BIFAlink
Policy & Compliance
www.bifa.org
Quay rent, demurrage and storage charges double in a year
The Port of Los Angeles, USA
The year 2020-2021 saw a doubling of demurrage and detention fees charged to customers at the top 20 global ports. Rates are inconsistent, with large differences between ports and carriers, but vary from just $132 at Busan in South Korea up to $2,500 for two weeks after discharge at Long Beach and Los Angeles. Demurrage and detention prices increased between March 2020 and March 2021 by approximately 104%, or the equivalent of $666 per container across all container types. Added to freight rates at historically high levels, there are concerns that there will be an increase in incidents of low-value cargo being abandoned at destination. This will increase pressure on forwarders and the financial risks that they are exposed to. How to protect your company What should BIFA Members do to protect themselves? Our first piece of guidance is to make sure that the BIFA Standard Trading Conditions (STC) are incorporated in all and any contracts with customers. This will give Members the legal basis to protect themselves, to exercise a lien, to ensure payment is made and to take action to recover outstanding debts. In other words, BIFA has given its Membership the necessary levers to secure payment from companies that remain trading. Generally, prevention is better than cure and we would suggest that Members consider procedures to ensure that their clients still want the goods and have the capability to meet their liabilities. The suggested steps include, but are not limited to: • Reviewing credit terms and adjusting as required, including the maximum that you are willing to advance on behalf of clients for individual shipments. • Devising a payment plan to avoid a large debt How BIFA Members can protect themselves from the costs related to abandonment of low-value cargo
accumulating in the case of ongoing storage charges. • Introducing procedures whereby overseas agents only ship goods to the UK after receipt of the UK import agent’s express instructions. • Refraining from entering goods to Customs for consignments shipped under a negotiable bill of lading until there is clear evidence that the importer has title to the goods in the form of either a correctly endorsed bill of lading being submitted or similar authority. • Not accepting shipments directly from other parties, including shipping lines, without checking that the client will accept and pay for the cargo. We are aware that importers are abandoning or rejecting cargo and there are two basic scenarios: • If the goods have been cleared and the importer rejects them, we would suggest that Members exercise a lien in order to protect their interests, • Where goods are rejected prior to clearance, instructions should be sought from the sender if ownership has not passed to the buyer.
Where cargo is rejected or abandoned by an importer, it is important to communicate with the originating agent and/or shippers to ensure that the issues are quickly resolved and additional costs are minimised. It is essential to keep accurate records of all discussions, including confirming wherever possible everything in writing. In many ways we are experiencing the worst possible situation – business is severely disrupted, but it is still continuing, and careful consideration must be given to protecting commercial interests. Our final two points are that: • Members should communicate their policies to clients, posting information on their websites. • Professional guidance should be sought covering a wider range of issues, from exercising a lien, ensuring that the correct insurance policies are in place, to understanding which of the government’s support packages may be accessible to Members. Export problems While we have focused on imports into the UK, similar issues can be experienced on goods exported from the UK and abandoned at destination. For full container loads, where the export agent is named on the bill of lading, there must be procedures in place to monitor clearance and removal from the quay in a timely manner. In many ways what is being suggested is merely a review and tightening up of good commercial practices. For many years we have urged Members to “know their customer” and that is probably truer now than ever before.
There could be three options: – Return them to the shipper, – Abandon the goods to the Crown, – Find a new buyer.
Regarding the scenario where goods are rejected prior to clearance, it is most important that the carrier is not paid, and thus the cargo is not accepted by the import agent, until it is confirmed that its client definitely wants, and more importantly can pay for, the goods.
10
September 2021
Made with FlippingBook Annual report maker