Container Detention on the Rise – What are the causes and where does it end?
The high demand for containerised freight over the last two years has brought many international and landside logistics challenges. One of the most insidious is high container detention charges levied by shipping lines for the late return of import empty containers, and detention charges if an exporter holds onto the export empties too long before packing and shipment.
Since the post-COVID shipping surge begun, shipping lines have struggled to keep up with the high demand for empty containers. As a result, they drastically reduced the number of free days offered under both contract and spot rates. Pre-COVID, shippers could regularly enjoy anywhere from 14 to 21 free days before detention charges begun, now it’s a luxury to secure 10 free days with majority sitting around 7-8 days.
The issue has now been exacerbated with the struggling landside transport industry that is facing numerous and worsening challenges. Each month there are fewer and fewer trucks on the road due to the long wait times for replacement parts and tyres as well as the excessive lead time on any orders of new trucks.
Additionally, as we enter the middle of Winter, COVID cases are soaring once again whilst influenza and other illness are at an all-time high meaning that on any given day, trucking carriers may have up to 10-20% of their workforce absent and unwell for an extended period. Unlike office workers, truck drivers do not have the luxury of working from home so any time they return a positive result, they are off the road for a minimum of 7 days, adding further strain to the landside transport sector.
The industry is also facing an unprecedented labour shortage caused by several factors; overseas workers have traditionally formed a major portion of the trucking workforce and when the pandemic began and borders closed, many of these workers returned home and left a big hole in the availability of drivers in Australia.
Pair this with an ageing workforce, where the average age of drivers for most carriers sits around 50-55 years old, carriers are finding it difficult to fill driving positions as well as attract new workers into the industry. With any drivers under the age of 25 unable to be insured to drive a truck, attracting new recruits generally starts in the warehousing sector where they are trained on proper depot procedures and learn how to drive a forklift before getting their truck driving licence.
These days, warehouses are struggling to fill their own positions with one major depot operator recently sharing that on any given day they will assign around 100 warehouse staff across the country and be lucky if 50% arrive on the day.
These depot shortages not only reduce the entry pathway for new drivers, but also play a big part in the turnaround of containers with those requiring treatment or inspection taking weeks to be processed and dehired. Adding insult to injury, even when containers are treated, shippers face even further delays and detention costs as the Department of Agriculture struggles to finalise the release as they battle with staff shortages of their own in the face of the rapid increases to import volumes post COVID..
Another critical driver of rising container detention comes down to the Empty Container Parks reaching capacity and reducing the intake of empty containers each day.
Many carriers are forced to stay up until midnight each night in the hope that when timeslots are released at 12:01am for the following day, there will be enough available to return the vast number of empty containers piling up in their yard, often only to find that no slots are released at all.
Shipping Lines refuse to offer blanket extensions or have leniency on shippers even in such cases where the carrier is unable to secure enough timeslots to return the containers. In all these instances, the responsibility to cover costs falls back on the importer who has little to no control over the conditions impacting these returns.
As a result of the growing frustration and inability to keep up with the demand, trucking carriers have taken a stand and now refuse to accept liability for any detention costs citing they simply cannot turn around containers quick enough due all the reasons listed above leaving importers and exporters to foot the unsavoury bill.
So where does it end?
Well, right now shipping lines still maintain the balance of power and shipping volumes remain high meaning carriers will continue to revert to their minimum free day policies on freight bookings as often as possible.
This will likely continue until competition for space ramps up once again and they look to compete with offers of extended free time to attract shippers and keep their vessels full.
The Department of Agriculture has also committed to improving their efficiencies across the board and have rolled out a number of new strategies such as virtual inspections and online booking portals to try and reduce turnaround times.
As well as a recent increase to minimum wages for low paid workers, trucking carriers have also changed their recruitment strategies in an effort to attract new workers back into the industry.
These are good signs for shippers but in these times, nothing is certain. In the meantime, industry bodies have been lobbying the ACCC and the Productivity Commission to conduct a full review of Australia’s Maritime System with a big focus of this aimed at Container Detention policies. Details can be found HERE.
With Joe Biden and the Federal Maritime Commission recently shining a light on unsavoury shipping line behaviours to effect change in the US and give support to US importers and exporters, there is a hope that something similar can be achieved here in Australia in the near future to provide much needed relief to Australian shippers.