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When you are in the shipping industry, demurrage charges can be an unwelcome surprise.
With the current state of overbooking and congested ports, it's no surprise that demurrage fees have surged, with a 39% increase in 2021.
The costs of these charges can be quite significant, so it is important to understand how they work and how to avoid them.
By being aware of the potential for demurrage fees and taking steps to mitigate them, shippers can avoid the headache of a surprise bill and keep their finances in check.
In this guide, we will explore some additional tips and strategies on how to avoid demurrage charges and streamline your logistics operations.
What Are Demurrage Charges?
Demurrage charges refer to the fees imposed on those who fail to unload or load their cargo within the allotted free time or past the last free day.
While shippers may see them as an unnecessary additional expense, they play a critical role in keeping the global shipping industry running smoothly. These charges serve as compensation for the time and resources spent by carriers and for preventing delays in the supply chain process.
Although these charges are designed to be a deterrent against tardiness, demurrage fees can be quite costly. Fortunately, there are ways to avoid demurrage charges...
What Are the Causes of Demurrage Fees?
Demurrage fees can be a frustrating and financially damaging experience for shippers. Understanding the causes of demurrage can help you take steps to avoid these fees.
Some of the most common causes include:
- Unawareness of cargo arrival time/date by the consignee
- Failure to receive documents in time for customs clearance and pickup
- Incorrect or incomplete documents received by the consignee
- Cargo not matching the sales order
- Disputes between shipper and consignee
How to Avoid Demurrage Charges
#1 Ensure Your Paperwork's in Order
When it comes to importing or exporting goods, ensuring your paperwork is in order can be the difference between a smooth process and costly delays. Demurrage charges can add up quickly and significantly impact your bottom line. That's why it's important to take the time to review and organize all necessary documents carefully before shipping.
Don't let paperwork mishaps derail your logistics operations - stay on top of the details and reap the benefits of a streamlined process. Cargoflip's pre-made templates enable you to quickly and easily create relevant documentation with just a few clicks.
#2 Pre-Clear Cargo
Businesses can streamline the process and avoid bureaucratic delays by completing the necessary paperwork and obtaining clearance before the cargo arrives. With pre-clearance, shippers can be confident that the required documents are in order and that the cargo will be released promptly.
By constantly communicating with customs, carriers, and port authorities, businesses can minimize the risk of added fees and ensure a smooth process.
#3 Package Properly
To ensure your cargo is loaded and unloaded as swiftly as possible, take the time to package it properly. If items are not packaged correctly, this can lead to delays and, in turn, demurrage costs.
Be sure to use the right materials for the job and ensure that your cargo is secure, as this will help minimize loading times.
#4 Have a Contingency Plan
Having a plan B (or C) in place is always a good idea if things go south. A well-thought-out contingency plan can minimize the potential of demurrage charges in the event of unexpected delays.
By being prepared for various scenarios, businesses can adjust their processes accordingly and avoid hefty fees, allowing them to focus on what's important without any unnecessary distractions.
#5 Track Shipments
Real-time tracking can be invaluable when it comes to avoiding demurrage charges. By keeping tabs on the status of your cargo, you can quickly identify potential delays and take corrective action before they become a costly problem.
Cargoflip's real-time tracking tool allows you to easily monitor shipments from start to finish and respond to any issues quickly and efficiently.
#6 Book Reliable Carriers
When it comes to shipping, reliability is key. Working with a trustworthy carrier can make all the difference in avoiding demurrage charges.
Take the time to research your options and ensure that you are partnering with a trusted provider with proven industry experience.
#7 Negotiate More Days
Finally, if you notice that your cargo is running late, consider negotiating with the port authority for more free days. If you can demonstrate that delays were unavoidable, port authorities may be willing to work with you and offer additional free time.
Try to request extended free time whenever you can. This will reduce the risk of incurring demurrage charges and help you stay on top of your logistics process.
No More Hidden Demurrage Fees
By following these tips, businesses can avoid demurrage fees and streamline their logistics operations for maximum efficiency. With the right strategy and tools in place, you can be confident that your cargo will arrive at its destination on time - every time.
Take control of your logistics operations with Cargoflip and ensure that your cargo moves quickly and efficiently. From pre-made templates to real-time tracking, Cargoflip has the tools you need to avoid demurrage charges and keep your business running smoothly.
Take advantage of our free trial now and experience the difference for yourself.
Demurrage Charges FAQ
Who should pay demurrage charges?
Demurrage fees are charged to the shipper when cargo is detained beyond the agreed-upon free time.
How are demurrage charges calculated?
Demurrage fees are usually calculated per container and vary depending on the port.
How many days before demurrage charges start?
Typically, free time is between three to five days, but this can vary from port to port.
How much are average demurrage charges?
Daily demurrage fees typically cost shippers from $75 to $150 per container per day.