India’s Ministry of Shipping has advised all shipping lines to waive off detention and demurrage charges for the 21-day national lockdown period starting March 22 to April 14.Importers of ferrous and non-ferrous metals are not able to clear their shipments that have arrived at Indian ports amid shutdowns and logistical difficulties caused by the COVID-19 lockdown imposed by the Indian government.
The Material Recycling Association of India (MRAI) and All India Non Ferrous Metal Exim Association (ANMA) has urged the Indian government to advised shipping lines to exempt importers and exporters from these detention charges for the lockdown period, as reported by Davis Index. Also, an online petition was floated demanding that the government waive off detention and demurrage charges. Over 2,842 signatories supported the petition stating that if these charges were in place many businesses will be forced to file for bankruptcy. Paying heeds to these requests, the Indian government issued an advisory to shipping lines on March 29 to exempt cargo owners from payment of detention charges for the lockdown period to facilitate the smooth functioning of supply lines across Indian seaports. The shipping lines are also advised not to impose any new additional charges.
India’s recycling industry is relieved by this decision as detention and demurrage charges for such a long period could have caused huge losses to importers of scrap and other secondary raw materials. Assuming a detention and demurrage charge of Rs12,000 ($159) per container per day for 1.5 lakh containers arriving at Indian ports daily, Indian importers were up for an estimated net loss of Rs180 crore (Rs1.8bn) per day. The month-long lockdown could have costed importers Rs5,400 crore, as per rough estimates shared by traders.
Although the Indian government has exempted seaports and its organizations from the lockdown, cargo owners struggled to secure the required paper works and transportation to move good from the ports. This has led to the detention of containers at ports. Manufacturers, importers and exporters across India are unable to complete customs formalities and get their containers out of custodians’ possession to any warehouse.
Major shipping lines such as MSC, CMA and Maersk have already shown their acceptance by waiving off of detention and demurrage charges. Some market participants have also expressed doubts as to how the government would ensure shipping lines or airlines do not levy demurrage charges as they are private entities.
At this time of global crisis, industry participants are expected to help each other, though there is little clarity from small shipping lines like freight carrier from Malaysia and Dubai. In the absence of a waiver, an estimated $50-90 per container per day detention charge has to be paid by importers. During the lockdown period, around 150,000-200,000 containers are estimated to have arrived at Indian ports, which could cause heavy losses to some importers.