Shipping lines have hit back at claims of profiteering after industry concerns over significant increases in demurrage and other container handling charges surfaced (see page 1). “The first issue is that we are most certainly seeing a large increase in stops from a wide variety of government departments,” said a carrier who spoke to FTW on condition of anonymity. “Yes, in a small number of cases they are after specific clients and there are examples of misdeclaration of cargo or value, but this is not common." According to the source, the delays vary depending on area, type of cargo and often also the customs official involved. “There are clear examples where some stops don’t take as long as others,” said the source, indicating that increased stops were part and parcel of increased costs. “The second issue at hand is carriers’ landside costs,” he said. “The market may have some valid points but the default to competition authorities is an easy target, given the cause and effect is the massive increase in customs stops.” He said while examples by forwarders of large bills received might very well give an indication of what they were dealing with, it was not necessarily unpacking the detail involved in these invoices. “A forwarder might be charged for the move to the depot but that can be broken down. The day one charge may be high but it is a combination of haulage, lifts and first day of per diem detention as the unit has exceeded its free time.” He said while depots had a fixed cost, the importer’s account from the shipping line would be more as it would have that fixed cost plus the per diem detention built in. “If you look at most lines' tariffs for landside here after a standard free time of three days, they then move on to a US$ amount per day container detention.” A forty-foot container charge is currently around US$ 80-90 per day. Whilst no shipping line was willing to comment on the record on the issue, there was agreement that the real bugbear was demurrage or detention. “The real nub is the carrier’s detention charge on the container. This manifests itself as a US$ charge per day when the container is in an importer’s possession or a ZAR per day charge if held in a depot under a customs stop,” said the source. Forwarders, however, maintain that the actual cost per day of a container is quite small compared to what they get charged. “This is true but disingenuous as again it is not looking at the broader picture,” said the source. According to the lines a detention charge is arrived at by various means and affects the carrier on a much wider ranging area. “When containers are held on to by the shipper/ importer for longer than the standard time allowed, then the carrier must enlarge its equipment fleet. A larger equipment fleet without increasing the revenue base significantly will drive up the capital investment requirement,” explained the source. “Imagine all shippers and exporters held on to equipment for one week extra, this would require two weeks of equipment for a carrier.” The per diem cost also does not cover the carrier’s full expenses of managing a larger equipment fleet as the carrier only gets compensated for the time the container is used by the shipper and does not receive revenue for the time that the container is in his custody. There was also opportunity loss, said the source. If shippers/ consignees use equipment for a longer period, this may lead to the carrier not having adequate equipment supply to meet the requirements of shippers requiring equipment locally or somewhere else in the market and, as such, he could lose the opportunity to generate ocean freight. “This last point is case critical right now and notably acute in this market. South Africa has high use of dry import equipment inbound but less demand outbound. This is made worse by high use of 40fts in and high use of 20fts out. Add in demands for reefer cargo, which has an imbalance here of say 1 to 5 ratio import versus export, and this places enormous strain on carriers to make sure they evacuate as fast as possible.”
