Demurrage is a phrase that is frequently used in the logistics industry. In essence, they are seen as charges imposed for long-term storage of cargo in a terminal or container warehouse. Let’s elaborate.
What is Demurrage?
There are mechanisms in place that enable a shipment to remain in the period that is thought to be free once it reaches at its port (whether by rail, air, or sea). The terminal in question will indicate how long this period is, therefore, it is never a good idea to guess. While the normal free storage term for the shipment is 4 to 7 days, you must confirm this with the parties involved to avoid paying fees like demurrage and detention.
How do you get paid?
There may be a variety of factors that contribute to how you end up being charged for demurrage. Your shipment documents may have been incomplete or filled out incorrectly, causing delays at the destination port due to paperwork. You are paying demurrage costs while your containers full of cargo are waiting to be unloaded while the paperwork problems are handled. Another possibility is that you sent your goods to the terminal to be loaded onto a shipping vessel, but due to natural catastrophe delays, the vessel won’t be in port for a few days. In this case, if you exceed the terminal’s designated free period, your cargo for exports will not be delivered.
How are you to know?
The truth is that you might not be aware of the exact day that you must begin paying demurrage charges. Finding out is the first step. Additionally, you might attempt to determine how much you will need to pay each day. It’s always a good idea to be informed in any situation because a carrier and terminal may have their own regulations and charges. This is because you can be charged either per day or per container. In some ports, daily fees may also increase if you stay more than a week in a terminal.
What makes you liable?
While assigning blame isn’t usually the best course of action, demurrage is a very annoying aspect of the logistics industry. Even if you have taken all reasonable precautions, delays with shipping vessels and public unrest could still be to blame. The purpose of demurrage, however, is to encourage you to clear your cargo as quickly as possible rather than to arbitrarily raise your total cost. Every terminal has its limits in terms of the resources and facilities that are available, thus the turnover of storage is crucial to any economy. As a result, maintaining a seamless workflow is essential, and it is our responsibility as members of the logistics community to treat this well-oiled machine with respect.