The International Federation of Freight Forwarders Associations (FIATA) has urged shipping lines to review and reinstate the current free time periods back to no less than feasible, pre-pandemic levels.
FIATA said in a statement on Tuesday that while the decision to reduce the free time periods was one-sided, market conditions had changed and justifications for the status quo no longer remained valid.
“Demurrage and detention charges are an important tool for supply chain stakeholders to ensure the efficient use of their container stock, which represents a substantial investment. Understanding the need for maintaining the velocity of cargo, containers need to be turned around as fast as possible,” FIATA said. “Consequently, merchants who use containers for longer periods should be discouraged from this practice.”
FIATA said in terms of its best practice rules, shipping lines were obliged to provide a reasonable free period to allow merchants sufficient time to load and deliver the container for an export and to pick up, unload and return the empty container for an import.
“During the last few years, free time periods for containers have been reduced and tariffs for demurrage and detention have increased considerably. Shipping lines justified shorter free time periods, noting that it will increase fluidity and help to ease congestion. The decision forced merchants to make considerable efforts to meet free time windows, leading to landside congestion and, above all, traffic jams around major ports and terminals,” FIATA said.
However, it said merchants had been charged detention and demurrage fees even in situations where they had no control over the container turnaround time due to port congestion.
“With reduced volumes shipped, the strain on supply chain bottlenecks came down, and congestion has since eased substantially. The idle capacity of containers that were stuck in congestion are now also coming back into circulation,” said FIATA.
According to the shipping and freight industry, the combination of older equipment kept in service and the production of new containers at record levels, will lead to a period where the available container fleet outweighs demand.
“No one stakeholder should impose onerous requirements on the others. In this context, the current free time periods limit the scope for proper compliance with the Convention for Safe Container and the Code of Practice for Packing of Cargo Transport Units,” said FIATA.
“In addition, FIATA, and co-sponsors, encourage shipping lines to take a serious look into the quality of the equipment, to retire equipment that is beyond its natural economical life cycle and may not be fit for purpose, and use the period to pro-actively review equipment, to maintain and repair it and ensure that it complies with appropriate standards for container quality,” said FIATA.
FIATA called for detention and demurrage practices to be brought in line with the velocity principle, with multi-stakeholder co-ordination to respond to market needs in a timely manner.
