What is Demurrage?
Demurrage is a charge applied to containers that are left at the port or rail yard longer than their allotted free time, or past the "Last Free Day." Shippers begin incurring this fee the day after the last free day and it is charged per container / per day until the container is picked up.
How long before demurrage kicks in?
In general, shipments that arrive via air or rail are given 48 hours of free storage time. Ports, however, can range from about four to seven days. However, all ports of entry have their own policies, therefore, it is important to be aware of the demurrage policies along your container’s route.
What are the causes of demurrage?
A shipper can incur demurrage fees for a variety of reasons, some in their control and others not. Here are some common causes:
- The consignee (the person responsible for receiving the goods) was unaware of the arrival time/date of the cargo, and therefore couldn’t arrange Customs clearance and pick up in time
- The consignee did not receive documents in time for Customs clearance and thus pickup
- The documents the consignee received were incorrect or incomplete
- The cargo that was received did not match the sales order
- The container was delayed due to a Customs exam or hold
- 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, you will be charged $7,500 for demurrage. Thus, demurrage can be a serious problem for your bottom line.
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 in advance as possible. This will help ensure that there are available truckers to handle your containers.
- Alternative plans. In shipping, always have a back up plan. It is a good idea, then, to have a second trucker, in case of unprecedented delays.
- Stay informed. Familiarize yourself with port regulations and Customs processes at the destination location and stay in communication with your forwarder so you know where your shipment is.
- Instructions. Share cargo and delivery instructions with all involved parties to avoid unnecessary delays or misunderstandings.
- Special Permissions. If you are transporting food or animal products, consider requesting extra free days to prepare for the possibility of a delay.
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