In Defense of Demurrage and Other ULD Charges

"Taking back control" of ULDs through an industry-wide demurrage system was one of the key ULD CARE initiatives outlined by Bob Rogers, the keynote speaker during the ULD CARE Virtual Conference.

“Somewhere between 5 and 10 percent of airline ULD (unit load device) inventory is ‘off the radar’ and potentially overdue for return at any one point in time,” Rogers, ULD CARE vice president and treasurer.

Rogers said he arrived at that estimate after looking at industry numbers from a number of ULD CARE members.

He explained that any given time, 5 to 10 percent of available ULDs may be unaccounted for. “Imagine trying to run any business and 5 to 10 percent of your productive assets are simply not available on any particular day, or 5 to 10 percent of your staff don’t show up, or 5 to 10 percent of your vehicles are not available for use. And, every day, it’s a different 5 to 10 percent,” he said. “You simply couldn’t run a business effectively.”

Rogers advocated for more control over ULD inventory through an industry-wide demurrage system.       

The maritime shipping industry has a 100-percent demurrage enforcement policy, Rogers said.

“They call it ‘detention,’ but basically when a 40-foot or a 20-foot container leaves the port terminal gate and goes out, the clock is ticking until it’s returned back. The maritime industry – 100 percent. The aviation industry with ULD – close to 0 percent. There’s something very strange here.”

In fact, charges for ULDs are included in the International Air Transport Association (IATA) manual titled, “The Air Cargo Tariff Rules (TACT) Solutions.” Section 4.8 outlines Unit Load Devices Charges. Incidentally, Rogers, an industry veteran, said he himself came across this section about six weeks prior to the ULD CARE’s virtual conference.

He read aloud the first paragraph of this section: “ULDs represent considerable capital and operating costs to airlines, although they also bring improved handling efficiencies. In the normal course of events ULDs move relatively seamlessly through the air cargo supply chain, but there are scenarios where charges could be levied for the use or misuse of ULDs. These would typically vary from one airline to another.”

Section 4.8 gives examples of charges that might be levied: demurrage, replacement or repair, tracking and retrieval, ULD receipt and checking, animal stall surcharge and one-way surcharges.

Rogers pointed out that, according to the manual, the demurrage charged is designed to encourage prompt return of ULDs rather than generate revenue.

For whatever reason, he said these best practices have been ignored.

Rogers further supported the argument for demurrage by noting:

• All other freight industries have demurrage policies.
• The IATA TACT manual makes provision for airlines to charge demurrage.
• FIATA, the International Federation of Freight Forwarders Associations, endorses the need for demurrage in maritime.
• Through implementing a demurrage system, the industry can drive third parties to take greater care of the ULDs they use.