Cost-effective shipments can be a critical part of a business's bottom line. With too many additional charges, it can become difficult to justify the costs of getting goods from point A to point B.
One of the most substantial charges a shipper can be given is demurrage & detention costs. These charges can represent thousands of dollars per diem. To avoid these additional fees, it's essential to know what demurrage and detention charges are and how to prevent them.
What are Demurrage and Detention Charges
Both demurrage and detention charges result from lacking communication, bad planning, or unforeseen circumstances. When certain aspects of the shipment aren't completed within the given free days, these charges represent the additional costs of storing and managing the shipments.
These occur when containers can't be shipped due to a lack of correct documentation or other non-carrier related errors. In this situation, your carrier will be unable to load the container onto the vessel and will be forced to charge you for storage until the next boat arrives. It’s also possible to pick up demurrage charges if your container is left on the quay of the arrival port beyond the agreed timeframe.
These charges occur outside of the ports when the empty container isn’t back with the carrier when it should be. Generally, carriers will grant shippers five free days, but after that, the shipper will be charged for additional days. The idea is that a speedy returning of containers improves efficiency and lowers costs for everyone.
How to Avoid Demurrage and Detention Charges
Avoiding additional charges during shipping means taking steps to be prepared. We've outlined a list of three tips for ensuring you avoid these charges here:
1. Set Up Notifications for When Containers are Ready to be Collected
The first step to ensuring you collect your containers on time is to know when it's ready. Earning detention charges because you forgot where all of your shipments are is an easy mistake to make but also a costly and embarrassing one.
Taking the time to set up notifications and invest in services to notify you and your team of every step of the process can allow you to prepare, adapt, and react quickly.
2. Use a Forwarder That Gets Longer Free Container Storage
One of the primary benefits of working with a freight forwarding partner is that they have established connections with carriers that can help them get better deals.
Some forwarders will have deals that allow them additional free days on the quay, giving you more time to get the documentation ready. Additionally, their experience in the industry and existing relationship with carriers, makes it easier for them to argue for exceptions and communicate with you about anything that needs to get done.
3. Build the Return of the Carrier Into Your Supply Chain Planning
Establishing a supply chain plan can be a complicated process, and because of this, it can be easy to forget about returning the container. Taking the time at the start of your shipping process to ensure you already have a plan to return the carrier can save you and your team a lot of headaches.
If you're working with an experienced freight forwarder, your partners will be able to help you resolve what steps should be taken now, so you don't face any additional charges in the future.
Preparing ahead so your business can avoid costly demurrage and detention charges is essential to developing a successful supply chain. Taking steps such as establishing notifications, working with experienced freight forwarders, and putting carriers' returns into your plan from the start can save your business money and grant you peace of mind. But demurrage and detention charges are just one aspect of your supply chain that can be aided by making optimisations. Explore our article below which covers how to optimise your inbound and outbound supply chains.
If you're still unsure about how to avoid demurrage and detention charges, you can help yourself make the right choice by consulting an international shipping expert. WTA can help you find a solution to your logistics needs. Contact us to find out more.