Although average demurrage and detention charges show a year-on-year decline of 25 per cent in 2023, these charges have remained higher than in 2020 in Antwerp and Rotterdam. Yet, it is the US ports that have the highest charges.

This follows from Container xChange’s annual Demurrage and Detention Charges benchmark report 2023.

Average demurrage and detention charges show a significant fourteen per cent decrease compared to the rates in 2020. However, there are still eleven ports where demurrage and detention fees remain higher as compared to 2020. These ports include Antwerp, Jebel Ali, Ningbo, Port Kelang, Rotterdam, Shenzen, Singapore, Tianjin, Xiamen, Hong Kong, and Guangzhou.

Demurrage and detention fees over the last four years across shipping lines for key ports.
Demurrage and detention fees over the last four years across shipping lines for key ports.

In an exclusive webinar held in July ’23, a panel of speakers from Drewry, S&P Global, and Container xChange discussed the impact of these charges on shippers worldwide amidst the changing dynamics of demand and supply for containers on a global scale.

No return to normalcy

‘There are multiple factors contributing to the inability of these ports to return to normalcy,’ states Chantal McRoberts, Director, DSCA Advisory, Drewry. ‘The significant increase in energy prices, coupled with higher labour costs, and escalating land expenses and port fees, have all played a part.’

McRoberts adds: ‘Furthermore, the implementation of new regulations, particularly those focused on green energy in EU ports, has added to the financial burden. Additionally, the introduction of rules requiring individualised shipment customs clearance, no longer consolidated under one bill of lading, has proven to be time-consuming, as seen in the case of Rotterdam.’

Also read: Container xChange warns for low water levels Rhine

Timely communication key to prevent charges

‘Bleak expectations for a significant peak season with a substantial increase in volumes, prices, and the potential for congestion and associated charges are evident in our customers,’ states Christian Roeloffs, Co-Founder and CEO. ‘However, a key factor in determining whether you must pay detention charges is the efficiency of your processes and monitoring. How quickly can you act and notify your agent or trucker if something goes wrong, such as a container being forgotten at the terminal. Timely communication is crucial in avoiding unnecessary charges. This holds true in any market situation.’

Roeloffs: ‘Demurrage and detention should ideally be a free market. The number of free days and the charges should be negotiable between parties and carriers, just like any other free market scenario. However, perhaps what needs regulation is the clarity on when the clock starts. Establishing clear time stamps and determining who bears the burden of proof in cases of congestion, where a container cannot be picked up, would be crucial. Payment should only commence once the terminal is able to release the container. These aspects warrant attention and potential regulation.’

New demurrage and detention challenges

Demurrage and detention (D&D) rates in the shipping industry have reached unprecedented levels, especially with the Federal Maritime Commission (FMC) in the US set to make crucial decisions.

Commenting on the new regulations, Roeloffs says: ‘The pending US foreign trade regulator’s decisions on new shipping line regulations will significantly impact D&D practices and could even reshape the landscape, bringing both challenges and opportunities.’

The D&D annual report highlights Drewry’s perspective that the FMC must strike a balance between the conflicting needs of cargo owners and shipping lines. Before the pandemic, shipping lines prioritised revenue generation, considering factors like cargo weight and equipment availability when making occupancy decisions. Regulating these market factors presents challenges for the FMC, especially since a substantial portion of US exports fall into low-income and heavyweight categories.

In April 2023, even before the official FMC decision, major carriers like Maersk, MSC, HMM, and Hapag-Lloyd contemplated waiving D&D surcharges on weekends and holidays when terminals are closed. Additionally, the Port of Houston stopped charging import container storage fees during closed terminal gates, but raised daily rates in specific positions by 32 per cent starting May 1.

Operational challenges

Commenting on the shipping forecast for the upcoming holiday season, Eric Johnson, senior editor, Technology JOC, S&P Global Market Intelligence, says: ‘In a very recent conversation with a Non-Vessel Operating Common Carrier (NVOCC) about their thoughts on a major trans-Pacific shipment, we came to know that they don’t expect the demand to recover until after the Lunar New Year next year. This matches what we’re hearing in general.’

‘So, if we assume that’s the case, the focus shifts to operational issues at important ports that we need to consider avoiding delays or additional charges once the container is out of the terminal. It becomes more about specific factors in the field that could cause delays in returning containers on time, rather than relying on a big overall economic improvement to drive demand. With each passing day, it seems less likely that there will be a quick demand recovery.’

US ports Rank Highest in average D&D charges

Out of all the ports worldwide, those in North America stand out as the most expensive when it comes to D&D charges. Leading this list of costly ports are New York, Oakland, and Los Angeles, taking the top three spots.

Accumulative demurrage and detention fees across shipping lines for North American ports: 2023.
Accumulative demurrage and detention fees across shipping lines for North American ports: 2023.

Even though these ports take the top 7 spots in our ranking table, the overall average charge has at least decreased by 25 per cent in 2023 and stands at a value of USD 2008 per container per day (coming down from USD 2692 in 2022). The late fees at the twin ports of Los Angeles and Long Beach are surpassed by another western port, Oakland.

Demurrage and detention fees over the last four years across shipping lines for North American ports.
Demurrage and detention fees over the last four years across shipping lines for North American ports.