Pentagon paid $720m in container rental late fees [REPORT]
Photo Credit: Maersk Line
And you thought your late fees at the movie store were starting to add up?
According to a report published by USA TODAY, the Pentagon has paid an astounding $720 million in late fees on shipping container rentals since 2001.
The containers, which are used primarily for storage, shelter and building material in Iraq and Afghanistan, are loaned to the DoD in similar contracts to those of private companies moving cargo. And similar to private companies, once the contract term is up, detention fees of more than $2,200 per teu can be applied. Take into account the sheer volume at which the DoD is renting and “the mistaken belief that the wars in Afghanistan and Iraq would be brief”, and the numbers begin to add up quickly.
Late fees peaked in 2004 at $128million. That dropped to $17million in 2008 but has risen with a surge of troops and gear to Afghanistan. In 2010, the Pentagon paid shippers $30million for overdue containers.
Contracts, however, have been modified to limit how much the government pays before it owns the containers, but still, the report states that a rent-to-own arrangement requires the Government to pay nearly $7,400 for a 20-foot container worth just $3,200.
Maersk Line Limited is one of the top recipients of late fees, according to the Pentagon. “When a container is not returned in a timely manner, carriers miss the opportunity to serve a customer,” Kevin Speers, a company spokesman, said . “Detention fees are a common incentive to prompt the on-time return of containers similar to late-fees on a car or movie rental.”
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