What is Demurrage?

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Demurrage

      

What is Demurrage?

Demurrage is a storage fee for containers that are left at the port or railyard after the "Last Free Day." This fee is charged per container / per day until the container is picked up. Demurrage charges start after you have exhausted your free days.

  

How long before Demurrage kicks in?

Generally, ports offer 4-7 free days of storage before they start charging you per day / per container. However, each port and terminal has its own rules on this, and it’s best obtained at the time of booking and during the transit time. 

   

What are the causes of Demurrage?

Demurrage fees may start to incur as a result of a variety of reasons.  Here are some common causes: 

  • The consignee was unaware of the arrival time/date of the cargo, and thus was unable to arrange Customs clearance and pick up 
  • The consignee did not receive documents in time for Customs clearance and thus pickup
  • Documentation received by the consignee is insufficient or incorrect
  • The consignee lacks the finances necessary to clear the container in time
  • The cargo that was received did not match the sales order 
  • The container has been stopped for inspection of the cargo, which sometimes takes long
  • There was a dispute between the shipper and the consignee

    

How much does Demurrage cost?

The cost of Demurrage charges vary depending on carriers, terminals, and contractual agreements. However, they tend to be anywhere between $75 to $300 per container/ per day. After several days, the charges can grow to more significant amounts. 

For example, if you are shipping 10 containers, and are late to pick them up for 10 days, with Demurrage charges of $75 per container / per day, your charges are going to look something like this: 
 

10 x 75 x 10 = 

750 x 10 = $ 7,500 for 10 days / 10 containers
  

How can I avoid Demurrage fees?

Though Demurrage fees are very common and often unavoidable, there are a few ways in which you can avoid incurring Demurrage charges. 

Plan ahead- arrange your pickup as far ahead as you possibly can, this will make sure that you have available truckers to handle your containers.

Alternative plans- it is always a good idea to have a second trucker, in the case of unprecedented delays.   

Stay informed- make sure you are familiar with port regulations and Customs processes in the destination location. 

Special Permissions- if you’re transporting food or animal products, you may want to consider requesting the shipper to arrange for extra free days to prepare for the possibility of a delay.

Instructions - share cargo and delivery instructions with all involved parties to avoid unnecessary delays. 

   

  

 

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