You’re Curious. Demurrage Fees, What are They?
Demurrage fees easily rank as one of the top annoyances in shipping, especially for those who ship internationally. It is an additional charge that can eat into a business’s bottom line when a shipment cargo sits for one too many days in the shipment holding areas at ports or terminals. To put it more simply, when a container shipment is dropped off and left at a terminal past its allotted time, the shipper will need to pay an additional amount for each day the container is left at the terminal.
So, what’s the point of these fees? These fees are a necessary evil because they help make logistics more efficient. The fees discourage shippers from leaving their containers in the container yard longer than is necessary, which helps facilitate the movement of goods. With hundreds of containers passing through ports in the US every day, too many containers stuck in one place would cripple the entire port system and subsequently, the entire US logistics network.
Detention Fee, A Brother to the Demurrage Fee.
Now, shippers often get confused over the terminology between demurrage fee and detention fee. They are very similar to each other in that they both are additional charges to your shipping cost, but there’s a distinct difference between the two.
Demurrage fees are tacked on for shipping containers that remain in the container yard past the “free time” (allotted time given to the shipper to move their cargo) and can range to hundreds of dollars per container per day. On the other hand, detention fees are charged to shippers for container use outside of the port/terminal beyond the free time until the container is returned. If you’re not careful, it’s easy to be charged both demurrage and detention fees, which would quickly add up and sink profit.
How To Avoid These Fees?
Demurrage and detention fees, though common, are avoidable. All you need to do is avoid delays! Of course, that’s easier said than done with the many outside factors that plague supply chains such as natural disasters, policy changes, etc. However, what can be done is to keep on top of your shipments and track your containers so that you can prepare for any sudden changes.
One such way is through a tracking system that uses real-time tracking software to keep you updated on your cargo. A tracking system like this can greatly reduce human errors like forgetfulness. Another way is to hire freight forwarding companies that often offer services like shipping containers at preferential rates or customs clearance. Freight forwarders are experts at organizing shipments along with their wide network of contacts domestically and internationally. Due to their expertise, they handle the organization of containers and shipments on a daily basis which will help you reduce your cost.
Hence, these 2 methods are among the most effective in curtailing the rising cost of demurrage and detention fees. Now, if you are looking for a freight forwarding company with decades of experience, Falcon is the right choice for you and can offer you a free quote for your shipping needs.
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