FIATA requires reasonable free time for container use

The FIATA International Federation of Freight Forwarders Associations urges shipping companies to review the current vacancies and restore them back to no less than manageable pre-pandemic levels. While the decision to reduce time off was unilateral, market conditions have since changed and the justification for the status quo is no longer applicable.

Demurrage and mooring fees are an important tool for supply chain stakeholders to ensure the efficient use of their container inventory, which represents a significant investment. Containers must be turned over as quickly as possible. Consequently, traders who use containers for long periods should be discouraged from this practice. For best practices on this topic, see the FIATA Toolkit on Detention and Demurrage and the Best Practice Guide on Container Shipping and Quality of Containers Vol 2.

FIATA reminds that it is the duty of the shipping companies to grant a reasonable free period to give the dealer sufficient time to:

• the loading and delivery of the container for an export; And

• the collection, unloading and return of the empty container for an import.

In recent years, container free time has been reduced and demurrage and demurrage tariffs have increased significantly. Shipping companies justified shorter free periods on the grounds that it would increase fluidity and help reduce congestion. The decision forced traders to make significant efforts to meet free timeslots, causing landside congestion and especially congestion around the major ports and terminals. However, even in situations where, despite best efforts, they had no control over container turnaround times, traders were being billed for holding and demurrage due to port congestion.

With reduced shipping volumes, the strain on supply chain congestion eased, and congestion has since eased significantly. The unused capacities of containers that were stuck in traffic jams are now circulating again. Industry feedback indicates that the combination of keeping older equipment in service and producing new containers at record levels would result in a time when the available container fleet outweighs the demand for their use.

Necessity of a timely reaction to a changed market environment

A supply chain is stronger when there is dialogue and coordination between stakeholders. No stakeholder should impose onerous requirements on others. In this context, the current free time limits the scope for proper compliance with:

• Convention on Safe Containers (CSC);

• Code of Conduct for Packing Cargo Transport Units approved by IMO/ILO/UNECE

In addition, FIATA (and co-sponsors) encourages shipping companies to seriously consider equipment quality in order to:

• weed out equipment that is beyond its natural economic lifespan and may not be “fit for purpose”; And

• Use the period to proactively inspect, maintain and repair equipment to ensure it meets appropriate container quality standards.

FIATA calls for detention and demurrage practices to be consistent with the speed principle, with multi-stakeholder coordination to respond to market needs in a timely manner and strengthen supply chain resilience. Now is the time to act to optimize container movements and improve container quality for future use.

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