Demurrage and detention charges are intensively unpleasant for the customers who use container transportation. On the other hand, these charges are crucial tools for carriers to keep container flow and yard stock. We will examine what are these charges and their purposes. We will also try to find out some ways to avoid these charges in this article.
What are demurrage and detention charges?
Demurrage: The charge paid by the merchant for the use of the container inside terminal beyond the free time period.
Demurrage Time: Demurrage time is the period from container discharge from the vessel until gate-out of the full container from the terminal.
Detention: The charge paid by the merchant for container use outside terminal, beyond free time period.
Detention Time: Detention time is the period from gate-out of the full container until gate-in of the empty container into the empty return yard.
What are the main purposes of demurrage and detention charges?
The FIATA (International Federation of Freight Forwarders Associations) describes the main purposes of demurrage and detention charges as two different subjects.
The first purpose is the “compensation to the shipping line for the use of its container” which basically means the lease cost of the container as steamship lines are the owner of those containers. They’re providing these containers on a temporary basis for the projected transit time, and they are billing extra usage days as demurrage and detention charges.
The other important purpose of demurrage and detention charges is “incentive for cargo movement, ensuring that merchants return containers as soon as possible for a fast turnaround.” This basically means that the carriers are eager to keep their container stocks in their control and make sure empty container flow is properly provided to exporters.
How can you avoid detention and demurrage charges?
Most of the demurrage and detention charges are occurring because of the lack of proper planning. Also, the customs clearance process, missing documents, and miscommunications contribute to demurrage and detention charges.
We can point out the most effective ways to avoid demurrage and detention charges as follows:
- All customs and shipping documents must be prepared in a proper way prior to arrival.
- All payments must be done as early as prior to arrival, and must be finalized prior to the cargo’s full release.
- Trucking partners must be arranged and shipment must be assigned as early as prior to arrival.
- The warehouse/depot must be properly and promptly informed and they must be organized for incoming containers.
- Communication with all related parties must be excellent to avoid misinformation.
All of this points to fact that early action is the most important element to avoid demurrage and detention charges.