With no end in sight of the USA China trade war, and the Chinese New Year approaching, US ports are experiencing chaotic schedules. This is causing drayage trucks to wait in line for many hours at a time as they shunt freight within the ports. The situation is leading to thousands of dollars of penalties in demurrage and detention charges for shippers and carriers.
How we reduce demurrage and detention charges at US port
What is demurrage and detention
Demurrage and detention are the costs that occur when the number of allowed days for a shipper to use a container free of charge is exceeded. When the free period has lapsed, the shipper is subject to a daily demurrage and detention fee.
Causes of demurrage and detention
The most common cause of demurrage is when the shipper delays payment. When a shipper pays only part of a shipment, the carrier can refuse to release the freight until the shipment is paid in full. Any delay in payment can lead to cargo detention within the port, and can result in demurrage charges. Other more general causes of demurrage and detention in ports occur from:
- Inadequate planning
- Unexpected circumstances
- Poor communication
Difference between demurrage and detention
The difference between demurrage and detention is that the demurrage relates to cost from time the freight remains loaded in the container, while detention relates to cost from the time an empty container is retained without being returned to the carrier. Demurrage and detention costs vary according to carrier and port. It is important for shippers to be aware of these two costs as they can quickly run into several hundred dollars per day per container.
How to avoid demurrage and detention costs
Adam Excell, US Sales Manager at Freight Forwarder Quote Online, said, “In our experience, demurrage and detention costs have generally resulted from events well beyond our control. There are, however, several steps we take to reduce the risk of these undesirable and unplanned charges.”
“We negotiate with carriers and port officials to request a few more free days for your cargo, so as to avoid any demurrage and detention costs. If this fails, we always negotiate any demurrage and detention quotes instead of accepting any as is. As we move so much freight through so many ports, we know who to whom we can reach out when situations get chaotic.”
Negotiation with carriers and port officials will help give a shipper more time to develop a strategy to deal with the situation causing the demurrage and detention. It is common for port officials to grant shippers additional time when large volumes of freight are involved.
“If the initial plan of negotiation does not work, we then look at assessing alternative trucking services and availability in nearby terminals to see if we can resolve the issue by rerouting the freight,” said Adam.
Proactive freight management is another important step to take in avoiding demurrage and detention. The volatile times we have now from the USA China trade war can lead to unanticipated port delays. Adam pointed out that, “It is critical to dispatch freight as far in advance as possible. Any additional time that can be added to a shipment will provide a buffer that gives shippers greater flexibility to handle any unexpected situations.
There are platforms now available that allow for containers to be easily exchanged. Shipper-owned containers (SOC) can be borrowed by shippers for one-way use, saving on demurrage and detention charges. SOC fees are cost-effective compared to conventional container hire – they are often less than $5 per container per day. “After the free period has lapsed, the longer it takes you to return a container the more expensive things are going to get,” said Adam.
You can have almost no demurrage and detention costs when you use SOC. Further, bringing your own freight container would make you independent from carriers and other shippers. It would give you a lot more time to return the container to a specific location while paying less than $5 per day as a penalty. But you have to look at how much and how often you are moving freight to see if using your own container is feasible.”
Need assistance with international shipping?
Situations where drayage trucks are stuck in the middle of unexpected port delays are not good for anyone. The drayage trucks face many issues, such as deadheads, long waiting times and unpredictable truck turn times.
Let the team at Freight Forwarder Quote Online help with your international shipping and reduce demurrage and detention charges at the ports should this situation arise. We offer a full range of international shipping services and are confident we can give you the help you need.
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