The International Federation of Freight Forwarders Associations (Fiata) and The South African Association of Freight Forwarders (Saaff) have called on the South African government to support key considerations laid out by the US Federal Maritime Commission (FMC) in its “Final Rule on Demurrage and Detention (D&D) to assess the reasonableness of these practices”.
According to a Saaff statement, the FMC’s decision, which came after six years of investigation with all actors in the supply chain, concluded the likeliness of a long history of unjust and unfair D&D practices.
“Whilst there are country and port-related variances, the FMC findings apply globally as demurrage and detention is a common and widespread topic of contention,” the statement said.
“If the FMC has identified demurrage and detention practices that are likely to be considered as unjust for the USA, these practices are also unjust and unreasonable for the rest of the world.
“Governments must therefore have greater scrutiny over demurrage and detention practices to ensure that they are considerate and reasonable for the good of their own economies.”
Saaff believes this is crucial to ensure fluidity and good function of the supply chain in unprecedented times as illustrated by Covid-19 and beyond.
“Policymakers are encouraged to consider the FMC’s non-exclusive list of factors for consideration when assessing the reasonableness of demurrage and detention.
“Such guidance will promote fluidity in the US freight delivery system by ensuring that demurrage and detention serve their purpose of incentivising cargo and equipment velocity and that the interpretive rule will also mitigate confusion, reduce and streamline disputes, and enhance competition and innovation in business operations and policies.”
Fiata and Saaff urged decision makers to ensure a level playing field for all actors in the supply chain in terms of the reasonableness of these charges.
“This includes consideration of the extent to which demurrage and detention practices are serving their intended purposes as financial incentives to promote freight fluidity. All international maritime supply chain stakeholders should also benefit from transparent, consistent and reasonable demurrage and detention practices that improve fluidity in global ports and terminals for the benefit of fair, reasonable and ethical interactions between stakeholders in the maritime supply chain.”
The two organisations point out that the FMC rule is intended to stop unreasonable and unjust practices to which shippers and freight forwarders have for years been exposed.
The call on South Africa’s government to align itself with the FMC’s “Final Rule” comes in the wake of persistent pressure that the FMC has applied on carriers and how costs are applied insofar as D&D is concerned.
Last week it was also reported that the FMC was honing in on the three big ocean freight alliances for alleged abuse of vessel-sharing arrangements.
- For context in the above matter, please read our October 9 report, “FMC launches inquiry into carrier billing” – ttps://www.freightnews.co.za/article/fmc-launches-inquiry-carrier-billing
- In respect of the vessel-sharing matter, please read our November 27 report, “Ocean carriers come in for intensified scrutiny” – https://www.freightnews.co.za/article/ocean-carriers-come-intensified-scrutiny.