Thursday, November 7, 2019

Global Freight Forwarding Body Presses Case for Clarity on Container Detention Charges

FIATA Wants Better Data Sharing and More Transparency
Shipping News Feature

US – Last month we told how FIATA, the international body representing freight forwarding agents worldwide, was complaining about the detention and demurrage charges incurred by shippers with regard to container carried cargoes.

Now FIATA has revealed details of its submission to the US Federal Maritime Commission’s (FMC) Review of container detention and demurrage charges in which it pressed for a more transparent, equitable and business orientated process as regards the determination and levy of such charges, not only in the US, but in other economies where industry operated under similar processes.

FIATA was critical of the practice which surrounds the determination of detention and demurrage charges which were highlighted in the FMC Review. It also questioned the rationale for such charges in achieving the orderly movement of containers to, and from, ports, terminals or depots rather than being pure finance generators. As to its Submission the FIATA Chair, Working Group Sea, Jens Roemer commented:

“The clock for the determination of a charge of demurrage and detention to incentivise the orderly movement of containers through ports and terminals must be stopped when circumstances arise outside the control of the importer and containers are not able to be moved. There is no logic in enforcing a charge which is supposed to motivate the importer to pick up, or return, a container in a timely manner if the port or terminal is not able to comply with the delivery request.”

”The same should apply for delays due to regulatory agency interventions which are inherent in all international logistic supply chains including maritime where containers and contents require border clearance and control. Such interventions being part of intelligence led risk assessments to address import prohibitions and restrictions and community protection aspects.

”These issues determine the dwell times of the container depending on the level of intervention and add to the time delay in delivery and usually additional costs to the importer. These delays are beyond the control of both the freight forwarder and importer and should not attract detention or demurrage charges. “

FIATA however did not stop there. In its Submission to the FMC Notice of Proposed Rule Making (NPRM) as to the FMC interpretation of the Shipping Act, and an identified industry failure to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering of containers with respect to demurrage and detention, FIATA urged the FMC to provide the necessary guidance which was currently lacking in the industry.

FIATA also urged the FMC to ensure that freight forwarders are able to compete on a level playing field by the provision of a fair and realistic delivery period free of detention for containers. The forwarding Association additionally questioned the reasonableness of demurrage and detention practices, pressing as to what extent the practices were meeting the intended purposes as financial incentives to promote freight timely movement of containers particularly as to the issues identified in FMC NPRM.

As to the movement process, FIATA also supported better data sharing by the various stakeholders in the maritime supply chain. In its ‘Best Practice Document’ as it relates to data and cargo movement FIATA encouraged better data sharing in all modes as this which would lead to greater transparency of information related to the movement of containers from vessel to terminal and to the next mode of transport.

The industry view is that such data sharing would significantly improve the timely movement of containers through terminals, increase productivity, reduce demurrage and detention charges and more importantly reduce overall transport cost and lead times for the importer in competitive markets.

FIATA further points out that what is apparent, and indeed happens with regularity in the maritime supply chain, is the knock-on effect in disrupted delivery processes. Planning for a pick-up of a container can only be undertaken if, and when, data such as pick-up reference, location and earliest possible date and time is provided. This information is often provided too late and therefore best available (and reliable) data should be made available at an earlier stage. On this issue, Jens Roemer commented further:

“Information available to FIATA leads us to contend that terminals are not aware as to the next mode of transport for at least 50% of the containers they discharge from a vessel. The freight forwarding industry however usually has this data available well in advance of vessel arrival and would be prepared to share this data for process improvement.

”Such data sharing would enable advance planning of all stakeholders, increase productivity for the terminals and other stakeholders as well improving the timely movement of container throughput in terminals. Importers see reduced lead time in terminals as a value add to the supply chain costs and a significant benefit to terminal operator efficiency.”

Photo: Abandoned and unreturned containers costs the shipping lines many thousands of dollars every month.