The International Federation of Freight Forwarders’ Associations (Fiata) has launched a demurrage and detention guide for forwarders to protect against “unjust” and “predatory” container line charges.
Fiata said its Multimodal Transport Institute Working Group Sea produced the ‘Best Practice Guide’ to “help reduce unnecessary supply chain costs and inefficient operations leading to unnecessary detention and demurrage charges”.
The guide acknowledges that demurrage and detention charges are an important tool for shipping lines to ensure the rapid return of equipment and to charge users that exceed the contractual duration of use. However, it also notes that merchants should not be subjected to “unjust and unreasonable charges” imposed by carriers.
“It is understood that shipping lines have been suffering in a very tough business environment and do everything they can to develop revenue streams that are not necessarily derived from freight,” said Fiata. “In this context, there are strong indications that shipping lines abuse the charging of demurrage and detention to maximise profits.
“Fiata does not believe that forwarders and shippers should be subjected to predatory pricing of this nature, especially as delays often occur through no fault of the forwarder or shipper.”
The guide suggests commercial partners negotiate agreements with lines to, among other things, limit the demurrage or detention accrued to a maximum amount, extend the free time period in case the terminal is unable to release or receive a container, and limit the charging of demurrage or detention to the item that covers the “compensation for the shipping line for the use of the container” when the merchant is unable to pick up or return a container.
Fiata also suggests members change the calculation of export demurrage to transfer the responsibility of vessel delays to the shipping line, and ensure that demurrage and detention charges on import shipments are charged “much faster, ideally within a week”.
The guide also says that merchants should not be prevented by lines from arranging their own pre-carriage and onward carriage of cargo. “It would be unfortunate if carrier haulage becomes a monopoly, with merchants being limited in their choice,” it notes.
“There is no question that merchant haul operations are more flexible and cost effective , to the ultimate benefit of the cargo owner.
“Fiata suggests that commercial partners negotiate terms that ensure that merchants can compete on a level playing field by providing a fair and realistic free detention period for containers under merchant haulage.”
Forwarders and shippers that opt for more environmentally friendly modes of onward carriage such as barge or rail should also not be penalised by lines, given that these modes take longer, thereby increasing the risk of accruing detention charges.
“Shipping lines should accept their responsibility to contribute to the protection of the environment by supporting modal shift,” says the guide. This, according to Fiata , can easily be achieved with extended free detention periods for containers moving inland by barge or rail.
“Fiata hopes the guide can provide orientation to its members and all stakeholders as to which conditions are adequate,” said the association. “We also look forward to closer collaboration with shipping lines and the various stakeholders throughout the port supply chain.”