CLECAT Calls for Fair and Equal Demurrage and Detention Charging During the COVID-19 Crisis

April 2, 2020 - CLECAT (European Association for Forwarding, Transport, Logistics and Customs Services) on April 1 issued a paper, which provides recommendations for a more transparent process with regards to the determination of detention and demurrage practices in container shipping. The paper sets out a number of issues freight forwarders have encountered recently with detention and demurrage charges, including references to the recent European court cases.

Commenting on the paper, Ms Nicolette van der Jagt, Director General of CLECAT, noted: "Over the last couple of months, we have collected the experiences and concerns of our members with regards to detention and demurrage charges. Today, with the present global crisis caused by the COVID-19 pandemic, these concerns become even more pressing. Whereas our priority remains to ensure that freight keeps moving and containers reach their destination, we believe that all parties in the global maritime supply chain have a common interest to support the overall functioning of the chain.

"Our members are particularly concerned about the impact the different national rules will have on the period of time containers will need to stay in ports before import or export. Above all, we need to keep cargo moving to reach citizens, but in view of restrictions and delays caused by the current crisis, the burden needs to be shared amongst all the parties. As such, CLECAT underlines that charging unreasonable amounts of demurrage and detention should not constitute a revenue model for the shipping lines."

The recent announcements of shipping lines to insist on current tariffs (in Europe), whilst anticipating a slowdown in the supply chains, without any offer of extended free times and review of tariffs, raises concerns among the freight forwarders. Equally, the proposal of carriers to ‘offer a variety of solutions to avoid significant detention & demurrage exposure’ reconfirms the suspicion that carriers are using their position within integrated logistics groups to undercut forwarders by charging D&D to merchants who arrange transport in merchant haulage, but waive the charge for merchants for whom they arrange the transport in carrier haulage. In doing so, the shipping lines are discouraging merchant haulage, thereby reducing competition and choice. Clearly, marketplaces become less efficient when entities have the power to levy unreasonable charges on their competition, and no matter whether the containers move in merchant haulage or in carrier haulage there should be equal and fair treatment of customers.

CLECAT is following with interest the recent US FMC guidance, arguing that demurrage and detention charges are only valuable when they work, i.e. when they are applied in ways that incentivise the merchant to move cargo promptly from ports and marine terminals. Ms van der Jagt concluded: ‘While we appreciate that demurrage and detention charges are an important tool for the shipping lines to ensure the efficient use of their containers, this must be done in a fair and reasonable manner. Demurrage and detention charges must serve their purpose to incentivise cargo interest to move containers, and merchants should not be subjected to such charges if the pickup or return of a container is delayed due to factors beyond their control. This is particularly acute in the wake of the current COVID-19 crisis.’

The full paper can be downloaded via the CLECAT website.

SOURCE: CLECAT

Container Costs at Indian Ports Crippling Importers

March 31, 2020 - Indian recyclers are appealing for relief from detention and demurrage charges until May, saying they are a ‘massive burden’ on an industry crippled by the country’s lockdown because of the Covid-19 pandemic.

The fees, normally a routine part of the business between shipping lines and importers, are building up as cargoes are stuck at ports following the national lockdown introduced on 25 March and due to end on 15 April.

The call for relief comes from the Material Recycling Association of India (MRAI) which has more than 1200 members, including most regional trade associations. It claims to speak for more than 20 000 small, medium and large enterprises employing 2.5 million people.

Containers building up

MRAI points out that containers are continuing to arrive at various ports and inland container depots (ICDs) across India but, due to the lockdown, its members cannot take deliveries and make payments. It says ‘The entire supply chain and supporting infrastructure (truck drivers, factory workers) is not available. This is now leading to piling up of containers at these ports and ICDs which will soon start incurring heavy detention and demurrage.’

Demurrage is charged by ports for containers still on the dockside after a specified number of day and detention covers the period between the container being picked up and returned empty.

MRAI maintains recycled scrap is an important raw material for the Indian secondary manufacturing sector, much of it imported by large shipping lines.

