The total amounts paid for demurrage have declined from $76 million to $27 million and to $19 million in 2017, 2019 and 2021 respectively as the Ghana Shippers Authority (GSA) pushes for a further decline.
The reduction is due to a nationwide sensitisation campaign the Authority had embarked on since 2018, engaging shippers in small and big groups, with a simple message: ‘ Demurrage is avoidable’.
The Chief Executive of the Ghana Shippers’ Authority (GSA), Ms Benonita Bismarck announced this at a seminar on demurrage for shippers in Accra.
Demurrage is a cost applied when a shipper holds the container inside the terminal of the shipping line or agents longer than the agreed free days and applies to all containers that remain at the terminal longer than the agreed free time.
Ms Bismarck in a speech read on her behalf said the campaign launched in 2018 was in response to the staggering figures generated by the Authority’s research team.
She explained that amounts estimated to have been paid in demurrages by Shippers demanded urgent action to stop the trend.
Ms Bismarck said, “For this campaign, the estimated demurrage payments have declined from $76 million in 2017 to $27 million in 2019 with a further decline to $ 19 million in 2021.”
She noted that the downward trajectory of these figures shows the impact of the combined effect of the sensitisation campaign and the very bold Government initiatives and interventions in the cargo clearance process like the Paperless Port Project and pre-arrival declaration in the Integrated Customs Management System (ICUMS).
ICUMS is a cargo clearance platform designed to support import and export processes, speed up transactions and reduce the costs involved in international trade.
She said these improvements notwithstanding, the goal of the Authority is to pursue a further reduction to the barest minimum in the interest of shippers and the national economy, especially in the face of recent increases in the demurrage daily rates by some shipping lines, coupled with the current exchange rate volatility.
State-Owned Agency sponsored demurrages
Ms Bismarck said that the Authority’s research has revealed a penchant for consignments of State-Owned Agencies to overstay at the ports with severe financial consequences.
She explained that while these consignments are not forfeited to the State for purposes of auction, their eventual clearance is accompanied by colossal demurrage and rent charges that would have accumulated over the period at the ports.
500 State-owned containers uncleared
She added that information gathered randomly from five Shipping Lines/Agents operating in Ghana revealed that over 500 containers consigned to various State-Owned Agencies remain uncleared at the ports as of September 9, 2022.
State Funds paying demurrages
She urged Chief Directors, Chief Executives, Managing Directors and other relevant Officers of Municipal District and Agencies /state-Owned Enterprises, to take urgent action to ensure that consignments are expeditiously cleared from the ports to mitigate the use of state resources for such avoidable costs.
She said as of September 9, 2022, 49 containers belonging to State Institutions have stayed with shipping lines for beyond 2000 days, 116 containers had stayed for between 1000-1999 days, 78 containers had stayed for between 500-999 days, 205 containers had stayed for between 100-499 days, 60 containers had stayed for up to 99 days.
Detention Charge
The Deputy Commissioner for Suspense Regimes at the Customs Division of the Ghana Revenue Authority, Mr Emmanuel Ohene said besides demurrage payments, there also is the detention charge that applies when containers taken out of the ports are not returned to the Shipping Line/Agent’s yard within the agreed time.
$70 per day for demurrages
He noted that the average amount for demurrage payment for a 40″ container is $70/day.
He said shippers could avoid the payment of demurrages by taking urgent action in the clearance of their cargo.
Technology
Mr Ohene urged shippers to adjust as technology has become inevitable for the survival of organisations, to stay profitable in the highly competitive business environment.
Avoiding Demurrages
The Head of Freight and Logistics at the GSA, Mr Fred Asiedu Dartey said one of the ways to avoid demurrage is for the Shipper to get a credible freight forwarder or clearing agent who would give the proper advice needed for the successful clearing of the goods.
He noted that, where in critical terms, the Shipper realises that he is unable to work within the seven days free days, he/she has to negotiate for extra days from the port of loading but not when the goods have arrived.
Mr Asiedu added that “once you have committed yourself to import goods, you need to make the resources available so you will not wait for goods to arrive before chasing funds from various sources – family, friends and banks.
By Julius K. SATSI || The Finder, Accra