If the situation in Egypt keeps deteriorating, ship lines will refuse to enter its ports. During events like “civil strife” and “acts of God,” steamship lines protect their crews and vessels by anchoring a few miles outside of the port. There they wait until the situation improves. If the situation does not improve, the vessels head to the nearest port to offload cargo intended for the troubled nation’s port.
Like oil rigs, vessel costs can be measured in the tens of thousands of dollars per day. It costs a lot of money to have a ship waiting day after day in international waters waiting to land. Someone pays for this waiting time (a.k.a. “demurrage”). It isn’t the owner of the vessel who pays. It isn’t the operator. It is the cargo owners: the shippers and consignees. It is often very late in the day when the shipper or cargo owner realizes that they are on the hook for hundreds of thousands of dollars to the steamship liner. Worse, the steamship line ensures they get their money immediately by demanding “cash against docs.” This is a euphemism for holding cargo hostage.
Demurrage and detention clauses that subject the cargo owners to pay these costs are found on the back of the bills of lading. As a matter of fact, most important contractual language of the bills of lading are in the boilerplate on the back of the bills. On the front of the bills are the details of who, when, where. These are the most paid attention to details, but they are just that: details. The boilerplate verbiage on the back is derived from decades of experience by the steamship line about all the dangers of international shipping. They are finely honed in how to protect themselves against these dangers of international shipping.
With respect to demurrage, it often is charged on a pro-rata basis. Whatever percentage of the vessel’s hold is one shipper’s cargo, that percentage is what they owe per day. Other times, it is spelled out in the booking, as in “detention $15,000 p/d” or something to that effect. This is when good freight forwarders who have negotiated favorable rates for their customers are separated from the bad ones who have not negotiated well on behalf of their customers.
Texas International Freight has a peanut combine on its way to the Port of Alexandria at the moment. Because of how we booked the cargo with the steamship line, the US seller of the peanut combine will owe nothing to anyone if the cargo cannot land in the Port of Alexandria, Egypt.
The turmoil in Egypt may yet wash out across the Suez Canal and into the world of freight. That is when some unlucky shippers will realize that some dangers of international shipping are not minor, fixable, and annoying. Some dangers of international shipping are rare, expensive, and gut-wrenching. But in any event, the dangers of international shipping are almost always foreseeable.
Hidden Dangers of International Shipping – Cheap Freight Forwarders
Cheap freight forwarders do not invest time and resources to helping their customers avoid this fate. That is what makes them “cheap.” They save their customers tens of dollars on every shipment for years, only to cost their customers hundreds of thousands of dollars just once. More sophisticated buyers know that dependability saves them money every shipment by saving them from the horrible costs they know they will never face.