DP World rate hike hits traders
Many food traders in Dubai are now threatening to shut their businesses after DP World tightened container storage rules at Jebel Ali Port and increased the demurrage rates by as much as 166 per cent, Gulf News has learned.
Last month, DP World notified shipping lines, agents, traders and port users that from November 1, new storage charges would be applied for all imports of full containers at the ports, to increase yard space and improve overall productivity of the terminals.
Containers can still be stored at the ports for five days without charge. Daily rates for storage between the sixth and 10th day have gone up from Dh30 to Dh80 per 20-foot container and from Dh60 to Dh160 for every container measuring over 20 feet. Charges from the 11th day are pegged at Dh150 daily for every 20-foot container and Dh300 per container over 20 feet. These rates are also applied from the first day of arrival if containers are not cleared within 10 days.
Traders and companies in Dubai who import and store their goods, materials and other supplies at the ports said the new rates will have a negative impact on their business, as they need to allot more money to cover the tariff adjustments.
Those who will be badly hit are food traders, who supply goods to major retailers and supermarkets, as well as other companies that import in bulk or huge quantities because they find it difficult to clear their shipments within the free five-day period. The lack of storage facilities in Dubai is also making matters worse.
"I'm losing nine per cent on every trade I do because of this. My profit margin on food has never been more than 4.5 per cent. So this practically wipes off my profit. I've done business here for 34 years, but if I end up paying and losing a lot of money, where is the incentive for me to stay in this business," a spokesperson for Dubai's Foodstuff Trading Group, that represents 2,500 food trade firms, told Gulf News.
The source said about 300 traders in Dubai are facing the same dilemma and are banking on DP World to provide them some relief, such as granting a refund, exemption or reverting to the old rates.
"Earlier, we used to pay Dh1,000 to Dh2,000 for every ten-container consignment. Today, we're paying about Dh20,000 to Dh30,000. Some companies like mine have hundreds of containers, so this will be more difficult because there's no other storage facility available in Dubai," the spokesperson said.
"Also, this kind of notice should have been given to us three months in advance so we could redo our trade or import less. I learned about it only on November 2," he added.
DP World's chief executive Mohammad Sharaf defended the decision, saying that it is intended to decongest their yards, ease the flow of cargo traffic and improve the overall productivity of their terminals.
"This is not a money-making strategy. We're doing it to reduce the congestion at the port. When the rates were still cheaper, our yard was being used as a cheap warehouse. Now, you can see there's no more congestion.
The goods are moving much faster. There are no more ships waiting. Overall, this is for the good of Dubai's trade," Sharaf told Gulf News. He would not comment if the new rates will be permanent, but he said they "don't want to take the risk" of restoring the old tariff structure, as it might just encourage traders to store their shipments longer at the ports.
"We want to serve more traders with more boxes, more cargoes moving in and out of Jebel Ali. We can't afford to let cargoes sit in the yard for a long time. Otherwise, it will become a huge warehouse," he added.
He said traders can approach them if they feel the new policy is causing problems. "They can let us know what their issues are so we can help them. Our job is to keep the flow of cargo as smooth as possible. If the problem is on our side, we will fix it, if it's on another authority, we can coordinate with them," said Sharaf.