Increased demurrage and detention fees tire shippers out
Shippers and importers are bearing the brunt of the port congestion with increased demurrage and detention fees. They are appealing for some relief claiming that the situation is out of their hands. The West Coast congestion and severe weather on the East Coast have created situations where both, shippers and importers, have been unable to deliver and pick up containers & return empties in a timely manner.
They claim that their haulers have been prevented from accessing cargo due to the congestion and/or port closings due to weather. When they finally are allowed to access the cargo, they are then hit with large demurrage charges accessed by MTO (Marine Terminal Operators) and VOCC (Vessel Operating Common Carriers). Further more, importers claim they are paying detention fees for late returns of empty containers when the MTO have restricted both time and access for returning equipment. One shipper told the FMC (Federal Maritime Commission) that they paid $100,000 in demurrage fees last year compared with $10,000 the previous year.
FMC has been asking for clarification and mediation in regard to this increase of demurrage and detention fees. This is the overall review:
- Truckers are appealing for increased fees due to long wait times to pick up & deliver containers and restricted access to equipment yards for the return off empty containers. They claim that they cannot even reach the break even point due to the inability to make several pickups and deliveries in a single day. This is because of long lines of trucks waiting to haul containers to and from vessels and restricted access to terminal to return empty containers.
- VOCC are claiming that due to the congestion they have had to cancel port calls and in some cases reroute cargos and arrange for rail transport to deliver cargo as close to its destination as possible. They are claiming increased cost due to long wait times outside West Coast ports; increase in fuel costs lost revenue while ships sit idle waiting for berths; and cost associated with rail transport to deliver cargos.
- MTO are claiming that they are only fulfilling their obligation to the VOCC to collect detention and demurrage fees before releasing the containers.
- As the ports become more and more congested, containers are being stacked higher in order to free up space. The end result is that crane operators spend more time shifting containers to access the containers at the bottom of the stack, thus increasing the amount of time it takes to complete the process.
- The recent reduction in days of “free time” at certain ports i.e., NY/NJ and Long Beach from 5 days to 4 days was to incentivize the timely movement of goods dockside and to penalize shippers and importers who did not move cargo within the “free time” window. There is the feeling that this just made the situation worse, with shippers and importers scrabbling to remove containers on the LFD (Last Free Day) , creating exceptionally long lines of truckers trying to meet deadlines.
While congestion begets congestion, shippers and importers feel that these fees are not doing what they where originally intended to accomplish: the efficient movement of cargo.