Shippers and freight forwarders continue to face a crisis in the global container shipping market, with record high shipping rates, record low service reliability, and a chronic shortage of ships and containers to meet a surge in demand. Much of this is connected to the effects of the COVID-19 pandemic, which has resulted in the closure of ports and terminals as well as shortages of key labor, such as port workers and truck drivers for inland delivery of containers.
These factors are creating immense pressure on international supply chains, with importers and exporters struggling to find shipping space for containers, especially on services from East Asia to North America and Europe.
At the same time, demurrage and detention (D&D) charges have mounted over the past year. There is more and more distress in the freight forwarding industry due to a lack of cooperation and transparency, particularly around shipping lines reducing free-time periods for the pickup and return of containers and charging unreasonable D&D fees. At times of ongoing disruption, carriers fail to provide forwarders with a reliable advanced notification of the vessel arrival, communicated by the shipping line or terminal operator well before the actual arrival of the vessel.
While D&D charges are an important tool for shipping lines to ensure the efficient use of their containers, shippers should not be subject to such charges if the pickup or return of a container is delayed due to factors beyond their control. It is unacceptable and unreasonable to charge unilaterally imposed damages such as demurrage and detention when the carrier itself is the cause of the delay, whether due to a change of vessel arrival time or changes in yard opening times. In these cases, the opinion prevails that shipping lines may try to abuse D&D charges to increase income as well as profits, or at least give the appearance of doing so.
In the US, excessive D&D charges have attracted the attention of regulators since early 2017, and the US Federal Maritime Commission (FMC) has clearly taken a position to protect the interest of US shippers and cargo interests. The landmark guidance provided in FMC’s final rule Docket No. 19-05, Interpretive Rule on Demurrage and Detention Under the Shipping Act (Final Rule), which was developed as a result of an extensive fact-finding investigation and industry consultation, brought together a non-exclusive list of factors that may be considered when assessing the reasonableness of D&D practices.
In Europe, a similar approach is missing. CLECAT continues to call on policymakers and shipping lines to ensure that their demurrage and detention charges are proportionate and fair to ensure a level playing field for shippers and the fluidity of international trade.