No response

‘MRAI, along with its members, have been trying to contact the shipping lines thereby requesting them for waiver of detention charges on delay in clearing containers owing to the lockdown of the country. However, [they] have not shown any positive response.’

It adds: ‘Incurring heavy detention charges will be a massive burden for our trade and industry. Since China’s coronavirus outbreak, metal prices have declined by a massive 25-30%. India’s secondary metal producers had booked their raw material … from overseas suppliers based on the prevailing price about three months ago [but] the decline in metal prices has made import of raw materials costlier.’

MRAI also notes that port congestion is a major worry for secondary metal and paper recyclers as shipping companies are demanding detention charges for containers blocking ports. ‘Since, shipping companies have declared themselves operational, they are asking material scrap importers to clear their consignments or pay penalty for engaging containers beyond the agreed transportation period.’

Call to Government

President Sanjay Mehta says the shipping companies see the situation as a business opportunity and are charging US$ 52 per container per day for 20-foot containers and US$ 104 for 40-foot containers.

‘This uncalled for charge will not only erode our working capital but also will root us out of business,’ Mehta adds. ‘During this period of lockdown, we expect stockpiles to build to the tune of around a million tonnes of imported metallic scrap at various ports. [The] material value will become zero if the shipping companies charge detention demurrage for 30 days or more.’

He quotes a container of iron scrap being worth US$ 5 000 and a detention fee of US$ 52 per day would amount to US$ 1 750 in a month. Lumping in ground rent, freight and transportation charges would also add to the cost.

‘We, therefore, urge the government to grant us relief and waive off detention, demurrage and all other such charges until 15 May, 2020 at the all ports and ICDs in India,’ says Mehta.

Charges suspended?

In response, the Directorate General of Shipping of India has issued an order ‘advising’ shipping lines not to impose demurrage charges until 7 April. There are reports of some lines, including Maersk, MSC and Safmarine, suspending such charges.

SOURCE: Recycling International

Oregon Port of Coos Bay Opens Lost Creek Rock Products Coastal Reload Yard on North Spit

March 5, 2020 - The Oregon International Port of Coos Bay (Port) is pleased to announce the opening of the Lost Creek Rock Products Coastal Reload Yard on the North Spit in Coos County, Oregon. This multi-modal, multi-commodity rail to truck and truck to rail terminal will serve the entire Southern Oregon Coastal Region with a vital link to deliver competitive access to domestic and global markets.

Coronavirus Outbreak Cuts China's Container Volumes

Feb. 7, 2020 - According to ocean freight data firm Alphaliner, container traffic has fallen by more than a fifth at the major Chinese container ports since the Wuhan coronavirus outbreak began in mid-January.

“The full impact of the Chinese coronavirus outbreak on container volumes will not be fully measurable until ports announce their throughput numbers for the first quarter, but data collected on weekly container vessel calls at key Chinese ports already shows a reduction of over 20 percent since January 20," Alphaliner said in a statement.

Overall, the slowdown in Chinese manufacturing and port operations due to the outbreak could shave up to seven tenths of a percentage point off of global container volumes this year, Alphaliner warned.

The disruption on Chinese shores has ripple effects for the global container industry. With major ocean carriers blanking multiple sailings to Chinese ports in order to bring capacity in line with demand, the service frequency for shipments along the core Asia-Europe trade lane is reduced. In addition, Alphaliner warned that the blank sailings could make it harder to bring capacity back up again once the epidemic has passed.

"Since these extended void sailing programmes on long-haul services are slated to continue until mid-March, any cargo volume recovery could be negatively affected, even after the end of the [Lunar New Year] holidays," Alphaliner cautioned.

The congestion in China is having a knock-on effect in neighboring countries' ports, which are picking up some of the transshipment traffic that might otherwise occur in China. It is even a storage issue in some areas: in Busan, South Korea, international shippers are using container yards to store China-bound cargo for later delivery after the congestion in Chinese ports dies down, a Busan port official told Reuters.

SOURCE: The Maritime Executive