Can you hold statutory authorities liable for additional cargo costs in your country..?? pcr

If you are in the business of international trading of goods, you would have experienced this one thing..

Whether you are an importer, exporter, carrier, trucker, clearing agent, broker, freight forwarder, or in any other way connected to the shipment..  No one is exempt from this.. And that is………….

ADDITIONAL & UNBUDGETED COSTS

These costs can occur anywhere and anytime and in many cases, these costs are quite prohibitive leading to cargo abandonment, revenue loss, business loss, and write-offs..

There are several reasons why these costs can occur.. Chief among them are

This article looks at “Delay by authorities”..

Authorities

Authorities involved in container shipments include entities such as Customs, Ports, Police, Immigration, Health & Safety, Narcotics, Food, and other bodies of Government who have the obligation to keep the country’s borders and trade safe..

All these bodies are authorised to stop and inspect goods with or without approvals, warrants, or notice to anyone at any juncture..

It could be after the cargo has reached the port, before it reaches the port, while in the port, before it leaves the port, en route from the port, on the road, at the warehouse, or while unpacking..

So, basically anywhere in the chain..

What are these costs..??

Some of these costs are

1. Demurrage
2. Detention
3. Storage

1) Demurrage in an import shipment is a charge levied per day by the shipping line to the importer from the expiry of free days till the time the full container is picked up for unpacking..

2) Detention in an import shipment is a charge levied per day by the shipping line to the importer from the time the full container is picked up till its return as empty to a depot nominated by the shipping line..

It is also common that both these charges are combined and called Combined Demurrage/Detention which is levied per day by the shipping line to the importer from the expiry of free days till the empty container is returned to a depot nominated by the shipping line..

Another form of Detention is Trailer Detention which occurs when the truck/trailer is detained at the customers’ premises for either loading or unloading for more than the allowed window period..

The free period varies depending on the country and cargo being unpacked and is usually agreed upon when the contract is established..

3) Storage in its generic sense is a charge levied by an entity that is storing goods for a customer for a period of time.. Storage is different from demurrage and detention.. In the case of container shipments, storage can occur at a port/terminal where it has been discharged or it can occur at the private storage depot that it has been moved to, from the port..

How does an inspection trigger these costs..??

As we know, in container shipments, exporters and importers get a fixed amount of free days to either pick up an empty container and pack it with goods in the case of exports or to pick up a full container, unpack it and return the empty container to a nominated depot in the case of imports..

Depending on the type of inspection and the authority(s) the same container can be stopped for inspection by different authorities..

For example, food cargo can be stopped by food, health authorities, and/or customs for inspection for different reasons..

If the cargo requires some lab testing before it is released, the cargo may be kept in the same container or unpacked at a warehouse/depot under hold..

In some cases, we have even seen squabbles between authorities in terms of who is allowed the first right of inspection..

And these inspections do not always happen at the same time or when the customer wants them.. It happens when the authorities are able to do it..

While this inspection or process are happening, the container and/or trailer may be incurring demurrage and detention or storage leading to these costs..

If the cargo is unpacked in a 3^rd party warehouse for inspection in order to free up the empty container and avoid demurrage/detention, there will still be costs for unpacking and possible repacking of the goods and further transportation costs..

Customers are by and large left without any recourse when such costs are incurred.. I don’t know of any precedent where a customer has been able to successfully claim any amount from any of the above-mentioned authorities when the inspections are unduly delayed..

Customers (importers or exporters) usually end up paying for these unbudgeted and additional costs by themselves..

In terms of non-allocatable costs, apart from the delays by authorities, the other areas where these costs can occur are due to lost or delayed original documents which are required for negotiation clearance or release..

What is the practice in your country with regards to inspections by statutory authorities.. Are there inordinate delays leading to these avoidable costs..?? Do you have any recourse..??

Share your experiences in the comments below..