Freight forwarders and importers are appealing for urgent intervention over demurrage charges which they say are “hammering the freight industry”.
The CEO of a reputable freight forwarding multinational who requested to remain anonymous said whereas shipping lines had initially agreed to ease off on demurrage at the beginning of South Africa’s lockdown period, they had reinstated charges.
“There are hundreds of containers sitting in depots all over the country with importers not being able to move their cargo because of restrictions,” the CEO said.
“It’s costing our clients thousands of rand at a time when shippers are already feeling the effects of extreme financial losses.”
With demurrage ordinarily charged at around $100 a day, just one of their clients owed about R109 000 in punitive damages, the CEO said.
He added that freight forwarders had been informed some time ago that at the end of April demurrage costs would reset to what they had been, “which most of the lines did – Maersk, PAL and CMA CGM – except Ocean Network Express (ONE).
“ONE allowed for an additional 14 days’ reprieve from charging demurrage.”
Mike Walwyn of the SA Association of Freight Forwarders (Saaff) confirmed that all principals in question had informed industry recently that lines would be reverting back to charging for demurrage.
“They tell you that this is to encourage importers to return containers more quickly when it can’t be done. The lines also say how good they were by reducing charges during stage five of the lockdown period, but that was off a ridiculously high base.”
The fact that many importers had shipments coming in which then could not be moved because of lockdown restrictions against certain types of cargo, meant their hands were tied, the CEO said.
Another anonymous source who has been working with demurrage for years told Freight News it was nothing new for lines to make money off containers returned late considering all the problems with delays in South Africa’s supply-chain environment.
“They have been charging demurrage if and when they want for years. It’s a nice way of making money and it seems there’s nothing that can be done about it because shipping lines are a law unto themselves.”
Glenn Delve, director at Mediterranean Shipping Company (MSC), has since pointed out that the impression being created that lines are somehow in cahoots over demurrage is incorrect.
“We all have our own policies about demurrage. Everything has a cost to it and when containers are held back for whatever reason we incur costs that we have to cover.”
He said as far as he understood even non-essential cargo was being moved at the moment, “so I don’t really understand what the problem is.
“And where cargo isn’t released for whatever reason, we can’t wait for our containers indefinitely. It’s also not fair to us. We need our containers for exports and if they aren’t returned in time it ends up costing us.”
Delve also said MSC treated all container delays on a case-by-case basis.
He reiterated that “the fact that shipping lines weren’t charging any demurrage during April shows to what extent we were willing to help”.