The issue of unjust demurrage charges, which was in the spotlight on this news site recently, has taken centre stage in the UK where the British International Freight Association (Bifa) has sent a strong message to shipping lines.
“Freight forwarders and the shippers they work for are reeling from unjust demurrage fees linked to congestion in ports around the world,” says director general Robert Keen.
“They should not be penalised by demurrage and detention practices when circumstances are such that they cannot retrieve containers from, or return containers to, marine terminals because, under those circumstances, the charges cannot serve their incentive function,” Keen adds.
South African forwarders recently lambasted shipping lines for demurrage bills in this country which amounted to R1.4 billion rand.
The figure was calculated during South Africa’s rigid Covid-19 lockdown levels which resulted in severe disruption to the movement of goods.
A Federal Maritime Commission (FMC) pronouncement in May, issued after six years of investigation with all participants in the supply chain, concluded that there had most likely been a long history of unjust and unfair demurrage and detention practices, according to Keen.
“While there are country and port-related variances, the FMC findings apply globally as demurrage and detention is a common and widespread topic of contention.”
He says that 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.
He believes it is wrong for container shipping lines not to respect the interpretative rule introduced by the FMC in May that sought to govern conflicts on the issue of demurrage and detention fees.
“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. It is crucial to ensure fluidity and good function of the supply chain in unprecedented times as illustrated by Covid-19 and the chaotic state of international container shipping at present.”
Bifa is urging decision makers to ensure a level playing field for all actors in the supply chain of the reasonableness of demurrage and detention charges. This includes consideration of the extent to which these practices are serving their intended purposes as financial incentives to promote freight fluidity.
“The FMC rule is therefore intended to stop unreasonable and unjust practices to which shippers and freight forwarders alike have been exposed for years.”
