Container D&D charges moderate but still above the 2020 level

A report published by Container X-Change, a company providing online platform for leasing and trading containers, says leading shipping lines collected an average of $868 per container as Demurrage and Detention (D&D) charges in 2021. The report is based on publicly available data from 60 ports and 8 shipping lines.

Container demurrage is charged for use of a container within a terminal beyond the free period allowed by the shipping line. For import cargo, the demurrage time is the period from container discharge from the vessel until gate-out of the container from the terminal. For export cargo, the demurrage time is the period from gate-in of the container into the terminal until the full container is loaded on board a vessel.

Container detention charge is collected for use of a container outside a terminal beyond free period. For import cargo, the detention time is the period from gate-out of the full container until gate-in of the empty container into the repositioning point. For export cargo, the detention time is the period from the pick-up of the empty container from the terminal or depot until gate-in of the full container in the terminal.

The D&D charges come into play when a shipping line’s containers are not delivered back within the free period i.e. the number of days the shipper or importer is allowed to use a container without any charges. The purpose of these D&D charges is to encourage users to return the containers quickly and to compensate the shipping line for any delay in doing so.

In 2021, the global average D&D charges per container ($868) shot up by 39 per cent from 2020 levels ($586) due to the Covid-19 pandemic. They have come down in 2022 ($664) by 26 per cent but they are still 12 per cent above the 2020 levels. In $ terms, the average D&D charges in 2022 are $2,692 in the United States, $549 in Europe, $482 in India, $453 in China, $407 in the West Asia, and $366 in Rest of Asia.

A number of factors, such as a port’s throughput volume, import-export balance, efficiency levels, regulatory hurdles, and environmental issues, contribute to the D&D charges. Also, D&D charges and free periods vary across regions and shipping lines. In 2021, Hyundai Merchant Marine (HMM) collected $1,236, whereas China Ocean Shipping Company (COSCO) collected $420 as D&D charges per container after 14 days of free period. The year 2021 was quite unusual due to robust global economic recovery and extraordinary congestion at various ports.

The shipping lines collected $666 at Mundhra and Nhava Sheva as D&D charges, which is higher than 45 other ports out of 60 for which Container X-Change collated the data. In 2021, India took an average of 107.44 hours to release import cargo and 187.04 hours for shipment of export cargo after the goods had entered the ports. The reasons for high D&D charges in India include failure to take advantage of the Authorised Economic Operator (AEO) programme, Direct Port Delivery (DPD) and Direct Port Entry (DPE) facilities, delays in testing and post-assessment duty payment, increase in bills of entry involving amendment, delays after grant of Let Export Order, reluctance of Customs to clear the goods against provisional assessment and so on. These and other related logistics issues need urgent attention.

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