How To Reduce the Demurrage And Detention Charges

Are you wondering why your container was charged detention or demurrage due to delayed delivery or return? And what’s the solution to reduce or mitigate these container demurrage and detention charges? No worries, your organization can take plenty of intelligent measures to reduce demurrage and detention fees or even avoid them altogether.

Let’s explore intelligent ways to reduce demurrage and detention fees in logistics through this blog post.

What Are Demurrage and Detention Charges?

Demurrage fees are charged to each container daily beyond the discharge date until the cargo is taken out of the port.

Freight detention charges in logistics, meanwhile, are charged daily per container from when the shipment is taken out of the port until the containers are returned to the shipping line’s pre-defined depot.

Because of terminal congestion, these freight detention fees have been increasing and becoming a high cost if measures are not considered to reduce freight detention and demurrage charges.

Difference Between Demurrage and Detention Fees – A Quick Comparison

Here is a quick comparison table highlighting the differences between demurrage and detention fees.

Aspect	Demurrage	Detention Fees
Definition	Charges incurred for the delay of cargo in port	Charges for the extended use of shipping containers beyond the agreed free time
Applicability	Occurs at the port during unloading/loading process	Applies to containers held by the consignee or shipper outside the port area
Purpose	Encourages swift cargo turnover in ports	Encourages efficient container usage and timely return
Charged By	Terminal or port authorities	Shipping lines or container companies
Calculation Basis	Based on time cargo spends in the port	Based on the time containers are retained
Timeframe	Calculated per day or per specific time unit	Calculated per day or per specific time unit
Responsibility	Usually borne by the cargo owner or importer	Usually borne by the consignee or shipper
Waivers/Exemptions	Can sometimes be waived due to port-related issues	May be waived under specific circumstances
Impact on Operations	Affects port congestion and cargo flow	Impacts container availability and logistics
Dispute Resolution	Handled between cargo owner and terminal	Resolved between shipping line and consignee
Documentation	Typically mentioned in the bill of lading	Stated in the container usage terms
Penalties for Non-Payment	Can lead to cargo detention or other penalties	Can lead to restrictions on future bookings

7 Tips to Reduce the Demurrage and Detention Charges

Proper planning for your equipment, labor, transport, and paperwork can reduce your demurrage and detention fees or even prevent them altogether. Here are 7 tips for keeping your demurrage and detention fees to a minimum:

Negotiate on contractual terms and conditions

Demurrage, detention fees, and your number of free days are all clearly stated in your transport contract. This agreement serves as a clear reference for understanding the charges and timeframes associated with your shipments.

Carefully plan and track your containers

Plan on shipping and returning your containers as soon as possible. It will help you achieve more flexibility and a longer timeline in case unavoidable challenges arise, such as severe weather or backlogs at the terminal. The same goes for loading times: little time buffers can make a big difference.

It’s also vital to track your container throughout the entire transit and be prepared for its arrival. Align with a digital forwarder that uses the latest technologies to make this possible. This is necessary for keeping demurrage and detention fees to a minimum.

Always have a backup plan

A good forwarder reviews for alternative freight rates and services and even search for available terminals nearby if your freight is redirected. If anything goes wrong with your original transport plan, having other options in mind is essential to avoid excessive fees.

Understand local shipping practices

To prevent demurrage and detention fees, you must be aware of customs clearance procedures and policies at the terminal. It is also critical to remember that even geographic location can play a significant role as different countries put different customs rules.

Do your research to determine whether you are shipping to a destination where long clearance times pose a risk.

Choose a reliable forwarder

An experienced forwarder possesses knowledge of local practices and understands how to negotiate with shipping lines to ensure you get more free days for your container. They know customs policies and how to select the right partners at the destination port.

They work with a global network of independent agents with local expertise to deliver your freight quickly. Shipping lines may also give forwarders more time, lowering the risk of demurrage and detention fees.

Invest in Supply Chain Visibility

When you are still deciding exactly when your cargo will arrive, bypassing demurrage and detention fees becomes all the more challenging. Unfortunately, announced ETAs often need to be more accurate, and anomalies that could lead to significant delays are also often difficult to foresee.

This makes it vital to invest in supply chain visibility solutions. In addition to delivering a wealth of other benefits, creating a fully transparent supply chain can go a long way toward reducing your demurrage and detention fees by guaranteeing that you can always track the location and status of your freight.

Implement the Right Technology

By employing appropriate technology, you can enhance your supply chain in several ways, such as maintaining document organization and obtaining real-time container tracking for supply chain visibility. This helps in optimizing your supply chain and reducing demurrage and detention fees.

Wrapping up

Shippers can minimize these fees by using exception management and proactive alerting to lower their transportation costs and maintain a competitive advantage. To discover more about how you can reduce detention costs with innovative tech solutions, contact the team Fretron today.