What Are Demurrage and Detention Charges?

Demurrage and detention charges can happen at any time but they have been far more frequent because of supply chain challenges during the pandemic. Learn more about what demurrage and detention charges are and how to avoid them in your upcoming cargo shipments.

What is a Demurrage Chargein Cargo Shipping?

“Demurrage” is the name of the charge that a merchant pays if a container is used inside a terminal past its free time. A fee is taken for this act because it is costing the shipping line money to have that space occupied and likely causing delays in the next shipments coming into the terminal. These situations have been happening at a higher frequency during the pandemic because so much cargo is being delayed across the country and across the world, putting countless holds on even the most simple shipments.

What is a Detention Charge in Cargo Shipping?

“Detention” is the charge a merchant pays for the use of the container outside of a terminal, beyond the previously agreed upon time period. Because most shipping containers are not owned by merchants or the shippers themselves, it is essential that delays in emptying containers are minimized so the flow of goods is not disrupted. Shipping lines have set fees in order to discourage shippers and merchants from running behind schedule in order to better assure all their customers that they will have container availability at the time of need. Without fees, it would be hard for ship liners to plan when their containers can be used by whom.

Why Are Demurrage and Detention Charges on the Rise?

Shipping lines have demurrage and detention charges to encourage their customers to empty their containers within the allotted time, but when the market has a significant disruption, adhering to strict time allotments becomes more complicated. It is also important to note that the reasoning for the delay in emptying a container does not matter; fees are charged regardless of the purpose for the delay, bringing us to 2022 and the global pandemic. Even before COVID began spreading across the globe, free time periods were reduced and demurrage and detention fees increased considerably. Shipping lines have been said to have been suffering from difficult market challenges and therefore increased their charges, putting tighter timelines and tougher consequences on their customers who largely could not do anything about it.

The global pandemic has put a massive strain on supply chains around the world, making it difficult to get products to retailers and customers and nearly impossible to do so in the timely manner that was previously standard. As the pandemic continues without an obvious end in sight, the International Federation of Freight Forwarders Associations (FIATA) is working to aid shippers by calling for regulations of demurrage and detention charges, arguing that the current system is no longer fair or reasonable. Only time will tell what effects their efforts will have on those involved throughout the shipment process but no changes are expected in this calendar year.

How to Avoid Demurrage and Detention Charges

If your business necessitates the shipment of cargo, understanding demurrage and detention charges can help you to maximize your profits. By working with a trusted, experienced logistics manager, more of these unnecessary fees can be avoided. With LogiWorld as your logistics partner, you will be assured that we do all we can to ensure that our containers are out of port within the allotted time, avoiding any possible demurrage or detention charges from the shippers. If you’re in need of a logistics manager to move your cargo, contact us today for a free quote on your next shipment.

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