5 Ways to Avoid Demurrage Fees

Intermodal freight transport is a complex but effective process. Shipping containers travel across the globe to be filled, emptied, and filled once more with all kinds of cargo.

Space is one of the most crucial assets in container shipping. Intermodal ports need empty containers available for their customers to use — and ports need space to transport containers — to keep the system running as intended. Just like the container chassis shortage, a container shortage can slow down intermodal freight transport. 

Demurrage fees encourage the efficient handling of containers. Unfortunately, they can also lead to a financial burden for your business. Keep reading to learn more about these charges and how your company can avoid demurrage fees.

What are Demurrage Fees and Charges?

Ocean freight and shipping lines charge demurrage fees when customers keep shipping containers occupied and in a port. The demurrage charge is applied when the customer keeps the container beyond the previously agreed-upon length of time in the contract.

Shipping containers play a key role in container shipping and the larger supply chain. Intermodal freight transport infrastructure is designed specifically to accommodate them. That means shipping lines want to keep them available for customers to actively ship and receive cargo.

Demurrage charges are a penalty for keeping those containers occupied beyond the free time provided. Why? Because customers take up space in the port and slow down the supply chain. They’re intended to motivate customers to empty shipping containers in a timely manner and return them to circulation.

Are There Other Fees Similar to Demurrage Charges?

Yes, there are charges similar to but distinct from demurrage. Detention fees are one of the most common.

Detention charges also apply when a customer maintains possession of a container beyond the amount of free time allowed by the contract. The key difference is that detention fees are levied when a container is held outside a port, as Supply Chain Brain explains. If a company can’t empty a container at its warehouse (or another facility) and return it in a timely fashion, it can cost them money.

Why is it Important to Avoid Demurrage and Similar Fees?

An aerial view of an intermodal port.

Demurrage charges, detention fees, and similar costs represent what is often an unnecessary expense. 

There are times when circumstances outside your company’s control can make these charges unavoidable. However, in many situations, having a good strategy and the right drayage partner can help keep costs low.

How to Avoid Demurrage Charges: 5 Tips

1. Work with a Dependable Customs Broker

Customs is a crucial consideration for every import and export. Advance customs clearance for a shipment can help you avoid demurrage and detention charges, as well as delays in accessing your shipment.

As Flat World Global Solutions explains, finding a reliable customs broker can help your company pre-clear imports and streamline the process of retrieving your cargo. Having a knowledgeable and helpful broker on your side is well worth the cost.

2. Anticipate Possible Delays and Build in Extra Time

The intermodal freight supply chain is reliable in the big picture, but it’s far from perfect. There’s always a chance that a shipment will be delayed in reaching the port, or congestion will slow down your efforts to pick up your shipment.

Anticipating these potential delays and planning around them — i.e. building extra time into distribution plans for imported products — can reduce the impact on your business.

3. Provide Details and Instructions to All Stakeholders

Keeping your drayage carrier, customs broker, warehouse workers, and other stakeholders informed leads to a more streamlined process overall. When everyone has the information they need about the anticipated arrival time, delivery instructions, window for unloading, and similar aspects, they can act more confidently and efficiently.

4. Try to Get More Free Time

It won’t always work, but it doesn’t hurt to ask. Requesting additional free days can help you avoid incurring demurrage and detention costs. If you know the cargo is especially complex to handle, whether loading or unloading, make sure to ask your carrier.

5. Find a Prompt, Professional, and Dependable Drayage Partner

Drayage is the vital link between the port and your cargo’s next step in the journey or final destination. 

At Iraheta Bros, we work hard to keep demurrage and detention costs low for our customers. Our team knows the Port of Oakland and how to operate efficiently within it. Our strong relationships with port officials help us get in and out quickly, helping you get your cargo in a timely manner and avoid unnecessary fees.

Work with Iraheta Bros – Request a Quote Today!

5 Ways to Avoid Demurrage Fees

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