FIATA International Federation of
Freight Forwarders Associations,
urges shipping lines to review and reinstate the current free time periods back
to no less than feasible, pre-pandemic levels. Whilst the decision to reduce
the free time periods was one-sided,
market conditions have in the meantime changed, and justifications for status
quo no longer remain valid.
Demurrage and detention charges are an important tool
for supply chain stakeholders to ensure the efficient use of their container
stock which represents a substantial investment. Understanding the need for
maintaining the velocity of cargo, containers need to be turned around as fast
as possible. Consequently, merchants who
use containers for longer periods should be discouraged from this practice.
Best practices on this topic can be found in FIATA’s Toolkit on Detention and
Demurrage and the Best Practice Guide on Container Shipping and Quality of
Containers Vol 2 (please click buttons below).
FIATA notes that it is the obligation of shipping
lines to provide a reasonable free period to allow the merchant sufficient time
for: the loading and delivery of the container for an export; and the pick-up,
unloading and return of the empty container for an import.
During
the last few years, free time periods for containers have been reduced and
tariffs for demurrage and detention have increased considerably. Shipping lines justified shorter free time periods
noting that it will increase fluidity and help to ease congestion. The decision
forced merchants to make considerable efforts to meet free time windows,
leading to landside congestion, and above all, traffic jams around major ports
and terminals. However, merchants have been charged detention and demurrage
fees even in situations where they had no control over the container turnaround
time, despite their best efforts, due to congestion at ports.
With reduced volumes shipped, the strain on supply
chain bottlenecks came down, and congestion has since eased substantially. The
idle capacity of containers that were stuck in congestion are now also coming
back into circulation.
Industry feedback notes that the combination of older
equipment having been kept in service, and production of new containers at
record levels, would lead to a period where the available container fleet
outweighs demand for its use.
About FIATA
FIATA International Federation of Freight Forwarders
Associations is a non-governmental, membership-based organisation representing
freight forwarders in some 150 countries. FIATA’s membership is composed of 109
Association Members and more than 5,500 Individual Members, overall
representing an industry of 40,000 freight forwarding and logistics firms
worldwide. Based in Geneva, FIATA is ‘the global voice of freight logistics’.