Organisation notes range of challenging factors on horizon
Container Transport Alliance Australia (CTAA) has offered an analysis of the impact of a disrupted shipping container supply chain that indicates even more costs being injected into the system through detention fees.
The issue comes on a backdrop of a shipping capacity squeeze on containerised imports and exports that is having many impacts on shipment delays, equipment availability, “rolled” cargo, and unprecedented rising ocean freight rates.
Many industry analysts are indicating that the rates and space challenges are set to continue throughout 2021 and 2022, CTAA notes.
As Australia moves into its traditional “peak season”, with continued strong import and seasonal export demand, one consequence of the current shipping capacity squeeze, that it describes as “insidious”, is the potential for rising container detention costs imposed by shipping lines on import and export container equipment.
CTAA understands that even major containerised forwarders and importers are being forced into the spot market to secure container import space on vessels, rather than longer term contract conditions.
This is described as including accepting container detention terms and conditions which shorten the available “free days” before empty containers must be returned to the location designated by the shipping lines.
Most container shipping lines servicing Australia have normal import container detention terms and conditions ranging between seven to 10 “free (calendar) days”, many also counting weekends and public holidays.
Also, most shipping lines start counting the detention free time from discharge of the container from the vessel rather than from when the container is physically available for pick up through the container stevedores’ vehicle booking systems.
Cost shock
“Straight off the bat, this puts pressure on the importer and their transport provider to get the container picked up, unstuffed of cargo, and the empty returned in a clean condition to a nominated empty container park or to a stevedore terminal as a direct wharf return.” CTAA director Neil Chambers observed.
“Some major importers have had more generous agreements with shipping lines on container detention free days.
“However, as we have observed in the current shipping capacity squeeze, this is changing.
“The ‘shock’ this will have on the landside logistics sector will be enormous as the volume of containers being handled will lead to more logistics delays and rising detention fee invoices.
“Landside logistics providers also continue to question how shipping lines can apply container detention fees when their designated return location is not open or is so congested that a return slot cannot be obtained in a timely fashion.
“This includes instances where some empty container parks are not open on weekends or public holidays despite those days being counted in the shipping lines’ detention free day conditions.
“Empty container redirections ordered by shipping lines and/or empty container parks or stevedore terminals add to landside delays.
“In Sydney, there are over 100 live redirection notifications each day for various empty container equipment types for various shipping lines, while the frequency of redirection notices is rising in Melbourne, Brisbane and Fremantle.
“Redirections add to de-hire delays as transport fleet allocators and controllers need to ditch plans to transport the empty to the original designated de-hire location and secure a slot at the alternative location.”
CTAA reports container transport operators are telling that the dwell time of import empty containers languishing in transport yards before being successfully de-hired is now between 1.6 to over three days and could get worse again like last year’s peak.
“That’s a lot considering that the container detention ‘free time’ allowed by shipping lines is 10 days or less overall from time of container discharge,” Chambers said.
“Shipping lines know that in many circumstances, despite the best endeavours of their shipper clients to have empty containers de-hired in a timely manner and not hold onto containers unnecessarily, they have next to no chance of undertaking that task within the detention ‘free days’ allocated.
“Throw in biosecurity interventions like Brown Marmorated Stink Bug (BMSB) on-shore fumigations and the like and the timeframe is well and truly blown.”
Exporters hit
CTAA also notes that exporters also aren’t immune from container detention fees.
They normally receive around 15 free days from collection of the export empty until its receival into the stevedore terminal for export loading onto a vessel.
CTAA had received information of several instances where shipping lines have ‘rolled’ export bookings (i.e. have changed export bookings to subsequent vessels), yet have still automatically generated export container detention invoices payable by the exporter for holding onto the allocated export containers too long.
“Clearly in those circumstances it isn’t the fault of the exporter and their transport provider that the export containers have taken longer to move through the export logistics chain to final stevedore terminal receival,” Chambers said.
“However, the administration time and cost alone in disputing these erroneous detention fee claims with shipping lines is debilitating.
“CTAA doesn’t dispute that shipping lines have the right to impose container detention fees if shippers hold onto container equipment too long. Empty containers are the shipping lines’ assets, and of course shipping lines have the right to maximise the use of their containers to generate ocean freight revenues and to minimise their empty container stock levels commensurate with shipping demand.
“However, CTAA supports calls from forwarder and shipper representative bodies notably Freight & Trade Alliance [FTA] and the Australian Peak Shippers Association [APSA], for the federal government-led review of container shipping lines practices and the establishment of a federal regulator akin to the US Federal Maritime Commission [FMC] which is currently conducting regulatory activities into shipping lines’ container detention and demurrage practices.”
Their submission can be found here.