Demurrage and detention (D&D) charges have long been a contentious issue in the shipping industry, and a recent report claiming that average D&D charges across the world’s 20 biggest ports have doubled since last year has once again brought the issue into sharp relief.
The figure provided in the survey, undertaken by Container xChange, a global online platform for the leasing and trading of containers, was +104% after two weeks.
But that’s only a tip of the iceberg, according to an industry source who told Freight News that there were several other costs that had escalated – among them the transport, lift and unpack/repack costs billed by shipping lines for containers that are stopped for physical examination by customs, the SA Police Service, or other government authorities.
“What’s particularly annoying about this,” SA Association of Freight Forwarders (Saaff) consultant Mike Walwyn told Freight News, “is that after some lengthy lobbying from Saaff, Sars amended Section 44 of the Customs Act to allow consignees to move stopped containers to licensed depots, instead of mandating that only the shipping line could do it.
“This takes away a lovely mark-up opportunity from the lines – one that they have not been shy to take in the past. But the lines are refusing to accept it and are currently negotiating with Sars.”
The issue of unpack depots is a particular thorn in the side of our source.
“I’m dealing with a specific case in Durban at the moment.
“The authorities clearly state on their stop notices that they accept an entire list of unpack depots - including those favoured by groupage agents (such as CFR Freight, Cardinal Maritime, Thrutainers etc), where groupage boxes would go to be unpacked anyway - and yet shipping lines insist on controlling the movement of containers from port to their preferred unpack depots.
“At the shipping line's depot the containers are unpacked, and after the exam is done, cargo is repacked again so the container can be transported to the groupage agent's nominated unpack depot, where cargo is unpacked yet again.”
The source believes carriers are “profiteering” when one compares costs billed by the shipping line to those billed directly by various unpack depots and hauliers.
“I would agree,” said Walwyn. “The mark-ups and charges applied by the lines go far beyond cost recovery plus an allowance for the work done. The word “gouging” springs to mind!”
“In the case I'm referring to,” said our source, “the shipping line has billed unpack/repack of R12 000 and a container lift fee of R6 000 for one 40-foot container.”
“I can give you some other examples,” Walwyn added. “Storage charged by a shipping line at $140 per day when the actual cost to them is about R180. Demurrage charges ranging up to $80-$100 a day for a container that costs about $2 per day to lease, and the list goes on…”
Our source believes that since groupage agents use customs-licensed unpack depots, there is zero risk to the shipping line in releasing exam-stopped containers to the groupage agents to move a container to the regular depot where cargo can be examined before final release. “However, this is true only if we use a bonded carrier to move the container, which is stipulated in the amended Section 44,” Walwyn cautioned. “But that’s not a problem for most of us.”
In an economy under siege there’s concern in the industry that “foreign-owned shipping lines are blindly chasing extra profit, to the detriment of local importers”.
“It’s probably true to say that for a number of years the ocean carriers had the short end of the stick while cargo owners and forwarders called the tune, and they found it hard to make profits,” Walwyn pointed out. “But now, with some help from the pandemic, the boot is on the other foot, and they’re making hay while the sun shines, with all the major lines reporting strong profit growth, some at record levels. I would have thought there was a middle road somewhere.”
Comment from the lines was not forthcoming at time of publication.
