As a
Consignee, your shipment has arrived, but for some reasons, you have been
constrained. The only option is to be granted a few days to put things together
and pull your consignment off the shipping line, otherwise be issued demurrage
charges. The horror note of a demurrage charge notwithstanding has negative affects
you don’t want to record.
In this post, we’d be dealing
with what demurrage is, its causes, how to avoid demurrage and the right place
to get free consultations and top-notch professional supports.
In shipping, different conditions
attract different charges. In most cases, a consignee may have planned for some
extra fees to be spent, but might not be certain about the major causes of some
of them. The reason being that there are numerous charges as well there are
causes for the charges.
In order to get a near stress
less passage at the shipping terminal, importers are required to ensure that
all due processes are passed. This is to avoid a possible increasing demurrage
charge when importing.
Table of
Contents
What Is A Demurrage Charge?
Demurrage is a charge levied by the shipping line to the
importer in cases where they have not taken delivery of the full container and
move it out of the port/terminal area for unpacking within the allowed free
days.
For simplicity, Cambridge Dictionary defines Demurrage as
money that must be paid when
a chartered (= rented) ship is used
for longer than agreed, or
when goods are collected later than the agreed time after
being taken off a chartered ship.
Both importers and exporters may
encounter the ills of a demurrage charge at different levels. To an importer,
the fees are charged when the import containers are still full and under the
control of the shipping line. But to an Exporter, the fees are charged when
In such a situation, the
consignee is yet to pick up the container and the free time for pick up
(usually 5 days) set at the sea terminal is expired. Most usually, the free
period starts when the container has been discharged from the vessel to the
terminal.
Demurrage charges are applicable from the point where free time
elapses and ends on the day the container is picked out of the terminal.
Demurrage charge, regardless of
preparation, is a terror-igniting compulsory charge in shipping, just like an under-declaration notice and other extra
charges. It usually not a comfortable fee as it has a tendency of increasing on
a daily basis, due to delay in the customs process.
Some Major Causes Of Demurrage
Various factors are responsible
for demurrage, all linked to some sort of delays. Although delay may not be
separated from shipping, they can be avoided by ensuring all precautions are
attended to.
Some of the most common reasons
for demurrage are as follow:
1. Consignee did not receive the
documents in time for customs clearance
2. The documentation received by the consignee is incorrect or lack sufficient details
3. Customers, Police or other authorities may stop the container for inspection of the cargo causing delays.
4. The Consignee was probably not aware of the arrival of the cargo and was unable to do the customs clearance in time
5. Lack of adequate finances to fund the clearing of the container in time.
6. Disputes between shipper and consignee
7. Wrong Cargo received was not as per the sales order.
2. The documentation received by the consignee is incorrect or lack sufficient details
3. Customers, Police or other authorities may stop the container for inspection of the cargo causing delays.
4. The Consignee was probably not aware of the arrival of the cargo and was unable to do the customs clearance in time
5. Lack of adequate finances to fund the clearing of the container in time.
6. Disputes between shipper and consignee
7. Wrong Cargo received was not as per the sales order.
Other factors include delay in
payment (or full payment). In a situation where the shipper paid only a
fraction of a shipment, the freight may not be released by the vessel until
full payments are made. Any delay in such payment definitely leads to cargo
detention, which consequently causes demurrage.
Another major cause is errors
from the paperwork. A shipper needs four documents properly processed without
which demurrage charges will definitely take place. They are:
i. A commercial invoice
ii. A bill of lading or airway bill
iii. A packing list
iv. An arrival notice
ii. A bill of lading or airway bill
iii. A packing list
iv. An arrival notice
These four are paramount,
although there might be other specific-goods required additional documents.
Important Information!!!
Most times, the shippers or freight forwarders may be the major cause of demurrage. There are incompetent, unqualified forwarders with limited ideas about freight forwarding business who most of the time, sparks demurrage.
Most times, the shippers or freight forwarders may be the major cause of demurrage. There are incompetent, unqualified forwarders with limited ideas about freight forwarding business who most of the time, sparks demurrage.
