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CLECAT calls for clarity on detention and demurrage charges

[ April 9, 2020   //   ]

European forwarders’ organisation CLECAT has called for a more transparent process in determining of detention and demurrage charges in container shipping. In a paper published in early April, it sets out a number of issues freight forwarders have encountered recently.

Director general Nicolette van der Jagt, said: “Over the last couple of months, we have collected the experiences and concerns of our members with regards to detention and demurrage charges. Today, with the present global crisis caused by the COVID-19 pandemic, these concerns become even more pressing. Whereas our priority remains to ensure that freight keeps moving and containers reach their destination, we believe that all parties in the global maritime supply chain have a common interest to support the overall functioning of the chain.”

She said that CLECAT members are particularly concerned about the impact different national rules will have on the period of time containers will need to stay in ports before import or export and that the burden needs to be shared amongst all parties. Shipping lines must refrain from charging unreasonable amounts.

The recent announcements insisting on current tariffs in Europe, whilst anticipating a slow down in supply chains, without any offer of extended free times and review of tariffs, is of concern to freight forwarders. Equally, carriers’ proposals to “offer a variety of solutions to avoid significant detention and demurrage exposure” reconfirms CLECAT’s suspicion that carriers are using their position to undercut forwarders by charging detention and demurrage to merchants who arrange transport in merchant haulage, but waive the charge for merchants for whom they arrange the transport in carrier haulage.

CLECAT argues that, in doing so, the shipping lines are discouraging merchant haulage, thereby reducing competition and choice. It says: “Clearly, marketplaces become less efficient when entities have the power to levy unreasonable charges on their competition, and no matter whether the containers move in merchant haulage or in carrier haulage there should be equal and fair treatment of customers.”

CLECAT says is following with interest the recent US Federal Maritime Commission (FMC) guidance, which argues that demurrage and detention charges are only valuable when they are applied in ways that incentivise the merchant to move cargo promptly from ports and marine terminals.

Ms van der Jagt concluded: “While we appreciate that demurrage and detention charges are an important tool for the shipping lines to ensure the efficient use of their containers, this must be done in a fair and reasonable manner. Demurrage and detention charges must serve their purpose to incentivise cargo interest to move containers, and merchants should not be subjected to such charges if the pickup or return of a container is delayed due to factors beyond their control. This is particularly acute in the wake of the current COVID-19 crisis.”

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