Clearing agents protest demurrage charges on empty containers delay

Port users are up in arms against demurrage charges on containers by shipping lines saying it exposes the country to high trade costs and commodity prices.

Led by the clearing agents' lobby–Kenya International Freight and Warehousing Association (Kifwa), they say shipping companies lines are imposing both demurrage and detention charges on empty containers, despite delays being caused by port congestion and constrained depots.

The move, Kifwa said, is financially constraining customs agents, freight forwarders and transporters, and disrupting supply chains and inland cargo movement.

It said the the high logistics costs are passed on to importers and consumers and an imbalance of risk unfairly shifted to agents who have no control over depot capacity.

Empty container return free periods (detention) at Mombasa Port vary by destination, typically allowing nine to 14 days for local cargo and up to 30-52 days for transit goods.

The Port of Mombasa has in recent months been hit by a congestion occasioned by high cargo volumes on increased imports and transshipment cargo.

Empty container depots outside the port are also reported to be full with trucks queuing for up to five days to return empties, where some are turned away due to lack of space.

Demurrage and detention are fees charged by carriers for exceeding "free period"  with the former applying when a container remains inside a terminal while detention applies when a container is outside the port.

Any extra charges translate to higher trade costs and commodity prices which ends up hitting consumers.

Kifwa has termed the charges “unjust and unlawful”, arguing that liners cannot benefit from their own failure to handle empties.

Demurrage charges range from approximately $13 (Sh1,677) to over $100 (Sh12, 900) per container, per day, once the initial "free time" has expired. The exact charge depends on the shipping line, container size and duration of the delay. 

Clearing agents which also speaks for customs agents wants an immediate suspension of demurrage and detention charges.

“Issue an immediate directive to all member lines to suspend the accrual of all demurrage and detention charges for containers whose return has been attempted and refused due to depot congestion, retroactive to the date when this crisis became systemic,” national chairman Fredrick Aloo, has told shipping lines.

They also want clear communication on return protocols with a transparent, daily updated system to notify freight forwarders of depot status and acceptable return windows to prevent futile trips and further congestion.

The lobby has also called for a temporary alternative solution to be jointly implemented by Kifwa, Kenya Transporters Association, Kenya Ports Authority, Kenya Maritime Authority and other stakeholders to establish a temporary, which will include overflow empty container reception areas or a staggered return appointment system to clear the backlog.

“We seek a collaborative partnership to resolve this operational crisis. Failure to address these legitimate concerns will leave our members with no choice but to formally dispute all unjust demurrage invoices, escalate the matter to the Competition Authority of Kenya and other relevant statutory regulators and pursue collective legal recourse to recover unlawfully charged fees,” Aloo said.

Kenya Ship Agents Association (KSAA) recently blamed the empty container crisis on what they termed “poor and slow operations” at the East African ports of Mombasa and Dar es Salaam.

It said delays in ships berthing at Mombasa is costing them heavy losses in terms of daily running usage and charter, with demurrage fees running between $20,000 (Sh2.6 million) and $50,000 (Sh6.5 million) daily, depending on the vessel size.

Lines have not been able to load full tonnage of ships leaving Mombasa, according to KSAA, with instances where vessels are made to vacate berths without completing cargo operations.

“Shipping lines are not imposing any charges, they are basically recovering operational costs,” KSAA chief executive, Elijah Mbaru, told the Star.

The Shippers Council of Eastern Africa has urged KPA, KSAA and the lines to “engage urgently” and prioritise empties evacuation, with vessels allowed an extra day at the berth to load empties.

“Despite these evident challenges, shipping lines continue to levy demurrage charges immediately after the expiry of guarantees without taking into consideration the difficulties faced during empty returns,” SCEA chief executive Agayo Ogambi noted.

KPA managing director Captain William Ruto recently confirmed there is a shortage of storage facilities in Mombasa, with the port being chocked by containers.

“Currently, we are storing more than 50 per cent of empties earmarked to be delivered in port. Investments in empty container storage facility is low, I agree there has been a problem, and we are helping where we can,” Ruto told the Star.