Airports report huge cargo backlog while forwarders want demurrage waiver

April 5, 2020: The air cargo community in India is demanding an unconditional 100 percent waiver of all demurrage charges at all airports in the country as the industry is unable to move their import cargo from the terminals due to 21-day lockdown and shortage of manpower. Meanwhile, airports are reporting huge cargo congestion at terminals and urging forwarders to expedite the clearance of import cargo

Lockdown and Mumbai Airport
The lockdown in Mumbai International Airport (MIAL) was started from March 22 and expected to continue till April 14, for 24 days. All international flights have been cancelled from 22nd March and domestic flights from 24th March. Along with passenger movement, cargo volumes have also been affected in the country due to flight cancellations and Mumbai airport is not an exception. However, freighter operations are allowed to continue at airports.

Manoj Singh, senior vice president & head cargo, MIAL said “Initially exports were very less due to restrictions on non-essential commodities and stoppage of manufacturing activity, but now the volumes are picking up in- terms of Pharmaceuticals, Perishable and few engineering commodities. In imports from the beginning in addition to the essential Pharma cargo we are receiving all non-essential commodities like engineering goods and electronics resulting in huge volumes.”

During the lockdown period, majority of the schedule freighters continued to operate along with ad-hoc charter operations. On an average of 4 to 5 freighters are currently operating on a daily basis with average daily export admittance of around 200 tons and imports of around 250 tonnes.

“We urge all the importers to expedite the clearance of import cargo and support the airport operator to render smooth operations. MIAL vide its circular has implemented the Government decision to waive off 50% demurrage charges accrued to the EXIM consignments due to the Covid-19 pandemic issue,” he said.

“Despite all-around constraints, MIAL has kept the cargo terminal open 24x7. Airport, customs and the concessionaires have deployed manpower and working tirelessly to process the EXIM cargo movements though with limited staff strength even due to the lockdown situation. MIAL has also taken requisite approvals from police authorities and provided vehicles for road transport of staff. Despite these strong measures, the airport is left with huge cargo backlog and congestion as the import clearances are happening at a very slow pace. The freight forwarders and customs brokers are reporting in very fewer numbers,” said Manoj.

Few airports have also come out with innovative solutions like the transportation facilities arranged by Hyderabad International Airport.

The order
The ministry of civil aviation has issued an order on April 1, 2020 by which it has waived 50 percent of demurrage charges levied by airports until April 15. But the order also came with certain ambiguities and conditions which had since confused the air cargo operators and freight forwarders. They are now demanding an order similar to that of Directorate General of Shipping (DGS) which provides a blanket ban on all demurrage charges at all seaports.

Ambiguities
Samir Shah, advisor, Federation of Freight Forwarders Association in India (FFFAI) said “The civil aviation circular is talking about bill of entry being filed, clearance happening, deliveries being taken which all is just not possible. Because how can one take delivery of all consignments lying in air cargo terminals for 21 days in less than 12 working hours on April 16.”
100 percent waiver

“Terminals are owned by private individuals who have made large investments and have to pay a royalty to the government. The government should not charge royalties during the lockdown period and terminal operators must waive all demurrage charges to at least 75 to 80 percent if not 100 percent.”

“Expecting people to go to the facilities for clearance is in complete disregard to the government’s call to follow social distancing. Stakeholders are finding it difficult to reach the facilities because of local administrative restrictions even for essential commodities. Anytime a clearance to be done, we need at least 4-7 individuals from different stakeholders to attend to the same file. When we open it up, we will notice that within an hour or two at least 500 to 600 people will all land up in the same place,” he said.

What is called the demurrage charge?
Demurrage charge is the amount paid by a shipper or consignee or carrier or agent to airport operator or cargo terminal operator for utilizing the storage facility at cargo terminals for keeping cargo, goods, unaccompanied baggage, stores, courier bags, express parcels and postal mail beyond the stipulated free storage time.