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Demurrage and Detention Fees – What’s the Difference and How Can You Avoid Them?

Feb 22, 2017

It can be frustrating to receive your freight invoice and not understand all the charges. Importers and Exporters often ask about Demurrage and Detention. So, what are these charges and how can you avoid or minimize them? 

Demurrage and Detention.jpgDemurrage fees are charged by steamship lines and airlines for the use of their shipping containers. You are allowed a limited number of “free” days. The amount of free days will vary by carrier and location. Demurrage charges start after you have exhausted your free days. This is to discourage shippers from using their containers to store shipments. 

Typically, demurrage fees will increase per day as time passes. The rate usually stays at one level for a number of days and increases every so many days until they are removed from the port, terminal or depot. These charges can really add up, having a sizable impact on your overall freight expenditures. Unfortunately, the shipper is responsible for Demurrage regardless if the delay, in removing their shipment from storage, is caused by them or by some other source. 

Delays may be caused by issues, such as clearing customs or by required paperwork being incomplete or missing. It is important to note that all demurrage charges must be paid in full before your shipment is picked up from the terminal.

Detention fees occur when shipping containers are kept beyond the allowed “free” time outside of the port, terminal or depot. This could be when import shipments are taken to a warehouse to unload or an export shipment is being loaded into the containers. Detention time is calculated based on when the containers leave the port, terminal or depot through the time they are returned there. 

Detention is also charged when a truck driver is delayed for loading or unloading longer than the normal time previously agreed upon. This may occur, for example, when they are waiting at a terminal to pick up a shipment and there are delays due to excessive port congestion. Like demurrage, detention may be caused by circumstances beyond shippers’ control. Regardless of this fact, shippers are still responsible for these charges.

How to Avoid or Minimize Demurrage Charges

  • Know, prior to shipping, how many free days you’ve been allotted.
  • Have your shipment pre-cleared while it is still in transit to avoid delays once it arrives. This is possible as long as all documents are prepared in advance.
  • If you have large volume shipments, be sure to request extra free time or have your freight representative negotiate it for you. 
  • Make arrangements for your freight to be picked up within the free time period. Confirm that a trucker has been assigned to your shipment as well. 

How to Avoid or Minimize Detention Charges 

  • Make sure that your facility is prepared with sufficient staff and loading dock time to load or unload cargo at the designated time. This will allow truckers to arrive and depart in a timely manner helping you avoid costly delays.
  • Schedule the delivery with your carrier well in advance so there is no last-minute scrambling to set up transportation to or from the port, terminal or depot.

Demurrage and detention fees don’t need to be confusing or unexpected. With sufficient preparation you can gain control of these costs and avoid unpleasant surprises on your freight invoice. 

Preparing a shipment to import or export? For advance assistance to help you avoid unexpected delays or charges, contact American Group. We have years of experience helping to make Shipping.Simplified. You can reach us by calling 866-553-6608 or emailing Rates@ShipAG.com.