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More Glossary Terms

Demurrage

Demurrage is a fee shipping lines charge when the full container isn’t removed from the ship, port, or terminal within the given free days.
What is Demurrage and Detention?
Demurrage is a fee that is levied to containers, cargo or equipment that has overstayed its time at a terminal location. Demurrage charges vary based on the shipping line, terminal, warehouse or container station.
In the shipping context, detention is a fee charged by the port or terminal when the importer has taken the container for unpacking but has not returned it empty within the given time frame.

Detention and demurrage are charges that can come up in the shipping industry, yet they’re not the same. The difference in detention vs. demurrage:

  • Demurrage charges are related to removing the container to unpack it on time.
  • Detention charges stem from not returning the empty container in time after unpacking it.
Reasons for Demurrage and Detention Charges

The transportation industry adds fees at every possible opportunity. In this case, detention and demurrage charges help control port congestion. Congestion impacts the efficiency of a single supply chain and gets in the way of other supply chains moving properly. That’s why these demurrage charges and detention fees are essential.

Fortunately, these are not arbitrary fees and they are possible to avoid.
Calculating Demurrage and Detention Charges
What is the calculation method of demurrage charges?
Demurrage charges are calculated per container daily, starting with the discharge date. Demurrage continues until the importer removes the full container from the port or terminal.
Detention charges are calculated per container daily. Detention starts when the given time frame ends and continues until the empty container is returned to the designated depot.
Port Congestion and Its Effects on Demurrage and Detention Charges
Port congestion can result from a range of causes, including:
  • Conflicts around the world.
  • Worker strikes.
  • Weather delays.
  • Overbooking a port or terminal.
Of course, importers contribute to congestion by failing to remove a full container for unpacking or returning the empty container after unpacking. Demurrage and detention fees help minimize this form of port congestion.
Unfortunately, port congestion can contribute to demurrage and detention charges, even when the congestion is not the shipper’s fault.
When different factors are at play in contributing to these charges, it’s understandable to wonder who is responsible for demurrage charges. Regarding imports, the importer/shipper needs to pay the fees.

Find out how shipment & order visibility aids in reducing detention & demurrage.

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Strategies to Reduce Demurrage and Detention Charges
These fees can greatly add up from day to day, especially throughout many shipments. Cost control required consideration of ways to avoid demurrage and detention charges. These are steps that can help:
  • Carry out advanced planning and negotiation, such as negotiating extra storage days.
  • Gain real-time information on container status.
  • Plan offloading schedules.
  • Learn from data and optimize free time
How MercuryGate Controls Demurrage with Shipment and Order Visibility in Ocean Transportation

MercuryGate’s ClearTrack solution helps shippers manage demurrage and detention charges.

MercuryGate’s transportation management platform increases visibility into freight across the entire multimodal network. Shippers can use it to gain detailed information on ocean freight, from the vessel and container levels to the order and item levels.

This technology helps control demurrage and detention charges through features like:
  • Visualizing the full shipment lifecycle.
  • Collecting information from different parts of the supply chain and standardizing it to see the full picture.
  • Sharing the location of ocean container shipments along with detailed information, including the current vessel location and the estimated time frame for arriving at the port.
Be Prepared for Demurrage Charges in Customs and Ocean Freight
It’s hard to avoid demurrage and detention charges altogether, especially with port congestion that’s out of shippers’ control. Still, it’s essential to understand and manage these charges. These fees add up significantly, they affect your bottom line and they can be controlled
Taking the above mentioned steps and using MercuryGate’s solutions can help shippers manage these fees. MercuryGate provides increased shipment and order visibility to provide end-to-end supply chain awareness required to limit demurrage..

Learn more about MercuryGate’s visibility solutions and how they can help with demurrage and detention charges.

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