Importers and exporters are facing a problem: demurrage. It’s often a surprise for them — both in terms of suddenness and financial loss. Fall 2014’s peak season proved how port congestion can make steamship lines increase demurrage charges and worsen the situation for importers. Careful planning and monitoring of loading/unloading operations and the drayage process can help shippers avoid demurrage fees.
What is Demurrage?
Demurrage is a fee charged by a carrier, port, or railroad company for the storage of containers or rail cars that exceed free time offered for loading/unloading. Once free time is expired, the shipper is charged a daily demurrage fee until the cargo is removed from the terminal. Charges differ based on the terminal or carrier and typically range from $75 to $150 per container, per day, during the first 5 days and can go even higher if the container stays longer.
Do not confuse Demurrage with Detention fee:
Demurrage relates to cargo (while cargo is in the container/railcar) and is paid to the port. It is charged for the storage of containers with cargo that exceeds free time at the terminal.
Detention (per dime) relates to equipment and is paid to a freight carrier company. It is charged when the shipper keeps the container beyond free time or when trucker waits extra time during loading/unloading containers
Causes of Demurrage
Even if the shipper does its best to plan loading/unloading and has all necessary paperwork, there are other external factors that could affect deadlines and cause demurrage. Late freight release or custom release of containers, damaged containers, or overweight containers are some reasons a shipper could be charged a demurrage fee.
Although, the most common reasons of demurrage are trigged by a shipper’s actions:
6 Tips for dealing with Demurrage
Love this ? Read these posts next: