4 Steps to Avoid Losses in Freight Detention and Demurrage
Updated: Dec 27, 2022
It is frustrating when you pay for someone else's mistake. In freight forwarding, demurrage and detention do the same to your customers.
Demurrage and detention charges are fees incurred for failing to load or unload cargo within a specified time frame. The consignor or consignee is the one who usually pays these penalties. These charges can add significant costs and strain to the overall shipping process, so all stakeholders must avoid them whenever possible. Some of the factors causing delays are unavoidable but with a reliable freight ERP, you can better manage your communication and freight movement.
Before we tackle the ways to avoid demurrage and detention charges, let's know more about:
if demurrage & detention are the same
why they are charged
who charges them
who pays for them
Are demurrage & detention the same?
Although both charges are related to the container's timely return, they are not the same. Every container has a certain free period. Post which the shipping line or port charges you.
Demurrage charges refer to the time a non-empty container spends inside the terminal from offloading from the vessel to their pick up.
Detention is the charges you pay for a loaded container not being timely returned.
Who charges these and who is responsible to pay?
Demurrage & detention charges are levied by the owner or leaser of the container on those who lease them. Depending on the country, port, or terminal and the terms agreed between the container owner and container user, the port or shipping line will charge this to the customer or the consignor or consignee. In most cases, the forwarder usually leases the container from the shipping lines. And ultimately, it's the shipper who bears the charges.
How can demurrage and detention be prevented?
Demurrage and detention are the results of miscommunication or failure to manage schedules. Two major areas you can prevent delays are: at the planning stage and the other while communicating.
Step 1: Plan ahead
Visibility is key. Freight software can help in better planning and execution of your container unloading and timely its return. Ensure you allow enough time for loading and unloading cargo. This means coordinating with your carriers and shippers assuring everything is ready to go when the vessel arrives.
Step 2: Be flexible
If you can't avoid demurrage and detention charges, consider being flexible with your shipping schedule. For example, you may be able to negotiate with your carriers to extend the time for loading or unloading in exchange for a reduced rate on the charges.
By having all your communication within a single system, you can avoid delays in customs clearance and container load and unloading.
Step 3: Communicate
If you are running behind schedule, it is important to communicate with your carriers as soon as possible. They may be able to work with you to find a solution that avoids demurrage and detention charges. Having a central communication channel to coordinate with destination agents, customs and other stakeholders promotes clarity.
Step 4: Faster and clear documentation
If customs picks your cargo for inspection, you'll likely incur late fees. While random customs checks are out of your control but incorrect documentation will surely delay your clearance process. With Logi-Sys' e-docket digital documentation, have all compliance documents centrally for pre-approvals.
Bonus step: Use available resources
Many ports and terminals offer services and facilities to help you avoid demurrage and detention charges. For example, some ports have dedicated loading and unloading areas for specific types of cargo, which can help speed up the process.
Overall, avoiding demurrage and detention charges requires careful planning, clear communication, and flexibility. Logi-Sys is your one-stop solution for faster documentation, simplified cargo management, and a central communication channel with customs, agents, and other teams. By taking these steps, you can help ensure that your shipping operations run smoothly and avoid unnecessary costs.