Recycling units to lose Rs 22,000 cr as demurrage and detention costs soar

Shipping lines and container freight stations ignore official directives calling for a waiver on these charges

The metal recycling industry is set to lose Rs 22,000 crore to shipping companies and container freight stations (CFS), as the latter have not waived demurrage/detention charges during the nationwide lockdown period.

Due to countrywide lockdown that started from March 25 initially for three weeks and was further extended till May 3, almost all operations in factories came to halt. A large number of Indian buyers had imported scrap (shipped in containers) as raw material and these containers had started piling up at Indian ports.

As per industry estimates, more than 250,000 containers with various metallic scrap have been stuck at various ports across India during this lockdown period. With the average detention charge pegged at Rs 15,000 per container for more than 60 days, the amount of detention/demurrage charged by the shipping lines will be more than Rs 22,000 crore only to the recycling industry.

“The  Ministry of Shipping issued an order dated April 21, and Director General of Shipping on April 22, callimg for a waiver of all charges at ports by shipping lines and CFSs/ICDs (inland container depots). However, many shipping lines, CFSs/ICDs continued to take such charges from importers. If not waived, metal scrap importers will lose Rs 22,000 crore on these charges. These charges work out to as much as Rs 80,000 crore for all importers of essential and non-essential commodities,” said Sanjay Mehta, President, Material Recycling Association of India (MRAI).

In fact, the Shipping Ministry's order specifically mentions the waiver of all kinds of port charges during the entire lockdown period, and 30 days beyond.

“The CFSs have worked interrupted albeit with limited resources during the entire period of shutdown and cleared 104,000 TEUs (twenty-foot equivalent units). If these containers can be evacuated, why not others. The orders from various authorities are proving counterproductive,” Umesh Grower, Secretary General, Container Fright Stations Association of India (CFSAI), in a letter addressed to the Chairman, Jawaharlal Nehru Port Trust (JNPT).

Grower further said that CFSs are employing around 25,000 skilled and unskilled labours and thus, facing severe cash flow issues as their financial work on the turnaround of containers per month.

The metal scrap recycling industry have urged the government to direct shipping companies and CFSs to enforce its orders immediately and waive all detention / demmurrage charges for the entire lockdown period and one month of thereafter as directed. Also, there is an urgent need to declare recycling activity as ‘essential services’ in addition to additional sanctioning and waiver of on working capital. The metal recycling sector has also urged the government to grant subsidy of Rs 2 / unit in electricity charge to help industry overcome the financial stress emerged after the coronavirus (Covid-19) pandemic.