The Issue of Direct Container De-Hire to Wharf
The rising prevalence of a new business practice among oceanic shipping companies is saving money from them, but only at the expense of container transport operators at the receiving ports. Container Transport Alliance Australia (CTAA), an advocacy group consisting of various container transport firms in the country, have recently spoken out against this development, and believe that action must be taken as soon as possible.
This practice is known as ‘direct de-hire to wharf’, which is an order that de-hires empty shipping containers directly at the receiving port instead of sending them to a dedicated empty container park where they should. According to the CTAA, several foreign container shipping lines do this very often, with a press release in April 2018 pointing out names such as OOCL, ANL (CMA-CGM), Hamburg Süd, and COSCO. Now, from the perspective of the shipping company this method is much more convenient as they would not have to shoulder the logistics costs of sending the empty containers to their last stop. And while this practice does save the shipping companies a lot of money in the long run, leaving empty containers at the receiving ports ends up causing several major issues:
Additional Steps in Staging Process – Direct de-hire to wharf orders require a designated space at the wharf itself; however, due to the limited slots and available vehicles for said spaces, container transporters do not have much of a choice other than handling the staging process of the container through their own facilities using their own vehicles, which requires additional work to make sure vehicles and staff are coordinated correctly through this process. In addition, the layout and workflow of certain ports make it so that the container return facilities and the container terminals are separated. This means that trucks will not be able to backload at the ports and will have to make half of the trip empty-handed, incurring additional logistics costs for the container transport operators.
Limited Alternative De-Hire Locations – Because of technical difficulties such as delays or an outright lack of space on the receiving ports, container transports will typically try to search for an alternative de-hire location such as an empty container park that is designed to receive and store said containers. However, according to the CTAA, some empty container parks – especially those that mostly handle containers from a certain shipping line – are told to turn away containers that have been given direct de-hire to wharf orders. As a result, container transporters are forced to travel longer distances to reach empty container parks that will receive said containers, wasting both time and money in the process.
Short Notice Redirection Orders – A large number of shipping containers are owned by the shipping companies that transport them by sea, which therefore gives them full control over where they want containers to be at any given time. A growing trend among these shipping companies, the CTAA notes, is sending out a notice for a shipping container that has already been given a direct de-hire to wharf order to be redirected to a different return location. The unpredictable nature of these short-notice orders causes major disruptions in the operational workflows of container transporters, requiring them to reallocate a significant amount of resources to process the order and send the container on its way to its new destination, which can result in additional delays.
Fines from Stevedores – According to the CTAA, most if not all containers that are given direct de-hire orders are booked through an alternative container tracking and management system called 1-Stop, instead of the standard Containerchain software used for all other cases. And because a majority of port staff make use of Containerchain rather than 1-Stop, container transporters run the risk of being charged penalties simply because information about the de-hired container was encoded into a different system. The CTAA makes particular note of the fact that these penalties are not enforced, or are otherwise not as strict, in standard empty container parks, which means this issue ca only occur should a given container be given a direct de-hire to wharf order.
Risk of Container Detention Policy Breaches – All shipping containers are given a set amount of time that they can be used (say, by the importer) before said shipping container must be returned to the port, and under normal circumstances, this allocated time limit is perfectly reasonable fore most applications. However, the CTAA states that the potential delays caused by the shipping lines’ own business practices place container transporters at a high risk of breaching the container detention policies of said shipping lines. Breaching said policies will result in a fine, the price of which varies from shipping company to shipping company, but the outcome remains the same: charges imposed on the container transporters for delays that are completely out of their control.
Neil Chambers, director of the CTAA, voiced his concerns over these business practices and the time and money cost left to be shouldered by container transporters, stating that “While the cost drivers may vary slightly from shipping line to shipping (sic), port to port, and even stevedore to stevedore, the impact to container transporters is the same – a hit to an expense line in their P/L. That is not sustainable for any business.”
More recently, another new business practice is trending among shipping lines called “empty return to ship.” Chambers, elaborating on this practice, had the following to say: “As an example, Maersk is requiring some empty containers to be treated as export containers that must be delivered to terminals for designated ships and discharge ports. This involves the corresponding need for the transport operator to compete with full exports to book an export slot, and for transporters or their import/forwarder clients to complete an export Pre-Receival Advice (PRA) through 1-Stop Connections.
“CTAA believes that the additional costs associated with this Shipping Line direction, including the costs of the completion and lodgement of the PRA, should be recovered by transporters in the commercial marketplace.”