10 Tips to Reduce Container Detention and Demurrage Charges
With demurrage and detention fees on the rise in ports across the country, finding innovative ways to minimize these fees is becoming increasingly important. To help you create an optimized supply chain that will keep the demurrage and detention fees that your company incurs as low as possible, we'll take a look at why these fees are on the rise in today's global economy before diving into 10 tips and strategies that you can leverage to reduce container demurrage and detention charges.
Demurrage and detention fees are charged when cargo is left at port past the "free time" window. This window will vary in duration from port to port and shipping line to shipping line but typically falls in the range of 3-7 days.
Though the terms are often used interchangeably, there are some key differences worth pointing out in the demurrage vs detention comparison. Demurrage fees are charged per day per container for every day past the date of discharge until the cargo is moved out of the port. Detention fees, meanwhile, are charged per day per container from the time that cargo is moved out of the port until the time that the containers are returned to the shipping line's designated depot.
Due in large part to terminal congestion, these fees have been steadily climbing in recent months and can quickly become a substantial expense if steps to mitigate freight detention charges and demurrage charges are not taken.
We've already mentioned the fact that ports and shipping lines will provide a window for pickup after the cargo has been discharged from the vessel before any detention and demurrage fees are assessed. However, it is possible to negotiate ahead of time for a longer "free time" window. In addition to negotiating for a longer window to pick up your cargo, it is also sometimes possible to negotiate for lower fees as well.
While avoiding demurrage and detention fees altogether is by far the best way to minimize their impact on your organization's bottom line, this isn't always an achievable goal. When choosing the ports and shipping lines that you would like to do business with, therefore, it is important to consider their detention and demurrage rates in case you do end up being forced to pay these fees. While this might not be the most important factor to weigh when choosing transportation partners, it is certainly something that is worth considering before you sign a contract.
Issues with customs can often create substantial delays once your cargo arrives at the port if you don't have all of your i's dotted and t's crossed. You'll want to start by making sure you have a thorough understanding of the customs clearance processes and port regulations that you will be required to follow, keeping in mind that these processes and regulations can vary from country to country and port to port. Next, make sure that all of the necessary paperwork is complete, accurate, and free of errors. Managing customs efficiently is certainly not the most challenging aspect of supply chain management, but it is an essential objective all the same in order to avoid delays that could lead to high demurrage charges.
When finalizing your shipping schedule, it's always a good idea to allow as much time as possible for delays and exceptions. Ensuring that you dispatch your cargo as soon as possible is one simple way to create more flexibility in your schedule in the event that poor weather, backlogs, or other exceptions create delays. The same advice applies to scheduling loading times for your cargo as well.
On average, cargo that is shipped internationally requires between 9-18 documents to see it from point A to point B, with many shipments requiring even larger amounts of documentation. Keeping up with all of these documents can often be challenging, but even a simple error on a single document can sometimes create delays that lead to large demurrage and detention fees. To ensure that all of your documents are complete and accurate, investing in a digitized documentation solution is one great option to consider.
If your inland facility is not immediately ready to receive your cargo, you may want to consider moving it to an off-port storage facility in order to avoid demurrage charges; In some cases, paying for third-party storage is less costly than paying demurrage fees to keep the cargo stored at the port. With that said, it is important to keep in mind that you will stay have to pay detention fees until the containers are returned to your shipping line when deciding whether or not it makes sense to pay for off-port storage.
Booking intermodal transport through your shipping line is an option that may be able to help you avoid demurrage and detention fees. When you choose carrier haulage, your shipping line will be responsible for arranging intermodal transport once your cargo arrives at the port, taking on all liabilities including demurrage and detention charges. As with off-port storage, though, it is important to consider the expenses of carrier haulage before deciding if this option is a cost-effective solution.
The more options you have available in the event that your plan A is disrupted, the better prepared you will be to navigate exceptions and delays that could otherwise lead to significant fees. Having alternative trucking services and alternative terminals on deck, therefore, is something that can make you far more agile if and when issues arise.
When you don't know exactly when your cargo is going to arrive, avoiding demurrage and detention fees becomes all the more challenging. Unfortunately, advised ETAs often end up being wildly inaccurate, and exceptions that could likewise lead to substantial delays are also often difficult to foresee. This makes it essential to invest in supply chain visibility solutions. In addition to providing a wealth of other benefits, creating a fully transparent supply chain is something that can go a long way toward reducing your demurrage and detention fees by ensuring that you are always able to track the location and status of your ocean freight.
From helping you keep track of important documents to helping you achieve supply chain visibility through real-time container tracking, leveraging the right technological solutions can help you optimize your supply chain and limit demurrage and detention fees in a variety of different ways.
At Expedock, for example, we provide 3PLs with a centralized source of data that offers complete supply chain visibility in addition to document digitization and the ability to automate a wide range of time-consuming tasks. In addition to freeing up space in your team's schedule by automating many manual tasks, Expedock can also help you limit the demurrage and detention fees that you incur by ensuring accurate documentation and complete supply chain visibility.
At Expedock, we are committed to providing supply chain managers with the cutting-edge solutions they need to automate the manual tasks that take up an average of 40% of their team's time while also helping them achieve complete supply chain viability and effortless collaboration between partners thanks to data that is standardized and easily accessible. If you would like to see for yourself the many benefits and uses of Expedock then be sure to contact us today for a free quote.