 7, and 8.”

It appears that SDDC is finally clearing up when and where the WAR surcharge can be billed. In the email, they have included an initial list of locations where it is applicable, and they committed to keeping an updated list on their website, although the section they reference does not appear to be on the SDDC website yet. Also, we are hopeful that the website section will include historical data as well, so we can see when an area became eligible for war risk charges, and when an area ceased to be eligible.

“Port/Terminal Security Handling Surcharge (COF) – An extra charge that is billed to the TSP for security of their cargo while at the port of embarkation/debarkation. This surcharge is applicable to codes of service 2, 3, 4, 6, 7, and 8.”

The good news on this item is that they finally gave Security charges their own item code (COF). In the past, TSPs could not use this code, and had to either bill security charges under the War Risk item code (WAR) or the Port Congestion item code (CON). We believe this contributed to a lot of confusion for PPSOs who had to approve this item, as it looked like TSPs were billing for a service that was not performed.

“Note 1: Air fuel, bunker, War Risk, Port/Terminal Security Handling, and Port Congestion surcharges are not applicable on shipment codes of service T, 5, and J.”

We know there are TSPs that will not be happy with this limitation, but SDDC has been pretty adamant that they feel these charges cannot be applied under those codes of service, so I don’t think this should be a surprise to anybody.

“The below definitions and application become effective March 1, 2006 and will be incorporated into the next Personal Property International (I-17) and Domestic (D-11) Rate Solicitations.”

We have some confusion over the application of the effective date, since we are not sure if that applies to pickup date, invoice date, date the PPSO was asked to approve or deny, or some other date entirely. We are going to ask SDDC for some clarification on that issue, as well as the question of rebilling previously denied charges. We will post any updates when we receive them.

Related Posts

1. War Risk and Security Surcharges Being Denied - January 4th, 2006
2. A Message from the SDDC - October 18th, 2006
3. SDDC What's New message on DPS - April 11th, 2007