Demurrage fees (pronounced \di-ˈmər-ij\), as well as detention and storage charges, were originally introduced as fair compensation to equipment and facility owners for the usage of their equipment and facilities – including containers, container yards, freight stations and warehouses.
These charges are used as an incentive to return the equipment or free up the storage space as quickly as possible. Often times perceived as an unexpected additional freight cost, they can prove frustrating to ocean freight customers. How can you avoid demurrage fees, as well as detention and storage charges? When does “free time” start? How long does it really last?
Our DHL Global Forwarding Ocean Freight experts take the complexity out of sea shipping, so you can avoid bad surprises and reduce your transportation costs.
The Difference Between Demurrage, Detention and Storage: It Is All about the Container’s Location
These charges apply for the usage of container equipment inside the port terminal. Demurrage fees are billed per container and per day by the ocean carrier, and the charged amount will vary by location and equipment type.
During the export phase, demurrage starts when the container enters the port terminal, and ends when it is loaded onto the ship or when the ship departs. The ocean carriers decide on the effective end of the demurrage period, depending on the container’s type and location.
During the import phase, demurrage starts when the ship arrives at the port or after the container has been discharged. Similarly to the export phase, ocean carriers decide of the starting date of the demurrage period, factoring in both the container’s type and location. Demurrage ends when the container is picked up from the terminal for delivery by truck, rail or barge to the consignee.
For demurrage, providers have to offer a reasonable free-time period in all instances.
These charges are similar to demurrage fees, but they arise outside the port terminal. Detention is billed per container and per day, and the charged amount will vary by location, carrier and container type.
During the export phase, detention starts when the empty container is picked up from the container yard, and ends when the full container arrives at the port terminal.
During the import phase, detention starts when the full container is picked up from the terminal, continues during its delivery to the consignee, and ends upon return of the empty container to the container yard.
For detention, providers have to offer a reasonable free-time period in all instances.
These charges cover the usage of storage space occupied by the container on terminal grounds, inside a warehouse or at the container yard.
For both import and export, the storage period starts when the container enters the storage facility, and ends when it is taken out from the premises.
Did you know? Demurrage and Detention in South America
In most South-American countries, the meaning of “demurrage” and “detention” is inverted. In these countries, “demurrage” refers to the time containers spend outside the port, while “detention” refers to the time spent on port grounds. Make sure you and your overseas business partner share a common understanding of the terms you agree upon.
Demurrage, Detention and Storage Free Time: Be Mindful of When the Clock Starts Ticking
A certain number of free days are granted to customers before any demurrage, detention or storage cost is charged to them. The exact number of free days depends to a large extent on the location and selected ocean carrier, but is also influenced by the equipment and facility type. In some warehouses, no free time is allowed at all.
These factors influence the amount of free time customers can enjoy. But importantly enough, they also govern which event and date will trigger the counting of days.
For example, import demurrage may start during vessel unloading, or after unloading is completed; but it may also start directly upon vessel arrival. Considering that unloading a ship typically takes 2 to 3 days, but may take up to a week in exceptional circumstances, it goes without saying that this seemingly small difference greatly impacts the final price of the bill.
While these charges cannot always be avoided, they can be significantly reduced with coherent planning and proactive communication.
1. Make sure your cargo is ready on time
To reduce detention charges, make the most of the free time allowed by the equipment provider. Setting your shipment up for success starts before the empty container arrives at the shipper’s location. By making your cargo ready for pickup on time, the loading party can take quick action when the container reaches the shipper’s location, and load the container more rapidly. That way, your container may reach port grounds before the free time has run out.
2. Be Smart About Customs Clearance
Pre-clear your cargo through customs if you can. By working with the right freight forwarder to manage your customs brokerage, the documents needed for import clearance are collected in advance, and all administrative steps are completed by the time the container reaches its port of arrival. This may allow for the container to be moved out of the terminal before the free demurrage time ends, thus also minimizing storage.
The documents you will need for customs clearance and handling
- Bill of Lading
- Commercial Invoice
- Packing List
- Arrival Notice
- If applicable: Dangerous Goods (DG) document
- If applicable: import license
3. Use the expertise of a freight forwarder
Planning your shipment’s journey, sourcing the right ocean carrier and trucking companies for the right price, finding a competitive storage solution, handling documents and complete key administrative steps such as customs clearance can prove complex and time-consuming. And even for the most carefully planned shipment, any deviation from the initial schedule can result in unexpected demurrage fees or detention charges.
DHL Global Forwarding’s close relationship to the ocean carriers allows us to offer extended free time to our customers, along with reduced demurrage fees and detention charges. And because DHL Global Forwarding takes care of your cargo from door to door, managing its own storage facilities across its global network, you can save yourself the complexity of dealing with numerous stakeholders and handover points. That way, you can focus on what really matters: your business and your customers.
4. Demand Demurrage, Detention and Storage Information in Your Quotation
Sharing the right information requires to be correctly informed from the get-go. The fees of demurrage and detention, along with their respective free time, should be clearly indicated in your quotation. The demurrage and detention rates should more specifically be stated per day and per container. Get in touch with your Ocean Freight Experts now, or use myDHLi Quote & Book to obtain a clear, comprehensive quotation for your shipment.