Demurrage & Detention – Avoid Additional Fees and Save Costs 

Demurrage & Detention – Avoid Additional Fees and Save Costs 

30. September 2020

High costs due to delays in freight transport are not uncommon. Especially during the corona pandemic, in which container traffic is affected by various disruptions, it is more difficult to avoid charges such as demurrage and detention. But in many cases, it is already possible to save additional costs by simply adjusting the processes. 

What are the reasons for additional demurrage and detention fees ? 

Demurrage is a charge levied by the shipping company when loading and discharging times are exceeded and containers require more time at the terminal than agreed. The standard “demurrage-free time” is approximately 3-5 days. If this time is exceeded, a fee is charged per container and day. The number of days under the grace period and the fees vary depending on the port and terminal. A detention fee may also be added if the container is not returned to the shipping company in the “detention-free time” after unloading the goods. Unnecessary delays should therefore be avoided in all cases. 

Reasons for delays

There are many reasons for delays. There can be problems with customs, the container may not be made available by the container terminal or accepted by the recipient in time. Port congestion can also lead to considerable follow-up costs. Other reasons often lie in processes that can be easily changed. One example of this is documentation: Documents are delayed, documents are missing, faulty or have been lost. Lengthy communication channels lead to simple processes being unnecessarily long. This not only costs time, but above all can lead to additional costs. 

Avoid delays and additional demurrage charges 

Thorough planning of the entire transport process and including time buffer is essential. However, despite planning, disruptions can often not be predicted. A backup plan with an alternative route should therefore be included , e.g. in case of port congestion.

Negotiate “demurrage-free days” and compare prices

At some ports, additional “demurrage-free days” can be negotiated for large cargoes. For example, it may be worthwhile to choose the port of Rotterdam instead of Hamburg, as the authorities in Rotterdam are often more willing to negotiate. In some cases,  there are also opportunities to store the freight economically outside the ports. If one compares the ports of Hamburg, Rotterdam and Antwerp, the demurrage and detention charges are on average cheapest in Antwerp. There are also big differences between the shipping companies when it comes to charging fees.

Keep processing times short

In order to keep the processing time for releasing containers as short as possible, one should always be well informed about the requirements on site and check whether certain goods may require special permits. It should also be ensured that all the necessary documents are available on time. 

Planning the return of the container

In order to avoid a detention fee,  enough time should be planned for the return of the container and, if necessary, additional “detention-free days” should be negotiated. It should be kept in mind that not every country has empty container depots outside the port, so containers sometimes are required to be returned to the port over a long distance. Therefore, the existing infrastructure is an additional factor that is decisive for determining the duration of transport.  

Creating transparency

Another point is the creation of transparency. Areas of responsibility and tasks should be clearly defined and assignable, so that ambiguities can be avoided. The importance of smooth communication between all parties involved should not be underestimated either. After all, a rapid exchange of information helps to enable rapid actions and reactions.  

Digitizing processes

 Digitalization plays a key role. Whether it is the automation of processes, digital solutions for better communication or apps for tracking a delivery: there are plenty of opportunities to optimize the supply chain. With digital tools, goods deliveries can be monitored transparently  and processed faster.

The digital supply chain platform offers an efficient and cost-effective solution for this purpose. It captures and transparently maps international flow  of goods and information along the entire supply chain across platforms, furthermore it facilitates communication between all partners. Documents can be uploaded directly onto the platform, so that important documents no longer get lost in countless e-mails. All parties involved are always up to date and in the event of a disruption it is possible to react quickly and appropriately to the situation.

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