Demurrage payments decline to $19m in 2021 – Ghana Shippers’ Authority
The Ghana Shippers’ Authority (GSA) says the estimated demurrage payments by Shippers have declined from $76 million in 2017 to $27 million in 2019 with a further decline to $19 million in 2021.
Ms. Benonita Bismarck, the Chief Executive Officer of GSA, said the decline in these payments was because of the Authority’s campaign against demurrage over the period.
Ms Bismarck gave the estimated figures during a seminar on container demurrage on the theme: ” How to Avoid Demurrage.”
Factors that contribute to the payment of container demurrage include delays in the receipt of cargo documentation, lack of prior information on vessel arrivals, lack of funds to clear cargo, declaration of inaccurate information, non-compliance with regulatory requirements, and deliberate delay due to some ulterior motives.
She said in response to the staggering figures generated by the Authority’s research team as amounts estimated to have been paid in demurrages by Shippers, there was no doubt that urgent action was required to stem the trend.
Consequently, the Authority has since 2018 embarked on a nationwide sensitization campaign, engaging shippers in both small and big groups, with a simple message that ‘Demurrage is avoidable’.
She said the downward trajectory of these figures was eloquent testimony of the impact of the combined effect of the sensitization campaign and very bold government initiatives and interventions in the cargo clearance process like the Paperless Port Project and pre-arrival declaration in the ICUMS.
The CEO said these improvements notwithstanding, the goal of the Authority was 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.
She said in collaboration with some key stakeholders, the Authority had been dealing with some pertinent industry issues that border on costs, delays and general service quality issues within the shipping and cargo clearance space.
“This process had required engagements with a number of the shipping lines with far reaching recommendations necessary to improve and sanitize the industry,” she said.
The CEO said information gathered randomly from five Shipping Lines/Agents operating in Ghana revealed that over 500 containers consigned to various State-Owned Agencies remained uncleared at the ports as of September 9, 2022.
She said 49 containers remained at the Port for 2000 days and above, 116 containers stayed between 1000-1999 days, while 78 containers remained in there between 500-999 days, 205 containers for 100-499 days containers 60 containers stayed for up to 99 days.
She appealed to Chief Directors, Chief Executives, Managing Directors and other relevant Officers of Ministries Departments and Agencies/State-Owned Enterprises to take urgent action to ensure that consignments were expeditiously cleared from the ports to mitigate the use of State resources for such avoidable costs.
Mr Emmanuel Ohene, Deputy Commissioner, Suspense Regimes, Customs Division of the Ghana Revenue Authority commended the management of GSA for their consistent campaign on demurrage aimed at throwing sufficient sunshine on how to avoid demurrage and thereby improve shippers’ competitiveness.
He said there had been tremendous innovation in the cargo clearance platforms from Automated System for Customs Data to Ghana Customs Management System and now to ICUMS.
“In today’s world where knowledge and the search for the best ways of doing things with cutting edge technology have become a sine-qua-non for the survival of organizations, shippers must make the needed adjustments that guarantee their survival in the highly competitive business milieu,” he added.
Mr Emmanuel Arku, the Head of Research and Monitoring Department of GSA said Shipper education was required to ensure that Shippers do the right things such as starting the clearance process before vessel arrival, submission of genuine documents and getting ready with funds for the clearance process.
Other measures are securing licenses and permits before cargo arrival.
He said some of the impacts of demurrage on the economy includes dwindles profits and working capital of Shippers, leads to higher product costs on the market, affects volume of imports, reduced revenues and taxes, and increases cost of living in the country.
It also affects competitiveness of Ghana’s exports, high cost of exports, and it was a foreign exchange drain on the economy (demurrage paid in foreign exchange).