Container Park with Containers Stacked Up.

Shipping Lines ‘Exorbitant’ Container Detention Hurts Aussie Shippers

Container shipping lines have been accused of extorting millions of dollars while showing “no compassion’ over container detention and demurrage charges, according to The Freight & Trade Alliance (FTA) and Container Transport Alliance Australia (CTAA).

The Freight & Trade Alliance in partnership with the Australian Peak Shippers Association (APSA) form an influentional advocacy alliance helping establish a global benchmark of efficiency in Australian biosecurity, border related security, compliance and logistics activities. Their mission is to increase profitability and business sustainability for Australian Importes, Exporters and Trade Service providers.

The FTA together with the APSA lodged a formal submission with the country’s Productivity Commission and supplied evidence that claims to show traders paying upwards of A$500m in access, and A$500 in container detention, charges.

“Members are operating with little competitive tension, costs are extraordinary; it is a massive blow for Australia and a windfall for foreign shipping lines. FTA Director Paul Zalai, said.

“Shipping lines servicing our entire container trade are commercial, foreign-owned businesses that are profit-driven, but what’s extremely evident is Australia’s national interest is very much a secondary consideration.” He continued.

The FTA highlighted fees to carrier-contracted stevedores and empty container parks for access to facilities without any ability to influence service or price.

It also noted “unfair” container detention fees, still payable when delays to box returns occur out of the control of the exporter or importer, as well as rates and surcharges to shipping lines operating under exemptions from Australian competition law.

Paul also said “The practices are consistent across all carriers serving Australia, further questioning any genuine competition in the region; one member alone had been made to pay $2m in import container detention charges.”

A spokesperson for Hapag-Lloyd said the line believed the “assumptions you describe are wrong”, adding “our comments on that will be given to the ACCC via the World Shipping Council and the SAL”.

Carriers Benefit from Slightly Reduced Quayside Charges from Stevedores While Shippers Continue To Suffer

Mr Zalai said carriers had also benefited from “significantly reduced” quayside charges from their contracted stevedore providers, without passing the savings down the supply chain.

“With less quayside revenue, stevedores and empty container parks have resorted to a ‘ransom model’, forcing transport operators to pay designated fees or be denied access to container collection/dispatch facilities,” he added.

“It is not sustainable for our exporters and importers to absorb this additional impost of hundreds of millions of dollars annually where they cannot influence service or price.

“We are relieved that the commission has identified a need for regulation to force shipping line contractors to have direct commercial arrangements with the lines and not enforce cost recovery against third parties.”

Although the Productivity Commission has shown itself to be supportive of the FTA’s position, it has limited power, and can only offer recommendations to government.

The FTA urged regulators to consider the imposition of limits on when, or the amount of, container detention fees that could be charged, suggesting carriers could be forced to sell boxes to the consignee after a set time, to end the detention period.

It also suggested that government could introduce legislation to require stevedores to recover access and empty container park charges directly from the shipping lines.

Shipping Lines Show “no compassion” over Container Detention & Demurrage Charges During the Australian Floods

The Shipping Lines have also been accused of showing “no compassion” by refusing to extend container detention free-time for customers impacted by the floods in Australia.

According the Neil Chambers, the Director of the Container Transport Alliance Australia (CTAA), the floods in Victoria have caused delays for exporters and left transport operators dealing with significant disruption.

Road closures, flooded in communities and property damage is stopping many businesses from continuing operations, adding: “Exports from the region need to be rolled and re-booked with shipping lines.

“In the main, we are being told there are export commodities, such as pasteurised milk to South-east Asia and other dairy products with a limited shelf life, which are the hardest hit, as well as some urgent freight for Tasmania.” Chambers said.

“On the import side, one large regional operator in Shepparton reported that the container stevedore terminals had been very understanding, and were working closely with the road carriers to avoid terminal storage bills and to accommodate additional time slots when the containers can be finally moved north from the port.”

However, Mr Chambers said, the shipping lines had “reportedly knocked back legitimate requests, in force majeure* circumstances, for extensions to container detention free-time for import containers that can’t be moved. The shipping lines are showing no compassion.

“They are foreign entities with their profits flowing offshore and, seemingly, have little empathy for the plight of their customers in Australia.”

It is the second time this month shipping lines have been accused of profiting off a natural disaster, after shippers and forwarders operating in flood-hit Pakistan said they were facing hundreds of thousands of dollars in detention and demurrage bills because shipping lines refused to waive fees.

shipping lines are showing no compassion in extending container detention free time during the floods.

*Force Majeure – an event beyond a party’s control (or reasonable control) which by the exercise of reasonable care the party is not able to prevent or overcome.