Demurrage, detention and storage charges relate to shipping containers and are often overlooked by importers. These charges can add up quickly, sometimes even meaning the difference between a profitable and unprofitable shipment. That's why it's it's essential to understand the types of charges and how they work.
Demurrage Definition
Demurrage charges are payable when cargo is left at the terminal beyond the allotted time. Container demurrage charges are usually calculated through a daily rate, and the container can’t be released from the yard until any outstanding demurrage charges are paid. While your container is sitting on the dock, it can’t be used for access or storing another customer’s cargo, so demurrage charges are accumulated as a result.
Detention Definition
As the consignee, you are responsible for returning the shipping container after emptying it. The shipping line will give the consignee 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 bill the consignee for detention charges.
Storage Charges
The shipper or consignee pays storage charges for holding trailers and containers at the terminal beyond the allocated free time. Storage charges can be accrued for a variety of reasons, such as when a consignee is unable to take delivery from the port, or when containers are required to undergo a customs exam and need to be stored before being approved for release.
How to Minimise Demurrage, Detention and Storage Costs?
Whether you are an importer or exporter, there are ways you can reduce dwell time and minimise the charges payable.
Minimising Container Demurrage Charges
Demurrage charges relate to the cargo inside the container. The most important thing to do is familiarise yourself with the contract, as this will detail the number of free allotted days on the container. When you are choosing your shipping line, be sure to ask about demurrage charges. You may be able to negotiate the number of free days, which can lower the charges you may have otherwise paid if you didn't negotiate.
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.
Minimsing Detention Charges
Detention charges relate to unpacked shipping containers. 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 any containers to arrive so they can prioritise the unpacking. Don’t assume staff know there is a deadline for containers to go back, as this could lead to additional charges if staff aren't able to finish unpacking before the allotted time.
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 the detention charges to be paid.
Know Your Charges
You don’t want to be asking 'what is demurrage, detention and storage?' when it's too late. When it comes to these charges, there is no mercy shown - you can expect to receive an invoice.
If you don’t have the time or headspace to be worrying about demurrage and detention charges, let Vara Allied look after it all for you with our product importing and customs service, which allows us to arrange customs and quarantine inspections if required. 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.
