Technology

How Demurrage and Detention Fees Can Be Avoided In The Container Shipping Industry?

The Freight Forwarders who send the shipments through sea freight are aware regarding the demurrage and detention charges. 

Basically, it is fees that were used in the form of compensation to container and equipment owners. This is actually taken in exchange of the container yards, warehouses, containers and freight stations. Moreover, it can help in the time when a shortage of equipment is there. Thus, due to this, turnaround time is very much improved. But, it can sometimes turn out to be unpleasant burden for a number of shipping companies. 

So, in this article, we would discuss about how detection and demurrage fees can be avoided in container shipping industry. Other than this, we would talk about how the charges can be minimized. Let us have a look:- 

What Are The Demurrage And Detention Charges?

Demurrage is basically charge which the shipping company pays if they are using the container beyond the allotted span of time. Generally, the time span that is given by shipping company for using is about 4-5 days. 

The charges which is associated with Demurrage fees is about $75- $150 per container on a particular day. However, you should keep in mind that these charges are just meant for the first 5 days. After this, the charges tend to change and increase. 

On the other hand, detention charges are basically the charges that are paid of using the container once it is outside the terminal. This is basically taken once the free time period gets over. 

The charges of detention are taken according to the container on a daily basis. The difference in amount is due to location, container type and carrier. 

During shipment exportation, the charges for detention start when lifting of empty container is done starting from the yard. On the contrary, the detention charges finishes once the shipments reach out to the port terminal. Finally empty container is handed over to container yard. 

It is normally noticed that detention and Demurrage charges keep adding up once the amount of free days gets surpassed. 

What Are The Causes Behind Detention And Demurrage Charges?

There might be situation that might not be under your control. Hence, under such a scenario, you would need to pay detention/demurrage charges. Some of these circumstances can be labor issues, weather, congestion at port and shortage of equipment or trucks. 

There are times when customs held the container for inspection. Hence, in such a case, you need to pay detention/demurrage charge. 

If incomplete documents are present or there are mistakes in the documents, then extra charge needs to be paid. So, dealing with faulty documents can take up a lot of time leading to detention/demurrage charge. 

There can be instances when exporter takes long time sending documents to importer. In such a case, detention or demurrage charges would be applied. 

There are situations where carriers are not able to release the cargo. These happen due to the problems which are related to payment. Hence, containers being released late at the destination are another factor that can cause detention/demurrage charges. 

Delay can also occur in a scenario when you are not able to get in touch with the consignee. 

How Detention/Demurrage Charges Are Calculated?

Let us take an example of a container that is 20 feet such that demurrage/detention charges can be calculated. 

Not, let us suppose that the container arrives on 8th April and it is picked up on May 2nd. So, in total it is about 25 days when the container needs to be picked. Further, there are few other things using which detention/demurrage charges can be calculated:- 

Total Number of Free Days: 5 days 

Total number of days that are charged with demurrage and detention: 20 

The rate that is charged during the first 10 days: 6000

The rate which is charged after the first 10 days: 12000

Thus, if you need for a span of 25 days, then the charges for first 20 days need to be paid as the first 5 days would be absolutely free of cost. You should also get a detailed Detention and Demurrage report. In this way, you would be able to understand how container shortage and black sailings can affect the detention/demurrage charges. Besides this, tracking container shipments should also be done. 

How Demurrage And Detection Charges Can Be Reduced?

 

  • Make Sure That Shipments Are Ready On Time 

If you want to lower down the charges associated with detention, then make use of the time that container provider gives you. This process starts before even the empty container reaches the location. 

But before doing so, it is important that shipment is ready for pick-up on the scheduled time. After this, the loading crew should load them in a quick manner once it reaches to your location. Hence, container would reach out to the port while the free time is still going on. 

  • Process Of Custom Clearance 

It is very important that the process of customs clearance is handled beforehand. There are a number of independent freight forwarders that do so and it makes their work easy. 

So, you need to make sure that the brokerage tasks of the customs are finished beforehand once the container reaches out to the destination. With this, it will be ensured that container would leave the terminal even when the free time is available.

 So, there are certain set of documents which would be needed which includes commercial invoice, administrative steps, arrival notice, bill and landing, DG document, packing list as well as Import License. 

  • Including The Fees Associated With Demurrage/Detention In The Quote 

If the fees that are associated with detention/demurrage can included in the quote, then you would be saved from a lot of trouble. The demurrage/detection charges should be stated during the day and on the basis of the container. 

  • Container Tracking Through Visibility Platforms 

If you take assistance of real-time visibility solution, then the container can easily be tracked during the transit. In this way, detention and demurrage fees can be kept to a minimum. Hence, with the assistance of intuitive tracking platform, you can do a number of things such as:- 

# Predict the delays that happen at ports. Hence, look at various options such that cargo cam keep moving. 

# You can get real time updates regarding your shipments such that you can know D & D charges. Hence, it is very important that proper action is taken before it gets too late. 

  • Data Usage 

In the global supply chain management, you can find a lot of data. Hence with the help of this data, uniform decision can be taken. Thus, unnecessary expenses can be prevented which includes demurrage and detention. 

So, with the container tracking platform data, here are some of the things that you can do: –

#Get to know the carriers performance and get to know about the carriers that perform well. 

#Understand about the different scenarios related to port congestion 

#Identify the ports that are risky which can cause shipment delays. 

  • Opting For A Good Freight Forwarder 

If you hire an experienced and trustworthy forwarder, then your cargo journey would be planned in a very good way. 

Besides this, they will source the best trucking and carrier companies while offering you a rate which is highly cost effective. 

The best part is that they will handle the customs clearance process as well as documentation. Hence, you will get a storage solution which is perfect. 

Besides this, it is always suggested that you opt for a freight forwarder that is trustworthy. Thus, they would be able to transfer the valuable shipments of customers in right manner. 

  • Use SOC Containers 

If you want to tackle the demurrage/detention fees, then it is recommended that you make use of shipper owned containers. Thus, you need to bring the own box rather than using the asset of the container liner. 

For instance, SOC shipments are one of best choices when transfer is being done to remote locations. Hence, a time span of 35-45 days is taken for the container to get back on the port. 

So, here are some of the ways through which SOC Containers can help you:- 

  • Supply Control 

One of the good things about SOC Containers is that containers can be sourced on your very own. This can come handy for a wide range of locations where the carriers are not able to provide boxes to them. Even when that is available, you are probably going to get it at a very high rate. 

  • Ownership Control 

You get the option to choose the container that you want for a specific time period. Other than this, you get the option to lease or buy the container based on your need. 

Final Verdict 

Above are some of the ways through which detection and demurrage fees can be avoided. 

Moreover, it is important that Ocean Tracking Container should be done. 

So, if you are in search for a platform for ocean tracking, then Vizion API can provide you with the same. 

We have been doing this for over a decade and hence we can match with your needs. 

Thus, contact us to get more details on our offerings.

Gary Anderson

I'm Gary Anderson, talking about logistics and transportation industry

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button