The intricacies of shipping include many different procedures, issues, and steps that are essential to know if you are in the business. In large cargo shipping, the process is almost never something you understand until you actually work in it. Shipping isn’t just getting things from point A to point B. Demurrage and detention can occur as a part of picking up a shipping container from the harbor, so it is important to understand that process in order to understand what is demurrage and detention in shipping.
Picking Up Cargo from A Port
When a large cargo ship arrives at a port, the large shipping containers need to be moved quickly and efficiently. These containers travel thousands of miles from Asia, Europe, or other continents around the world. When these arrive at a US port, there are certain rules and regulations that apply to picking them up. These vary from coast to coast, but they essentially follow the same basic rule: these shipping containers need to be picked up and moved as soon as possible.
Why is Timely Pickup Essential?
Hundreds and thousands of shipping containers arrive at a port every week, if not every day. These containers are unloaded into the port and have to be stored somewhere. Every port has vast areas for storage, but they are still limited. If every vendor picked up their order quickly, storing these containers wouldn’t be a problem, but unfortunately, people don’t pick them up when they say they will. This leads to organizational and storage issues for the ports. These shipping containers are not small, and not every large truck can move them. Specially designed chassis and weight-bearing trucks are needed to move these effectively. This is where demurrage and detention come into play.
Demurrage Meaning
Demurrage charges are a type of fee that applies to shipping containers in a port. When these do not get picked up within the window the port allows (usually between 4-7 days), the company meant to receive the cargo has to pay the fees before they can take their shipping containers offsite. Some ports will even move the container to another location which could be difficult to organize for the receiving company. The word “Demurrage” actually comes from old French, and it means to linger or tarry. This reflects partially why these demurrage charges are so important to know about and to avoid.
Demurrage Charges
Demurrage charges are avoidable and having your shipping company always on time is essential. You are wasting money when you have to pay demurrage charges. Demurrage charges can also be applied to cargo for which the shipping charges are not paid in full. Some ports will hold cargo if all charges are not paid, which results in demurrage charges as they are detained.
Detention vs. Demurrage
Detention fees are often confused with demurrage fees, but they are not the same thing. Detention fees often occur when a shipping container is not brought back to the port on time. Most people do not know that almost all shipping containers do not belong to the company that purchases the goods. Most of the time, they go back to the port and go back across the ocean, taking other goods or just going back to the place they came from. This means that the shipping containers have to be emptied of their goods, then returned to the ports. The easiest way to remember the difference between detention and demurrage is simple: Demurrage charges apply to containers at the port, and detention charges apply to containers away from the port.
Ways to Avoid Demurrage Charges
The best possible way to avoid demurrage charges is by planning ahead. Making sure that you have everything in line in your supply chain is critical to your success. When you let one part of your chain slip, it can really set you back, resulting in setbacks every time. Know your schedule and know what needs to happen when your container gets into the harbor.
Clearing with Customs
Another important factor is to make sure your container will get through customs. Pre-clear your goods with customs. If this means paying extra, it may be worth it to avoid any demurrage charges.
Shipping Details
Lastly, share all of your shipment details with all of the companies involved. If you involve a company like ours to help you, let us know ahead of time when a shipment will be arriving so we can be ready to assist you. Sometimes demurrage charges accrue because a company does not have a place to store the shipping container before they are ready to unload the container, which is why we offer some short-term and long-term storage for certain goods. This can help you avoid demurrage, and we can get it to where it needs to be so you can unload your goods and return the container in a reliable manner. These are simple and useful ways to avoid demurrage.
Ways to Avoid Detention Charges
Many of the same tips apply to avoiding demurrage or detention charges, however, the biggest factor for detention is ensuring that you have a place to unload your goods and a place to store them. Warehouses and workers are essential. You may be able to find a company to help you store your goods or to unload your shipping containers as well. We are happy to deliver your container to whichever location you need. Remember, having your supply chain in order is absolutely essential to running any business which transports these goods.
Demurrage and Detention
Demurrage fees and detention fees are mostly avoidable. Obviously, circumstances won’t always be perfect, but if you are prepared and have the help you need from a choice company, you will be able to avoid these charges and save your money. Remember that keeping your company in business means good planning, preparation, and working with the right people. Avoiding fees with shipping will be better for you, your company, and your consumers.
