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US ports occupy top five spots on the list of “60 ports ranked by highest to lowest D&D charges across shipping lines”
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New York charges the highest demurrage & detention (D&D) fees on the planet. Long Beach, Los Angeles, Oakland and Savannah take up the 2nd to 5th spots
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All five ports are 2-3 times more expensive than Hong Kong, which is in 7th spot
US retailers, manufacturers, agricultural shippers, and other exporters and importers are laboring under some of the highest shipping levies in the world, according to Container xChange, a leading global online platform for container trading and leasing.
Container xChange’s new “Demurrage & Detention Benchmark 2022” report, published July 5, compares D&D rates imposed on customers by the world’s 10 largest shipping lines across 60 of the world’s biggest container ports.
It found that US shippers face the highest D&D charges imposed by container lines worldwide. Indeed, US ports occupy the top five spots in Container xChange’s ranking of global ports from the highest to the lowest D&D fees.
Demurrage and detention tariffs have two main purposes: to compensate the shipping line for using its container and to encourage the merchant to return the box as soon as possible for the shipping line to reuse it and have a fast turnaround.
Demurrage is what a shipper pays for using a container in the terminal beyond the free period. Detention is what he pays for using the box outside the terminal beyond the free period. For imports, demurrage time begins when a box is unloaded from a ship until its gate-out. For exports, it starts from gate-in of the full container until it is loaded.
New York leads the way in D&D fees, followed by Long Beach, Los Angeles, Oakland and Savannah. All five ports are 2-3 times more expensive than Hong Kong, in 7th spot, and 20 times costlier than leading Asian hubs such as Dalian in China and Busan in Korea.
Under heavy pressure from shipper lobbyists hit by soaring shipping rates, schedule disruptions and higher fees, which have been adding to supply chain cost inflation, President Joe Biden signed the Ocean Shipping Reform Act (OSRA) into law on June 16.
OSRA empowers the Federal Maritime Commission, the US shipping regulator, to act more assertively on D&D charges and shifts the burden of proof for the reasonableness of fees to ocean carriers instead of shippers.
“We have received hundreds of complaints from shippers,” said Rep. John Garamendi (Dem., Calif.) who sponsored the initial House version of the bill.
The “Demurrage & Detention Benchmark 2022” report notes that global average D&D charges levied by container lines on customers two weeks after a cargo was unloaded from a ship rose 38% for standard-sized containers from US$586 in 2020 to US$868 in 2021.
So far in 2022, average D&D charges by major ports have fallen 26% to an average of US$664 per container, although fees remain 12% higher than pre-pandemic levels at around 12%.
Even so, US shippers are not benefitting from these global declines in D&D charges. The average charge by liners two weeks after a container was unloaded at Long Beach was US$2,730, up from US$2,638 a year earlier. At Los Angeles in May, the average D&D fees rose from US$2,594 per box in 2021 to US$2,672.
The US also comes out worse on D&D costs regionally, says the report. D&D charges in May in the US were the highest at US$2,692 per container, compared with US$549 in Europe, US$482 in India, US$453 in China and US$366 in the “Rest of Asia”.
“Throughout this pandemic, as shipping costs have soared and inflation has become a threat to the US economy, the focus on container line behavior by politicians and regulators has magnified,” said Christian Roeloffs, co-founder of Container xChange.
US agricultural shippers have been outspoken about their inability to find affordable empty containers for exports. But importers have been equally outraged by what many believe has been profiting on D&D charges by liners. Some have started suing carriers.
This came into the crosshairs of Biden this year when he was highly critical of container lines. His administration addressed D&D in the OSRA.
