Demurrage, detention and storage of shipping containers are additional costs that are often overlooked by importers. These costs can add up quickly and make the difference between a profitable and unprofitable shipment so it is essential to understand them properly.
Demurrage is a charge for cargo left at the terminal beyond the allotted time. A daily rate is charged for container demurrage, and the container can’t be released from the yard until the demurrage is paid. While your container is sitting on the dock, it can’t be used for access or storing another customer’s cargo so ‘rent’ on the occupied land in the form of demurrage is payable.
As the consignee, you are responsible for returning the shipping container after emptying it. The shipping line will give you a number of free days to complete the unpacking and return process. If the container doesn't reach the depot by the deadline, the shipping company will charge you a detention fee.
Storage Costs Definition
The shipper or consignee pays storage charges for holding trailers and containers at the terminal beyond the allocated free time.
How to Minimise Demurrage, Detention and Storage Costs?
Whether you are an importer or exporter, there are ways you can reduce dwell time to minimise costs.
Demurrage relates to the cargo inside the container. The most important thing to do is familiarise yourself with is the contract. Details of the free allotted days are on the container shipment contract. When you are choosing your shipping line, be sure to ask about demurrage. You may be able to negotiate the number of free days.
Don’t rely on just one truck. You can’t expect a truck to be available to collect your goods on an hour’s notice so have multiple trucks or trucking companies you can call on when your goods are ready for collection. Know when your container is due to arrive and give the trucking company as much notice as possible regarding collection.
Detention relates to the unpacked shipping container. If a shipping container isn’t on a ship, it isn’t making money. Shipping lines need their containers returned to the depot as soon as possible so they can be placed back into circulation to earn an income.
If you think you are going to struggle to unpack and return in the allotted time, discuss it with the shipping company before the contract is drawn up. You may be able to negotiate an extension now, but once the agreement is final, it's much harder.
Make sure your staff are aware of when you are expecting the container to arrive so they can prioritise the unpacking. Don’t assume staff know there is a deadline for the container to go back.
Know how much room you are going to need to store the goods. If you have an idea of the cubic size of your order, you won't need to find a storage solution at the last minute. Here is a handy link to help calculate the volume and weight of your shipment.
Don’t put the trucking company under pressure to get the container back on time. Your deadline is one of many. If there is a hold-up on another job or a truck breakdown, the shipping company will still expect payment of their detention fee.
You don’t want to be asking what is demurrage or what is storage when it’s too late. When it comes to demurrage and detention, there is no mercy shown, and you will receive an invoice.
If you don’t have the time or headspace to be worrying about demurrage and detention, let Vara Allied look after it all for you with our product importing and customs service. When you engage our international freight & shipping agent services, we can handle all of this on your behalf. Vara Allied has built strong relationships with freight forwarders over many years which helps with smoothing out the process.
If you want to cut out all of your importing headaches including the negotiations with shipping lines, call one of the experts at Vara Allied on (08) 6115 0118 or contact us for a quote.