In our TSI Spotlight series we’ll be covering important topics within the logistics industry. We’re kicking off by putting the spotlight on Demurrage and Detention, a topic under fire at the moment. We’ll cover the basics and then take a closer look at how these charges can be reduced or even avoided.
What are Demurrage Charges?
When goods are being imported, demurrage charges are the costs to the consignee for any delays in picking up such goods from the port after they have been unloaded from the vessel. Demurrage charges differ from carrier to carrier, port to port, and the type of equipment being used.
When it comes to exporting, situations where a container is delivered to the ocean carrier but remain in port for an extended time period due to reasons that cannot be ruled out, or miss the sailing completely, may also have to pay demurrage charges. The charges are fixed per container, per day.
What are Detention Charges
After a container has been discharged from a vessel, it is taken from the port to the customer’s premises and offloaded. The empty container (commonly referred to as empties) has to be returned to the port where it was picked up from, or to the empty container depot. If the customer is delayed in returning the empty container, after a certain number of days the carrier will start charging the customer. These are known as detention charges, and they are also charged per container, per day.
When goods are being exported, an empty container is taken to the customer’s yard to be filled with cargo for export. The loading needs to be completed on time so that the container can be returned to the port to be loaded onto the ship. Delays here or missed sailings will also result in detention charges being applied by the ocean carrier.
Can Detention and Demurrage Charges Be Reduced or Avoided?
Detention and demurrage charges can indeed be reduced and even avoided. For the most part, detention and demurrage charges are avoidable, however, container turnaround time is essential if businesses want to avoid or reduce these charges. This requires proper planning of labour, equipment, transport and administrative functions. Businesses also need to take into account how long each step of their import or export process will take and allow extra time in case there are delays.
Did you know that if you are a customer of TSI, we manage your demurrage and detention for free? Our technology gives us a total view of your supply chain, which helps us plan ahead. We also know what’s going on around the world when it comes to shipping, making decision-making easier. Visit our website to find out more.