World's Top 5 Most Expensive Ports are in the US: Demurrage Report
Demurrage and Detention (D&D) charges imposed on US shippers by 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.
Container xChange’s Demurrage & Detention Benchmark 2022 report, published today, ranks the most expensive global ports for D&D charges (see definitions below) levied by container lines on customers two weeks after a cargo arrives at the port or is discharged from the vessel.
Even as U.S. regulators have taken a keen interest in container line behaviour amid soaring U.S. inflation and historically high shipping costs, U.S. ports occupy the top five spots in Container xChange’s rank list of “60 ports ranked by highest to lowest D&D charges across shipping lines”.
New York leads the way in 1st place followed by the ports of Long Beach, Los Angeles, Oakland and Savannah.
All five ports are more than 2-3 times more expensive than Hong Kong in 7th spot and at least 20 times more expensive than leading Asian container hubs such as Dalian in China and Busan in Korea.
Political spotlight on D&D
Under heavy pressure from shipper lobbyists, President Biden signed the Ocean Shipping Reform Act into law on June 16, 2022.
OSRA gives 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 behaviour 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.
Global average D&Ds fall; US hubs see rises
Container xChange’s Demurrage & Detention Benchmark 2022 report notes that global average D&D charges levied by container lines on customers two weeks after a cargo was discharged from vessel increased by 38% for standard-sized containers from $586 in 2020 to $868 in 2021.
So far in 2022, average D&D charges by major ports have declined to an average of $664 per container by 26%, although fees remain far higher than pre-pandemic at around 12%.
Even so, U.S. shippers are not benefitting from these global declines in D&D charges.
Fees vary by port and carrier
Container xChange’s Demurrage & Detention Benchmark 2022 report also notes that D&D charges vary widely by port and by 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 US 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’.
At Rotterdam in mid-year, average D&D charges at the end of the two-week period were $564 per container. However, shipping with ONE cost $809 container “which, when compared to the port’s average D&D charges, will escalate your container shipping costs by 43%”.
David Lademan, Associate Editor of the Container Markets division at S&P Global Commodity Insights, said, "The issue of demurrage and detention as a part of the overall cost of freight has been brought to the fore because of the market imbalances that we have seen over the past two years."
Many shippers have reported that demurrage charges have been levied against them despite cargo being buried under stacks of containers at logjammed ports, which leaves them functionally unable to retrieve their containers.
Many shippers are now in the practice of crossdocking cargos, to return containers quickly and avoid elevated fees. This comes amid an already protracted period of turbulent market conditions.”
Cutting D&D costs
Dr Johannes Schlingmeier, CEO & 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. So, if your container gets held up inside or outside of the terminal, you won't have to pay late fees to them.
"Better planning by all supply chain partners and better communication between logistics partners and stakeholders can help reduce liability and exposure.”