Demurrage and detention are the charges that can escalate above the original value of your cargo and lead anyone into shock. Shipping itself involves plenty of charges- right from packing of goods till it reaches the receiver’s point. Adding unwanted charges such as demurrage and detention comes to be not less than a nightmare. Call it unplanned, undesirable, or anything, but it's something that ruins the entire budget planning and can lead anyone to pay a huge sum at a time. When it is such a horrible, why not do something that could block its way. To help you to get rid of them, we have made a list of things that can be very beneficial in restricting these charges coming your way. But before we head on, let us know what actually demurrage and detention charges are. Demurrage Demurrage refers to the charge that the merchant pays for the use of the container within the terminal beyond the free time period. It relates to cargo means when the cargo hasn’t been unloaded yet from the containers. In a direct way, it can be said that the charge is levied when you use the port or terminal space for more than the given time frame. For example- you ordered goods from California to the port of Shanghai. And you couldn’t reach the port and collect your goods on time. For longer time in customs clearance as expected, the port of Shanghai will levy a charge known as demurrage. The rate is multiplied by the number of days or part of the day above the agreed laytime. Detention Detention refers to the charge that you pay for the use of the container outside of the terminal or depot, beyond the permitted time frame. It relates to equipment in which both scenarios can be possible-container can be either empty or loaded with cargoes. It usually happens in export when the empty containers after shipment have not been returned to the carrier. Usually, the carrier allows for some free time, within which the container should be returned to the carrier. With delaying days, the carrier starts adding a per day charge known as detention. For example- You hired a few shipping containers from a carrier company to ship your cargoes from Duisburg to the port of Miami. He gave you a free time of 15 days. But unfortunately, due to some contingencies, you returned the container after 20 days. In that case, the carrier company will levy a penalty for keeping the container for extra 5 days. The charge is called detention. How to avoid demurrage and detention? Acquire SOC: The best way to escape yourself permanently from detention charge is by acquiring SOC Containers. SOC are Shippers Owned Containers solely owned by shippers (one who wants to ship goods). Unlike COC Containers, owning SOC Containers offer benefits because you have no liability towards the third party (carrier companies). Containers being your own property can be used for any number of days. When you use your own boxes, you have control over its supply, ownership, shipment, and everything. Even during the high season when the carrier company sometimes goes out of stock, you can still be safe. There is an immense number of advantages to owning SOC Containers. But owning SOC Containers is economical when you have constant needs for import and export. For shipment that emerges once in a while, buying SOC will make no sense. In that scenario, you should implement other things like- Manage your Shipment Wisely: To avoid demurrage and detention, you should have a better management plan for your shipment. Plan and manage everything beforehand. Contact supplier, transporter, carrier company, etc, and fixed schedule with them. Try making every booking in advance to avoid a last-minute hurry. It also gives more flexibility and a bigger time frame to keep extra time for customs clearance. Time is often unpredictable. Make Bookings in Advance: Try to dispatch cargoes as far in advance as possible. Start with pro-active planning. Making a pre-booking for repositioning, transportation, and shipment helps avoid a lot of last-minute contingencies. It enables operators to schedule pick up and/or delivery. Make sure you are prepared for everything in advance, including customs clearance, proper documentation, paying taxes, duties, and generally staying two steps ahead of the actual arrival of the cargo. Also make sure that the suppliers, shippers, and trucking companies are ready to take action when the cargo arrives. Keep a Smooth Flow of Communication: Sometimes, bad communication can mislead your planning and ruin up everything. Proactive communication with each of the stakeholder involvement in your shipment is very crucial. It eliminates chances of disasters. Talk to your stakeholders and make sure both of you agree to the same terms and conditions and have the same understanding of the date, time, quantity, port, etc. Always have a plan B Maybe you have planned everything very efficiently, but contingencies can hit any time. But it should not hinder your shipment. For example- if you’re dealing with a particularly congested port, having an alternate option for a trucker could be a lifesaver when time schedules become tight. For that, you need to keep a plan B ever ready. Keep alternative transporter, supplier, carrier informed. Look for their availabilities during your date. Having a plan B can save you from a lot of mess that often shows up at the last time. Request to Extend Free Time: This is another way through which you can avoid demurrage and detention charges. Try to negotiate terms instead of accepting a freight quote as it is. Though this trick mostly works when you have a good relationship with the suppliers or carrier. Usually, every carrier company works on their own policies by which they allow you some free time for returning the container. In that case, he can negotiate in your free time and can allow you for a few more days. It also works mostly in the case of larger shippers, since they are based on the volume of containers you have with you. You can’t eradicate demurrage and detention, but the above points will at least help you to avoid them to a large extent. We would never want you to pay a hefty amount as a penalty. Being a container trading platform provider, we intent to help you with the right information, right product, and right services. Let us know how did you find this article and how you are going to implement them while planning for your next shipment.
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