Demurrage charges upheld by Indian freight association
Some 200,000 containers of imported metal and paper scrap are reportedly stuck at ports and freight depots in India.
Photo by Brian Taylor.

Demurrage charges upheld by Indian freight association

MRAI advises importers to make partial payment “under protest.”

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April 28, 2020

The Mumbai-based Material Recycling Association of India (MRAI) has advised its members that the Container Freight Station Association of India (CFSAI) has “issued a letter denying any waiver on demurrage charges” to shippers with containers stranded at India’s locked down ports.

In an April 27 advisory to its members, the MRAI says the CFSAI has pointed to Handling of Cargo in Custom Area Regulation 2009 (HCCAR) guidelines for its continued insistence on demurrage charges.

The recycling organization notes that various Indian ministries—including the Ministry of Shipping and the Central Board of Indirect Taxes and Customs (CBIC)—have issued circulars in an attempt to weigh in on the matter.

An April 25 article on the Hindu Business Line website cites MRAI President Sanjay Mehta as estimating that more than 200,000 containers of scrap materials are stuck at ports “across India due to the lockdown, as various industries using the scrap were non-operational, entailing huge demurrage” charges. Mehta also suggested to the publication that the government set up a regulatory agency to oversee shipping lines working in India in a more uniform way.

With any path forward for relief for these demurrage charges uncertain as of late April, MRAI Secretary General Amar Singh suggests one potential way forward to exporters and importers affected by the situation.

“MRAI would suggest to all those members who wish to expedite clearances of their import cargoes from the ports, container freight stations and inland container depots (ICDs) to pay the charges either partially or in full under protest, so that it can be refunded back from shipping lines [or the] CFS once the orders issued by ministries are properly implemented.”

Scrap buyers and sellers also should “write a letter to CFSs and ICDs that have their containers” requesting that they “waive off ground rent, detention/demurrage charges with immediate effect, failing which the Jurisdictional Customs Commissionerate will be informed for strict actions against them.”

In the meantime, MRAI says “along with its members and all partner associations, [it] has been relentlessly working with the government on providing relief toward container detention and port/CFS ground rent to the importers, whose cargoes have become stuck for clearances at ports on account of the lockdown.”

MRAI indicates the Ministry of Shipping has issued orders more sympathetic to importers and waiving demurrage charges, and the association has “urged Shipping Minister [Mansukh] Mandaviya in a letter to ensure that his ministry’s orders are implemented by maritime logistics stakeholders.”

India remains “under strict lockdown” notes Singh. “Labor is not available, factories and plants are not operational, [there is a] cash flow crunch in the market, employees cannot reach offices to perform necessary work related to imports, banks are working with less manpower, hence it is taking more than four or five days to get documents, courier services are not resumed and the process of clearing the containers is very slow and time consuming, so please plan accordingly to clear the containers.”

Concludes Singh, “MRAI is also exploring various mediums to reach ministers and bureaucrats by phone, and is trying to get their attention through media (electronic/newspapers) and also seeking legal opinions to make sure shipping lines and CFSs adhere to government orders.”