A maritime attorney has shed legal light on the issue of demurrage, with much of his advice seeming to favour the claim that shipping lines are exploiting freight forwarders and importers who have little recourse to cargo delays caused by Covid-19 lockdown regulations.
Because the attorney represents a firm acting on behalf of lines and forwarders, he requested that his name and that of his company be withheld.
“I am caught between the two opposing interests,” he said.
And in light of the fact that regulations aimed at combatting the coronavirus were affecting efficient movement of cargo across South Africa, there was a case for considering ’force majeure’, ‘fundamental change of circumstances’ or ‘frustration of contract’ through the concept of supervening impossibility of performance.
The latter, he said, referred to “the situation where performance was possible at the conclusion of the contract but subsequently becomes objectively impossible through no fault of the parties”.
"There may be an argument where a party is unable by law to take delivery for an argument that constitutes supervening impossibility of performance”.
Admittedly, lines and depots still have a responsibility to their own bottom line.
“They might say that they have to salvage costs of storage and demurrage or rentals in respect of containers.”
With regard to forwarders saying that demurrage charges are further eroding revenue streams already strained by lockdown regulations, the attorney said a case could possibly be made against lines.
“I suspect there is an argument that neither the depots nor the lines can try to snatch a bargain or charge excessive rates in these circumstances. A starting point may be to get both to disclose the actual cost – not the profit element – of doing so.”
He added though that “at a commercial level neither the depots nor the lines would want to disclose actual costs because that would reveal to what extent demurrage and related charges are in fact money-generating operations”.
- For background about this issue, read this: “Shippers and their agents take on lines over demurrage” (https://www.freightnews.co.za/article/shippers-and-their-agents-take-lines-over-demurrage).