Rising Container Detention an Insidious Consequence of Shipping Capacity Squeeze

Written and Published by Container Transport Alliance Australia (CTAA), 18 August 2021. 

The shipping capacity squeeze on containerised imports into Australia and exports to overseas markets is having many impacts on shipment delays, equipment availability, “rolled” cargo, and unprecedented rising ocean freight rates. Many industry analysts are indicating that the rates and space challenges are set to continue throughout 2021 and 2022.

As Australia moves into its traditional “peak season” with continued strong import and seasonal export demand, one insidious consequence of the current shipping capacity squeeze is the potential for rising container detention costs imposed by shipping lines on import and export container equipment.

CTAA understands that even major containerised forwarders and importers are being forced into the SPOT market to secure container import space on vessels, rather than longer term contract conditions. This includes accepting container detention terms & conditions which shorten the available “free days” before empty containers must be returned to the location designated by the shipping lines.

Most container shipping lines servicing Australia have normal import container detention terms & conditions ranging between 7 to 10 “free (calendar) days”, many also counting weekends and public holidays. Also, most shipping lines start counting the detention free time from discharge of the container from the vessel rather than from when the container is physically available for pick up through the container stevedores’ vehicle booking systems.

“Straight off the bat, this puts pressure on the importer and their transport provider to get the container picked up, unstuffed of cargo, and the empty returned in a clean condition to a nominated empty container park or to a stevedore terminal as a direct wharf return.” observed CTAA Director, Neil Chambers.

“Some major importers have had more generous agreements with shipping lines on container detention free days. However, as we have observed in the current shipping capacity squeeze, this is changing. The “shock” this will have on the landside logistics sector will be enormous as the volume of containers being handled will lead to more logistics delays and rising detention fee invoices.”

“Landside logistics providers also continue to question how shipping lines can apply container detention fees when their designated return location is not open or is so congested that a return slot cannot be obtained in a timely fashion. This includes instances where some empty container parks are not open on weekends or public holidays despite those days being counted in the shipping lines’ detention free day conditions.”

“Empty container redirections ordered by shipping lines and/or empty container parks or stevedore terminals add to landside delays.”

“In Sydney, there are over 100 live redirection notifications each day for various empty container equipment types for various shipping lines, while the frequency of redirection notices is rising in Melbourne, Brisbane and Fremantle.”

“Redirections add to de-hire delays as transport fleet allocators and controllers need to ditch plans to transport the empty to the original designated de-hire location and secure a slot at the alternative location.”

“Container transport operators are telling CTAA that the dwell time of import empty containers languishing in transport yards prior to being successfully de-hired is now between 1.6 to over 3 days and could get worse again like last year’s peak. That’s a lot considering that the container detention “free time” allowed by shipping lines is 10 days or less overall from time of container discharge.”

“Shipping lines know that in many circumstances, despite the best endeavours of their shipper clients to have empty containers de-hired in a timely manner and not hold onto containers unnecessarily, they have next to no chance of undertaking that task within the detention “free days” allocated.”

“Throw in biosecurity interventions like Brown Marmorated Stink Bug (BMSB) on-shore fumigations and the like and the timeframe is well and truly blown.”

Exporters also aren’t immune from container detention fees. Exporters normally receive around 15 free days from collection of the export empty until its receival into the stevedore terminal for export loading onto a vessel.

“CTAA has received information of several instances where shipping lines have “rolled” export bookings (i.e. have changed export bookings to subsequent vessels), yet have still automatically generated export container detention invoices payable by the exporter for holding onto the allocated export containers too long.”

“Clearly in those circumstances it isn’t the fault of the exporter and their transport provider that the export containers have taken longer to move through the export logistics chain to final stevedore terminal receival. However, the administration time and cost alone in disputing these erroneous detention fee claims with shipping lines is debilitating.”

“CTAA doesn’t dispute that shipping lines have the right to impose container detention fees if shippers hold onto container equipment too long. Empty containers are the shipping lines’ assets, and of course shipping lines have the right to maximise the use of their containers to generate ocean freight revenues and to minimise their empty container stock levels commensurate with shipping demand.”

“However, CTAA supports calls from forwarder and shipper representative bodies notably Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA), for the Federal Government-led review of container shipping lines practices to/from Australia and the establishment of a Federal Regulator akin to the US Federal Maritime Commission (FMC) which is currently conducting regulatory activities into shipping lines’ container detention and demurrage practices.”

See: https://www.ftalliance.com.au/reports-and-submissions/2678

Meanwhile, container transport operators across Australia are having continued conversations with their import and export customers about the liability for container detention fees. This includes the terms & conditions of the landside transport task as to when and in what circumstances transport operators may or may not accept any liability for empty container de-hire or export container delays.

Queries about this Media Release should be directed to Neil Chambers, CTAA, 0413 662 263 / neil.chambers@ctaction.com.au

About CTAA: Container Transport Alliance Australia (CTAA) is strong Alliance of leading businesses engaged in the container transport logistics industry. CTAA Alliance companies account for the majority of containerised freight handled in capital city ports in Australia.