What is Demurrage?
All importers and exporters attempt to avoid additional fees that may come with shipping a package. Often, demurrage, detention and storage are unanticipated fees that can build into multiple charges.
Depending on the country and company, you may even run into the possibility of some of these fees being applied in addition to another fee. These fees increase if your cargo remains in a terminal. It’s important to double check terminal records and proof of delivery. Fortunately, there are ways to avoid demurrage or negotiate with a shipper.
What is Demurrage?
Demurrage is a fee attached to cargo that has overstayed its time at a terminal. These fees can be enforced by port officials. Depending on the vendor, terminal, warehouse or container station, fees and policies can vary.
The amount of time you must pick up your cargo without being charged varies from vendor to vendor. Typically, cargo arriving by sea has four to seven days without being charged. However, less time is given to open top or special containers.
Detention vs Demurrage
In some countries, demurrage and detention are combines but it in others it is classified as separate.
Detention charges are added to the storage or holding of containers under the care of a customer outside of a port, rail terminal, feeder terminal, inland depot or container yard. Detention gets applied after a designated free time.
This varies from demurrage, which are charges applied to storage of laden containers while under the care of a port, rail terminal, feeder terminal, inland depot or container yard. This fee is charged once a designated free time has been exceeded.
Storage vs Demurrage
Once a container is discharged off a ship it is moved to the CY area within the port. When a customer completes clearance with customs and prepared to deliver a container, they will move the container from the CY area.
All ports offer a free period to allow customers time to process regulations and deliver shipments from the port. Sometimes the consignee may not be able to take delivery from the port because of documentary, financial or contractual problems.
At times containers will be stuck at a port. This will affect the overall productivity of the port and yard space. As a result, ports will levy a charge on containers that haven’t been moved within a specific amount of free time.
Some ports will move the container to a private depot to alleviate the storage charges from becoming too high for the customer.
Demurrage is a charge imposed by a shipping line to the consignee if the container isn’t cleared and returned to a designated empty depot in specified free days.
11 Ways to Avoid Demurrage
- Know the do’s and don’ts for importing.
- Ask for cargo import requirements that may be held by customs or authorities.
- Identify cargo
- Request that a shipping line and/or shipper supplies extra free days in case of delay for cargo that will require special permissions
- Make sure that you’ve seen the product you’re purchasing to reduce problems when your shipment arrives.
- Talk to your shipper and the shipping line frequently to verify the status of shipping documents and the shipment. Most shipping lines don’t accept liability for non-notification of cargo arrival.
- You must talk to your bank if your shipment falls under a letter of credit. It may also be beneficial to ask that documents are released.
- An express release may be more beneficial in avoiding delays if your shipment doesn’t fall under a letter of credit or doesn’t have an original bill of lading. An original bill of lading tends to have longer delays in terms of approval.
- If a shipper requests an original bill of lading to safeguard his payment, you should ask that they secure a Telex Release. This will help to avoid delays while waiting for an original bill of lading.
- Cargo and shipment delivery instructions should be provided to all parties. Vendors and third-party providers should be notified in advance for trouble-free loading and unloading process.
- Utilize a professional freight forwarder that can look out for a shipment and make sure cargo arrives on time without demurrage or other additional fees.
Crowley’s Speed to Market can Help Deter Demurrage
Looking to avoid demurrage charges? Crowley Logistics’ services are fast and efficient. Our integrated supply chain solutions work to ensure detention, storage and demurrage charges are a thing of the past. Get in touch with us today to see how our speed to market is your competitive advantage.