They ought to be avoided
strategically, and early too.
But with the help of a Licenced
Customs Agent or professional freight forwarder for adequate consultation, you
might just be a step away from an ‘aha moment’.
How Long Before You Are Charged To Pay Demurrage Fee
Your shipment or cargo is allowed
at the terminal for 4 – 5 days free time. This implies that your cargo is
likely occupying the storage that could serve other incoming shipments.
After the free duration expires,
you will be charged subsequently, a daily fee for using the storage facility.
This charge continues until you move the cargo from the terminal. Charges
generally increase the longer the cargo stays on the terminal, and it varies.
Difference Between Demurrage And Detention
Basically, these two are charges
for shipment where the customers have used up standard free time.
Only that, while demurrage is a
levy issued when the customer occupies the facility inside the terminal for
longer than the agreed free days, detention is levied a customer for using the
facility outside the terminal longer than the agreed free time.
These vary from one country to
another. Contact us for more details.
How To Avoid Or Reduce Demurrage Charges?
Demurrage and Detention are in
most cases out of your hands and hard to control. However, there are ways to
minimize risk and avoid unnecessary charges.
Negotiate Terms
Always try to negotiate terms instead of accepting a freight quote as it is. Negotiate with your carrier and request more free days to buy you more time. That might work as a strategy to avoid Demurrage and Detention as carriers sometimes grant shippers with large volumes of cargo some more time.
Always try to negotiate terms instead of accepting a freight quote as it is. Negotiate with your carrier and request more free days to buy you more time. That might work as a strategy to avoid Demurrage and Detention as carriers sometimes grant shippers with large volumes of cargo some more time.
Always Have a Plan B
Asses alternative truck rates, other truck services or even look for available terminals nearby in case your cargo needs to be rerouted. If everything goes wrong with the initial plan, it is important to have another option to avoid large costs.
Asses alternative truck rates, other truck services or even look for available terminals nearby in case your cargo needs to be rerouted. If everything goes wrong with the initial plan, it is important to have another option to avoid large costs.
Efficiently Manage Time
Most importantly, dispatch your cargo as far in advance as possible! This gives you more flexibility and a bigger time frame for handling unforeseen challenges such as bad weather or backlogs at the port. The same is applicable to loading times, where just small time-buffers can make it for you!
Most importantly, dispatch your cargo as far in advance as possible! This gives you more flexibility and a bigger time frame for handling unforeseen challenges such as bad weather or backlogs at the port. The same is applicable to loading times, where just small time-buffers can make it for you!
Be Well-Prepared
Don’t make the mistake of signing a contract just as it is. Always be informed and read through it carefully, as the per-diem charges and fees are ultimately determined in your contract. Further, ensure that you are in good knowledge of the customs clearance processes and port regulations. Be on the safe side and understand that even geography plays a huge role, as different countries have different definitions.
Don’t make the mistake of signing a contract just as it is. Always be informed and read through it carefully, as the per-diem charges and fees are ultimately determined in your contract. Further, ensure that you are in good knowledge of the customs clearance processes and port regulations. Be on the safe side and understand that even geography plays a huge role, as different countries have different definitions.
Bring Your Own Container
It was always a pain in the arse to find shipper owned containers (SOC) as you had to reach out to your network, get lucky, and organize everything on your own. Container xChange now made it easy to use or supply containers for SOC for one-way use on their neutral online marketplace. Using their online platform, you save up to $200 to $400 or completely avoid Demurrage and Detention as their per-diem fees are below $5 per container.
It was always a pain in the arse to find shipper owned containers (SOC) as you had to reach out to your network, get lucky, and organize everything on your own. Container xChange now made it easy to use or supply containers for SOC for one-way use on their neutral online marketplace. Using their online platform, you save up to $200 to $400 or completely avoid Demurrage and Detention as their per-diem fees are below $5 per container.
May We Be Of Help?
Contact Bowagate Global Limited Today
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our how to avoid customs debit note and other Services?
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are open during business hours, so you can speak to a real person. Or send
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