Once again, the ideal storm is developing. The worldwide epidemic with its numerous variants is trying to plunge the maritime industry into absolute turmoil. Just as it did throughout 2020 and into the early parts of this year.
During this time of the pandemic, there is:
- Shortage of container capacity.
- Low supply of equipment.
- The ports have become congested.
Shippers and retailers are playing a calculated game of “race the clock” to have merchandise in place before the peak season starts, and the volume of freight being carried is at historic levels. All of this adds to the turbulence around the thorny topic of container detention and demurrage fees.
According to a survey by Container xChange, between 2020 and 2021, the average detention and demurrage fee levied at the world’s 20 busiest ports grew by a stunning +104 percent. After two weeks in 2021, the average cost of demurrage and detention costs for all container types was $1,219 per container.
Demurrage and Detention:
Detention costs and demurrage charges are not the same things, even though they are addressed as if they are. A full container can only stay at a port for a certain amount of time (“free time”), and there must be the return of the container and other equipment within a particular duration. These terms are defined differently by each shipping line and port, and they may change significantly, but in general, the windows are 3-7 days. While the container is still in port, demurrage is charged. Any container that remains beyond the port, whether full or empty, is subject to detention.
Tips to reduce Container Detention and Demurrage:
Each container’s detention and demurrage costs may add up to hundreds of dollars every day. Shippers, consignees, and freight forwarders all suffer resultantly. This impacts margins, cash flow, and profitability. Here are some ideas for reducing or perhaps eliminating D&D among these stakeholders:
Knowing more about the factors that influence detention and demurrage costs would help stakeholders make better decisions and provide them with the leverage they need to negotiate per diems.
As previously indicated, detention and demurrage fees vary by area and even ocean line. There can be a negotiation about the free days (usually 3–7). But your bargaining power as a shipper is dictated by your volume.
Plan ahead of time and execute efficiently:
Dispatch freight as soon as feasible. Any additional time can be included in the plan. It will assist reduce unanticipated risks like severe weather, labor unrest, or port congestion.
Handle customs like a pro:
Make sure you have all of your documentation ready, thorough, and exact. It’s also crucial to have primary awareness of the customs clearance procedures and port rules.
Invest in the best technologies:
Nobody can afford to be idle, whether within or outside a port. The ability to deliver ultra-accurate ETAs and detect possible detention and demurrage costs is dependent on having high-quality, consistent data. Real-time visibility allows shippers to synchronize vehicle schedules with the arrival of a vessel in port, avoiding full containers from sitting idle and empty containers from being returned to the port.
Many businesses waste a lot of operational resources gathering shipping event data by hand. It comprises visiting carrier websites, collecting recent events and ETAs, and entering the data into a TMS or other systems. Container tracking from Custom Crating and Logistics automates this laborious procedure, removing human error, providing better consistent data, and reducing container detention and demurrage fees.