The International Federation of Freight Forwarders Association (FIATA), which globally represents an industry of about 40,000 forwarding and logistics firms, is urging ocean carriers to review their container demurrage and detention charges to ensure that they are not unreasonably applied during the coronavirus pandemic.
Demurrage pertains to the time an import container sits in a container terminal, with carriers responsible for collecting penalties on behalf of the marine terminals, while detention relates to shippers holding containers for too long outside the marine terminals.
The purpose of these charges, which generally range from $150 to $350 per container per day in the U.S., is to incentivize a quick turnaround of container equipment by shippers to the carriers.
“FIATA calls upon shipping lines and terminals to exercise restraint in their demurrage and detention charges and practices, taking into consideration the unprecedented difficulties faced by the freight forwarding industry and other stakeholders amid disruptions in the supply chain,” the Switzerland-based organization said in a Wednesday statement.
FIATA praised the ocean carrier industry for waiving certain demurrage and detention charges during the extended Chinese New Year holiday due to the COVID-19 outbreak in China.
However, in other parts of the world, shippers and their transportation intermediaries are now finding it increasingly difficult to retrieve and drop off containers at marine terminals without incurring these charges due to unscheduled COVID-19-related terminal slowdowns or temporary closures.
The reasonable assessment of demurrage and detention charges, even before the spread of COVID-19, was a hot-button issue for shippers, forwarders and their drayage service providers.
“There is no logic in enforcing a charge which is supposed to motivate the importer to pick up, or return, a container in a timely manner if the port or terminal is not able to comply with the delivery request,” said Jens Roemer, FIATA’s Working Group Sea chairman, in a statement last November.
With myriad government lockdowns and restrictions to control the spread of COVID-19, forwarders are doing their best to quickly load and unload containers to limit detention and demurrage charges from the ocean carriers and marine terminals, FIATA said.
“Our agriculture and forest products exporters are still facing an onslaught of demurrage and detention charges, even with all the blank sailings by the carriers,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), based in Washington. “Terminals are closed or have limited hours, carriers come in off-schedule, state governments are restricting ‘non-essential’ cargo supply chains, often leading to inability to meet free-time requirements.”
FIATA said it supports the U.S. Federal Maritime Commission’s (FMC) recently proposed rule, which provides guidance under the Shipping Act on what the agency will consider to be fair and reasonable practices for ocean carriers and marine terminals to assess demurrage and detention fees on shippers.
In a March 16 letter, 67 American shipper groups urged the FMC to finalize the rule, which they say is especially important during the COVID-19 pandemic. The FMC said last Thursday it plans to finalize the rule soon.
Friedmann, whose association was one of the signatories to the letter, said “it’s unconscionable that it has taken the commission six months to review the overwhelmingly supportive comments on the proposed rule.”
He told American Shipper the AgTC and other associations had recently asked the White House to intervene and generate some urgency at the FMC to finalize the demurrage and detention practices rule.