Shippers in the UK are facing a significant rise in costs, as the container haulage business becomes increasingly chaotic.
Shipping lines have very few – if any – available haulage bookings until the middle of October or later, but are also imposing storage charges and D&D fees on customers.
And boxes booked last week may only be available in mid-October or later, but customers must pay full tariffs on storage.
The result is an increase in costs, estimated at up to £300 ($406) per container, with forwarders forced to seek alternative arrangements with independent transport companies.
This means additional costs for loading/unloading (lolo), and higher haulage costs in a ‘pay to play’ environment.
“Pay to play is part of the reason for so many last-minute carrier cancellations, or cancellations without notice on the day of delivery,” said one forwarder. “It is dire. And it’s going to get worse. Catastrophe is coming.”
Lines are asking for port storage and demurrage fees of between £75 and £95 per day for a 40ft container, which can escalate to £150-£175 a day.
Forwarders said that customers were fighting the extra costs, “arguing the toss”, but LSPs were “caught in the middle”.
“You either have to pay a premium for merchant haulage or get whacked for thousands on storage. Shipping lines should be waiving the fee where their haulage fails. But they are not.
“And customers who have spent £17,000 to £18,000 getting their container here are then having to wait another four weeks to get it delivered.”
One forwarder suggested that some 30% to 40% of haulage moves were failing – “And that’s the booked ones,” he added.
For failed bookings, some lines are providing additional free time, ONE offering four days, CMA CGM six and MSC and Hapag-Lloyd seven days. OOCL and Cosco have said no additional free time would be offered, while Maersk will only offer free time up to the point of re-booking.
The forwarder said the situation was similar in major hubs in northern Europe, in Belgium, Germany and the Netherlands, and has been occurring in the US for the past six months, but the UK’s crisis was deeper.
“To some degree, forwarders are making it worse,” he admitted. “We are all throwing money at it to solve it, which means that hauliers are leaving the lines to work for forwarders instead. But the lines get an income flow through D&D too – they can’t lose.
“One could even argue that they are incentivised to fail.”
The situation has worsened in the past month, but there are fears it will become worse still through October and possibly continue until year-end.
Some useful definitions for those of us not involved in the shipping industry on a day to day basis:
DEFINITIONS:
“Demurrage”: the charge, related to the use of the equipment only, the Merchant pays for carrier’s equipment kept beyond the free time.
“Detention”: the charge the Merchant pays for detaining Carrier’s equipment outside the port, terminal or depot, beyond the free time.
“Combined Demurrage & Detention” (also called merged D&D): is the charge related to the use of equipment only, the Merchant pays for carrier’s equipment kept beyond the free time offered by the Carrier, when Demurrage and Detention is combined into one single period.
