Demurrage and detention (D&D) charges imposed on U.S. shippers by ocean container lines continue to be the most expensive in the world and have increased this year, even as global average fees have fallen from the record highs of 2021, according to Container xChange, an online platform for the leasing and trading of shipping containers.
Despite increased U.S. regulatory scrutiny of D&D charges, shippers using the port of New York now face the highest D&D fees, followed by the ports of Long Beach, Los Angeles, Oakland and Savannah, Ga., in Container xChange’s list of 60 ports ranked by highest to lowest D&D charges across shipping lines.
President Biden signed the Ocean Shipping Reform Act into law in June, giving the Federal Maritime Commission the power 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.
“Throughout this pandemic as shipping costs have soared and inflation has become a threat to the U.S. economy, the focus on container line behavior by politicians and regulators has magnified,” said Christian Roeloffs, co-founder of Container xChange. “U.S. agricultural shippers have been particularly outspoken about their inability to find affordable empty containers for exports. But importers have been equally outraged by what many believe has been profiteering on D&D charges by container lines. Some have started legal actions against carriers.”
Container xChange’s “Demurrage & Detention Benchmark 2022” report notes that global average D&D charges levied by container lines on customers two weeks after cargo was discharged from the vessel increased 38 percent for standard-sized containers to $868 in 2021 from $586 in 2020.
So far in 2022, average D&D charges by major ports have declined 26 percent to an average of $664 per container although fees remain about 12 percent far higher than pre-pandemic level, according to the report.
However, U.S. shippers haven’t yet benefitted from these global declines in D&D charges. According to Container xChange, in May the average charges at the Port of Long Beach was $2,730 per container, up from $2,638 a year earlier. At the port of Los Angeles in May, the average D&D fees increased to $2,672 per container from $2,594 in 2021.
Container xChange’s Demurrage & Detention Benchmark 2022 report also notes that D&D charges vary widely by port and by the carrier. Of the leading container lines across ports, COSCO currently has the lowest D&D charges, while HMM’s D&D fees are the highest.
By region, D&D charges in May in the U.S. were the highest at $2,692 per container. This compared to $549 in Europe, $482 in India, $453 in China and $366 in the “rest of Asia.”
To compile the report, Container xChange collected more than 20,000 data points from publicly available sources. These were used to compare D&D rates imposed on customers by the world’s eight largest shipping lines across 60 container ports in the world. The data was then compared against data collected by Container xChange mid-year 2021 and 2020.
Dr. Johannes Schlingmeier, CEO and founder of Container xChange, said using shipper-owned containers (SOCs) instead of shipping line/carrier-owned containers (COCs) could help reduce shipper supply chain costs.
“Taking the SOC options means you’re not leasing a container from the shipping line,” he said. “So, if your container gets held up inside or outside of the terminal, you won’t have to pay late fees to them. More generally, I think we need common sense to prevail on D&D fees rather than regulatory intervention. Better planning by all supply chain partners and better communication between logistics partners and stakeholders can help reduce liability and exposure.”