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Over the past year, average detention and demurrage (D&D) charges dramatically fell by 25% and were below pre-pandemic levels for the first time in three years, according to the latest Container xChange’s annual D&D survey.

The general reduction of D&D charges could be explained mostly by the reduction in demand for shipping, easing congestion in ports and slacking freight rates back to pre-pandemic levels: The latest Drewry’s composite World Container Index is set at $1,488.13 per 40ft container, a 78.7% drop compared with the same week last year, and 86% below the peak of $10,377 reached in September 2021. In these market conditions, users of shipping services have much more market power against ocean carrier which tend to bring D&D charges down or even waive them to keep customers.

Nevertheless, the efforts of the Federal Maritime Commission (FMC) in implementing the Ocean Shipping Reform Act of 2021 also resulted in D&D costs being forced down in the US. The FMC has proposed several rules to regulate D&D charges, such as the forbidding the possibility to charge customers when terminals are closed. FMC Commissioner, Daniel B. Maffei had noted that he wanted to change the practice of D&D being a “revenue centre”, as opposed to an incentive to pick up cargo and return equipment. CLECAT is still of the view that guidelines on D&D practices should be drawn up to ensure that D&D charges are proportionate and fair, in the interests of ensuring a level playing field for the fluidity of international trade. The entire supply chain, as well as economies at large, would benefit from a less opaque system with transparent, consistent and reasonable demurrage and detention practices.

Source: The Loadstar, Drewry