Maersk, Hyundai raise demurrage
Maersk Sealand announced plans Wednesday to substantially raise penalties assessed on shippers for late pick up of cargo at its port and rail terminals and inland container yard depots.
Truckers and customs brokers contacted by Shippers NewsWire said they feared that other terminal operators would likely follow Maersk’s lead and also hike their fees.
In a notice to customers, Maersk said it would boost U.S. demurrage charges to $225 per day for dry cargo, $400 per day for refrigerated cargo and $275 per day for other types of equipment, effective May 1. Maersk, a liner carrier with one of the largest terminal operations in the United States, typically allows shippers five days of free time to remove their containers from a terminal.
An employee at the Maersk customer service in Houston said the current fee for dry cargo is $125 per day. Port terminals in Los Angeles-Long Beach, Baltimore, and Newark, N.J. set their own demurrage rates because of issues related to union contracts.
A trucking source in Los Angeles said demurrage rates there are $60 per day. The local Maersk office gave a daily figure of $75.
Maersk said the changes to its demurrage and detention policies are necessary because of equipment shortages and congestion at port and rail facilities.
The same fee schedule would apply at Union Pacific rail terminals for the first five days of storage, rise to $250 for days six through nine and jump to $400 for storage on day 10 and beyond. Reefer fees are $400 per day, rising to $500 after nine days.
Hyundai America also informed its customers Wednesday that it was raising its storage fees at rail ramps to $100 to $150 per day depending on the city in response to higher demurrage fees being charged by the railroads, according to a letter it sent customers.
Maersk said the $225 daily demurrage rate would kick in after the free time window for the first nine days of storage at Port of New York-New Jersey terminals, and increase to $345 for storage for 10 or more days. Reefers would be charged $400 per day for the first three days and $500 per day after four days. In March, Maersk and other terminals at the port reduced free time from five days to four on both import and export containers.
To improve the flow of equipment, Maersk said it would no longer hold a container until the demurrage fees are paid and would instead immediately add the fee to the customer’s invoice. Under current practice, truckers are often compelled to pay the penalty up front in order to get their loads and then try to get reimbursed by the consignee.
A trucking industry source speculated the change was made because Maersk realizes the truckers can’t afford to advance such a large fee to the shipper.
The change doesn’t preclude the cargo owner from deducting the demurrage from the trucker's freight bill, the source said. Last summer, when severe port congestion caused 10-day vessel backups, many truckers told shippers they would not accept responsibility for demurrage if they couldn’t get containers out on time and shippers reluctantly ended up paying demurrage.
The demurrage rate will probably not be equally enforced, with large volume retailers like Wal-Mart getting preferred rates, the source said.
Maersk said it was also reduced the free time for cargo at all U.S. and Canada inland container depots and rail ramps and at the Port of New York-New Jersey.
A new detention policy also takes effect May 1. Detention is charged when the shipper does not return a container within a specified time frame.
Maersk said detention will be payable by the shipper, consignee or their agent (customs broker or non-vessel-operating common carrier) rather than the trucker, even in cases in which Maersk takes responsibility for a store door delivery and selects the trucking company.
Detention charges will increase to $75 per day for dry cargo and $300 for reefer cargo for late returns up to 14 days. An Los Angeles-based customs broker said detention is currently $44 per day.
Truckers often incur detention because they wait to make non-revenue trips to return empties until the port is less congested.
The new Maersk policy comes after customs brokers in the Los Angeles area convinced West Coast terminal operators in February to delay a plan to reduce free time by a full day and change the calculation of free time when each container is actually unloaded rather than the current practice of starting the clock when the ship has completed discharge of all containers.
“Cargo that is not made available to importers by the carriers and/or terminals is still assessed the demurrage fee, even when the delay is caused by lack of equipment or service failures by the carriers and/or their chosen terminals. When containers are grounded for lack of chassis or when cargo piles up when rail service is interrupted, importers should not bear an additional charge for containers that they want, but cannot pick-up,” the Los Angeles Customs Brokers and Freight Forwarders Association said in a Feb. 10 letter to terminal operators.