Service level agreements raise liability issues

Alan Peat THERE IS a possible crisis and conflict at the Port of Durban - but it’s the quietest battle that FTW has witnessed. Already in August the Durban container terminal (DCT) was handling record numbers of containers - with 91 448 TEUs on the books for that month. That has led to a forecast total of 1.4-million TEUs for 2003. At the same time, the average delay for ships at the harbour for mid-September is about 42 hours, according to SA Port Operations (Sapo) figures, and still monstrously above the shipping conferences’ “16-hour average delay for two consecutive months” that will see the port congestion surcharge of US$150 per TEU lifted. Sapo has managed to increase its productivity by a margin - with the gantry cranes logging 17 container lifts an hour, as opposed to the 15/hour average of a year ago. But that’s tortoise speed compared to the world’s top-class ports, and the height of the pre-Christmas rush at Durban is just really getting under way. So Christmas congestion at Durban could be just down the road. Another factor which is due to come into account - and lead to that possible “conflict” - is the September signing date for the shipping lines’ service level agreements (SLAs) with Sapo. The generic document for these SLAs - currently being individually negotiated - contains a compensation formula, where the guilty party in any delay (either lines or the port authorities) would have to fork out for non-performance. If this was a transparent pursuit, it would reveal at long last where the blame lay. Was it lines for later-than-scheduled arrivals, or the port for poor productivity? The big “if” in this situation is that - IF there is a compensation formula in the individual SLAs - the guilty party should pay for congestion. If that’s the case, how can the innocent shippers be expected to continue having to pay the surcharge if another party becomes liable for the delay cost? Now try getting an answer to the question: If the SLAs have compensation clauses, will the congestion surcharge be lifted? - even if only by the lines which have signed up SLAs, because not all are expected to do so immediately. FTW tried the Container Liner Operators Forum (Clof), the shipping conferences and individual shipping lines. And got nowhere. The only reply forthcoming from the conferences was that the surcharge - what they term a “port additional” - would only be lifted “when the conditions are met”. That’s the 16-hours for two months clause. The conferences meanwhile also feel that SLAs are individual line business and they have “no comment”. Clof secreteriat won’t talk about anything either. The port additional is purely the responsibility of the conferences, FTW was told. “All we do is monitor what is happening at the ports”, was added. So - is serious congestion at Durban just around the corner? If it is, who should pay - the shippers/ importers as at present, or the liable party under the SLAs? All FTW can advise at this moment is: Wait and see!