New container detention rules will hurt industry

The decision of major container shipping lines to reduce the free time available for import containers to be de-hired and for export containers to be returned full for export will increase international trade costs inAustralia, and will reduce profitability and competitiveness.

Effective from 1 August 2012, major shipping lines Maersk Line, ANL, CGM-CMA, and Mediterranean Shipping Company (MSC) have changed their container free time and container detention tariffs charged to importers and exporters.

In most cases, the import container free time period has been reduced from ten (10) calendar days to seven (7) calendar days.

This means that from the first day of availability (and from the day of discharge for some lines), importers will have only seven (7) days for the container to be collected from the wharf, delivered to the unpack point, unpacked, and then returned for de-hire to a designated empty container park.

The chief executive of the Victorian Transport Association (VTA) Neil Chambers described these tighter container detention rules as “a blatant exercise in revenue-raising by these market-dominant shipping lines.”

“The shipping lines know that many shippers will not achieve these container turnaround times through their inland logistics chains. As a result, the shipping lines are banking on collecting many more thousands of dollars in container detention charges per annum to boost their flagging freight rate revenues,” Mr Chambers added.

“Add in weekends, perhaps a public holiday, quarantine inspections and treatments, Customs X-Ray, inland transport, time to pack or unpack the container, then the time needed to return the empty container to a de-hire facility – in many instances it will be impossible to achieve this task in seven calendar days,” Mr Chambers observed.

The flow-on impact of the unrealistic impost of these fees by shipping lines is heightened commercial and operational tension between supply chain participants.

“Transport operators have continual arguments with importers and freight-forwarders when containers cannot be de-hired before detention fees are applied. Importers and freight forwarders engage transport companies to handle their inland transport needs … that is accepted. But, everyone needs to be mindful of the lead times needed to undertake the transport task effectively, including the return of the empty container to the designated empty container park.”

“The VTA recommends to road transport operators that they should require at least two business days’ notice from their clients of the availability of empty containers for de-hire.”

With the implementation of the Containerchain System at all of the major empty container parks (ECP) in Melbourne, notification windows for truck arrivals are not always available at short notice for trucks to be serviced at the designated ECP. Also, some ECP are still only open 7am to 4pm, Monday to Friday, adding to the difficulties in returning empties before container detention applies.

“We recommend that transport operators should charge the true costs of additional handling and administration when they need to stage containers through their transport depots, including times when empties must be staged before they can be transported for de-hire at the required empty container park.”

“Importers, exporters and freight forwarders need to factor in these new container detention rules. They should have in place systems to track container ‘free time’, and should make early contact with shipping lines if it becomes clear that containers will not be able to be returned before container detention fees apply.”

“However, most of all, think about the potential additional costs of container detention when making a decision to ship with the shipping lines who have introduced these unrealistic container detention rules,” Mr Chambers concluded.

Source: http://www.tandlnews.com.au/