FIATA, the International Federation of Freight Forwarders Associations, issued a new call for shipping lines and terminals to restore container policies including detention and demurrage fees to pre-pandemic levels to reflect the easing of the surge in container volumes and the decline of backlogs at the major ports. The trade organization representing freight forwarders in 150 countries is calling for D&D practices to be in line with the velocity of shipping saying the time has come for the industry to review and reinstate free time periods.
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Calling the decision of the shipping lines and terminals to reduce free time and impose additional fees over the past few years “one-sided,” FIATA says market conditions have changed. They note that congestion and backlogs have declined making the efforts that were implemented to increase fluidity and help ease congestion no longer necessary. The group highlights the obligation of shipping lines to provide a reasonable period to allow merchants to load and deliver containers for export and unload and return import containers.
“A supply chain is stronger when there is dialogue and coordination between stakeholders,” writes FIATA. “No one stakeholder should impose onerous requirements on the others. In this context, the current free time periods limit the scope for proper compliance,” they content with accepted industry practices.
They point to industry analysts that reported the shipping lines kept older equipment in service longer and the record levels of new containers built over the past few years. With the decline in bottlenecks in the supply chain and port congestion, FIATA suggested that there will be a period where “the available container fleet outweighs demand for its use.”
The group further contends the practices of the shipping companies contributed to the landside congestion and traffic jams around major ports and terminals. They said the decision of the shipping lines forced merchants to take considerable efforts to meet the free time window providing shorter periods and forcing more returns into the available windows.
They are also calling for carriers to use the current lull in volumes as an opportunity to seriously look at the quality of equipment. They are saying that equipment should be retired that is beyond its natural economic life and may not be “fit for purpose.”
Like many other shipping organizations, merchants, and the users of the boxes, the freight forwarders argue that D&D fees are being charged in situations where the shippers had no control over the container turnaround time despite their best efforts.
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D&D fees have been one of the most hotly contested practices of the past few years with regulators taking a hard look at how they were being used. In the U.S. regulations were changed regarding the fees and as a result, the Federal Maritime Commission reported dramatic increases in the number of complaints it was receiving from shippers. In the less than seven months between the passage of the Ocean Shipping Act reforms in June 2022 and the end of the year, the FMC staff estimated that more than $700,000 in charges were refunded by carriers due to complaints filed over Demurrage and Detention billings.