THE first proposed changes to the Shipping Act may weaken incentives to keep equipment moving and make the Covid crisis slowdown in container flow permanent, reports IHS Media.
The potential problem comes from detention and demurrage billing by ocean carriers after the recent Biden administration's July 9 executive order, where the US Federal Maritime Commission is ramping up enforcement.
Shippers feel it is unfair to bill shippers and their truckers when they cannot pick up or return a container within free-time limits.
'Demurrage and detention, if you think about it, is really compensation for using a container as a warehouse in lieu of warehouse capacity,' said South Carolina Ports Authority CEO Jim Newsome.
Said the FMC: 'Demurrage and detention are valuable charges when applied in ways that incentivise cargo interests to move cargo promptly from ports and marine terminals.'
FMC guidance has attempted to reinforce that concept, barring container lines from issuing storage fees unless they self-certify that the charges comply with FMC regulations. These concepts might be the type of requirement that undermines fluidity.
Containers coming into the Los Angeles and Long Beach gateway can face detention and demurrage charges of more than US$2,500, triple the global average.
Maersk's non-freight-related ocean revenue increased 6.2 per cent to $1.3 billion, representing 13.5 per cent of its total ocean revenue due to higher revenue from demurrage and detention.
'But when we get into a situation where you have a high level of congestion and it becomes actually difficult for companies to get their hands on the cargo, then you can get into a situation where it doesn't work,' said Maersk CEO Vincent Clerc.
Said Mr Newsome: 'In a largely contract carriage environment, I do not see how demurrage and detention rates can be satisfactorily regulated, as they are part of a broader commercial transaction.'
The soon-to-be-introduced Ocean Shipping Reform Act of 2021 could restrain carriers from imposing legitimate detention and demurrage fees, undermining the goal of systemwide container fluidity.
SeaNews Turkey
The potential problem comes from detention and demurrage billing by ocean carriers after the recent Biden administration's July 9 executive order, where the US Federal Maritime Commission is ramping up enforcement.
Shippers feel it is unfair to bill shippers and their truckers when they cannot pick up or return a container within free-time limits.
'Demurrage and detention, if you think about it, is really compensation for using a container as a warehouse in lieu of warehouse capacity,' said South Carolina Ports Authority CEO Jim Newsome.
Said the FMC: 'Demurrage and detention are valuable charges when applied in ways that incentivise cargo interests to move cargo promptly from ports and marine terminals.'
FMC guidance has attempted to reinforce that concept, barring container lines from issuing storage fees unless they self-certify that the charges comply with FMC regulations. These concepts might be the type of requirement that undermines fluidity.
Containers coming into the Los Angeles and Long Beach gateway can face detention and demurrage charges of more than US$2,500, triple the global average.
Maersk's non-freight-related ocean revenue increased 6.2 per cent to $1.3 billion, representing 13.5 per cent of its total ocean revenue due to higher revenue from demurrage and detention.
'But when we get into a situation where you have a high level of congestion and it becomes actually difficult for companies to get their hands on the cargo, then you can get into a situation where it doesn't work,' said Maersk CEO Vincent Clerc.
Said Mr Newsome: 'In a largely contract carriage environment, I do not see how demurrage and detention rates can be satisfactorily regulated, as they are part of a broader commercial transaction.'
The soon-to-be-introduced Ocean Shipping Reform Act of 2021 could restrain carriers from imposing legitimate detention and demurrage fees, undermining the goal of systemwide container fluidity.
SeaNews Turkey