Demurrage and detention charges have been widely used in logistics services. If you are new to this import-export industry, ensure you learn more about the charges. It will help you control your shipping expenses as much as possible.
What are Demurrage and Detention Charges?
Demurrage charge is raised when the full container is not moved out of the port/terminal for unpacking within the allowed *free days. Whereas detention charge is raised when the empty container has not been returned to the nominated depot within the agreed *free time.*Free Time:
The free time determines the number of days a shipper can use the container for free. If the free time is exceeded, the user has to pay a demurrage and detention charge. In case of booking cancellation, no free time is applicable.Who Charges it?
Containers are owned or leased by shipping lines, hence demurrage and detention are charged by them. Such high per diem charges might be unjust and unreasonable for project freight forwarders. However, shipping lines impose these charges to ensure the efficient use of their containers. A few years ago, these charges were minimal and rare. However, today they are quite common and can easily exceed your shipment budget.What Causes Demurrage and Detention?
Demurrage and detention charges can arise due to one of the following reasons: –- Miscommunication or delays caused due to incorrect or incomplete documentation.
- Late receipt or loss of documents. For example, a sea freight exporter in India is late in sending the documents to the other partners/parties that are involved.
- Customs clearance delays. Containers being held up by customs for inspection and examination.
- Improper handling of goods.
- Circumstances beyond your control – shortage of truck/trolleys, labor strikes, terminal congestion/ traffic, bad weather/natural disaster, the Covid-19 pandemic, etc
- Delay in payment etc.
Can Demurrage and Detention Charges Be Reduced or Avoided?
The answer to this question is, yes! Proper planning, availability of labor, transport, and appropriate administrative functions can reduce or even avoid these charges. Having an effective communication network with contacts at the port, clearing agents, etc. is also crucial. In most cases, demurrage and detention are hard to control in the freight forwarding process. However, the good news is that they can be seriously mitigated with the help of an experienced, customer service-oriented project freight forwarder. A reputed and experienced project freight forwarder will help you in the following ways.- The freight forwarder will let you know when the last free day is for a given shipment
- They will monitor the progress of the shipment
- Will offer alternative solutions should the possibility of demurrage/ detention arise
- Will offer budget-friendly service.