Understanding Demurrage and Detention Charges Amid Global Trade Disruptions

The recent global trade disruptions, triggered by a variety of factors, have significantly impacted the flow of containers worldwide. As a result, importers unable to sell their products are leaving containers stranded at ports. Meanwhile, others, facing financial constraints, struggle to release their cargo. Ports, already stretched thin by the urgent need to deliver essential supplies, are operating with reduced efficiency. This has negatively affected gate in/out operations and truck turnaround times, leading to increased congestion and a higher likelihood of incurring detention and demurrage fees for all stakeholders.

Given these challenges, it is crucial to understand why conditions leading to detention and demurrage are increasing, the differences between these two fees, and the steps companies can take to mitigate them.

What Are Demurrage and Detention Charges?

Demurrage

Demurrage is a daily fee charged by the terminal when cargo remains at the port beyond the agreed Last Free Day. These charges vary by port and terminal but can be substantial, typically ranging from £60 to £160 per container per day. Furthermore, these storage fees often increase progressively the longer a container stays at the port.

Detention

Detention, also known as per diem, is the fee levied by the ocean carrier for each day a shipper holds onto the carrier's container beyond the allotted free days outside the port or terminal. While storing cargo in its container might seem like a convenient short-term solution, the accumulating detention fees can quickly make it an expensive option compared to warehousing. For shippers dealing with full or closed warehouses, there are strategies to avoid these high costs.

Strategies to Avoid or Reduce Demurrage and Detention Charges

Given the recent congestion at many ports and warehouses, it is beneficial to know how to minimise detention and demurrage charges. Here are some key strategies where freight forwarders can provide valuable assistance:

Secure Off-Dock Storage or Additional Warehouse Capacity

Off-dock storage tends to be less costly than port storage. Off dock locations can help find alternative storage solutions that are more economical.

Opt for Slower Ocean Services or Detention In-Transit Products

When storage capacity is limited, slower ocean services or detention in-transit products can be viable options. Informing your freight forwarder at least two weeks before the estimated time of departure (ETD) facilitates better planning.

Consider Alternative Gateway Ports

Choosing less congested gateway ports can also help. For instance, opting for Southampton instead of Felixstowe or London Gateway instead of Liverpool can alleviate delays.

Track Demurrage and Detention Costs Closely

Lack of visibility into arrival times and container availability often leads to higher detention and demurrage costs. Utilise technology and service models that provide easy tracking of inventory in motion to avoid unexpected charges.
The recent global trade disruptions have complicated the management of container flow, making it harder to avoid detention and demurrage fees, which are felt more acutely than ever. Shippers should proactively understand these fees, monitor the conditions that lead to them, and implement strategies to minimise their impact.

For further information on how to reduce detention and demurrage charges, please get in touch with our team.

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