Shipping lines deny ripping shippers off

The Ship-owners and Agents Association of Ghana (SOAAG) has come out strongly against allegations that its members are milking importers and exporters with high demurrage charges.

“We want to put it on record that demurrage is an opportunity cost against the shipping lines. We do not want demurrage income because at the end of the day, the shipping line loses more if it does not get the containers to other markets where they are needed,” Vice President of the association, Adam Imoro Ayarna, told the B&FT in an interview.

Demurrage is money that shipping lines/agents charge importers and exporters for failing to return containers within the mandatory seven days period.

According to the Ghana Shippers’ Authority (GSA), shippers pay between US$22 to US$48 and US$44 to US$96 per day on demurrages for the 20-foot and 40-foot containers respectively.

The authority also revealed that shipping lines raked in a total of US$40 million in demurrages in 2010, US$85 million in 2013 and US$100 million in 2016—but the figures have been denied by SOAAG.

Former CEO of the GSA, Dr. Kofi Mbiah, at a recent seminar on container demurrage, organised by the Chartered Institute of Shipbrokers (ICS) in Accra, sought to imply that demurrage was wrong money going to the shipping lines at the expense of shippers.

But Mr. Ayarna refuted those claims, saying “this issue about shipping lines milking the shipper is neither here nor there”.

To buttress his argument, the SOAAG boss indicated that beyond the mandatory seven-day grace period, about 60 percent of imports that come to the country enjoy extended demurrage free days from 14 to as high as 60 days.

“Also, in order for us to get back our containers, we give waivers of almost 70 percent to shippers whose containers have attracted demurrage,” he indicated.

According to Mr. Ayarna, the issue of shippers having to pay up millions of dollars at the ports in demurrage charges is attributable to a number of factors and it was unfair for shipping lines to be called out and given bad press.

“It is very unfortunate when people talk about this because it is not healthy for the economy, especially when industry experts who understand these things mix it up and couch it in a way that makes shipping lines look bad.

We are talking about congestion and bureaucratic processes in the ports and all of these add up to it, just as we cannot say the GPHA is charging rent because they want the containers to sit at the port,” he explained.

SOAAG’s contribution to the economy

The 13 shipping line agents—SOAAG members—operating in the country contributed a total of GH?183.3 million in taxes and other contributions to regulatory bodies in the maritime sector.

This amount comprises GH?89 million in Value Added Tax and GH?17.2 million in corporate taxes. A total of GH?51.7 million was paid to the Ghana Shippers’ Authority while the Ghana Maritime Authority received GH?17.2 million in fees, with the remaining GH?8.2 million being withholding taxes.

In terms of jobs, Mr. Ayarna indicated that shipping agencies boast a direct workforce of 840 aside being very instrumental in the transfer of knowledge and technical expertise in the maritime industry.