Top Tips to Avoid Demurrage Fees
For most importers and exporters, the words “demurrage fees” are enough to cause a shudder.
After all, importing and exporting can be costly enough - without the added burden of demurrage detention or per diem fees!
In most cases, importers and exporters didn’t plan for the additional fees, and most don’t even understand what caused the extra charges.
Don’t worry - you’re not alone.
In this blog, we’ll break down the ins and outs of demurrage charges and what situations can incur demurrage costs.
Let’s dive in.
What is a Demurrage Fee?
Put simply, a demurrage fee is a fee assessed to a container that is left at the port/rail beyond the terminal’s/rail’s set free time.
Because the period of “free time” varies from contract to contract, it’s critical to understand the rules of the port/rail you work with, so you know exactly how much free time you and your terminal get.
In most cases, importers are granted about 4-5 days of free time for standard containers at ports, and rails grant about 2-3 days of free time for importers and exporters.
If your container stays at the rails beyond that time, you’ll incur daily storage fees until you remove your container from the rail, also known as demurrage.
So, how much can you expect to pay in demurrage/storage fees if your container stays at a terminal/rail too long?
The answer is it depends.
Demurrage charges vary based on carrier or port/rail policies and usually go up after a period of time.
Generally, daily demurrage charges are charged by the day per container for about the first five days. After that period, demurrage fees can skyrocket to even more per day.
As you can see, avoiding these fees is critical to keeping your drayage costs in check. Fortunately, Book Your Cargo can help. Our team allows importers like you to plan your container accordingly to avoid demurrage fees and the sky-high bills they can create.
Demurrage Fees vs. Per Diem Charges
Per Diem is a term used all the time in container drayage transportation.
When importers and exporters move containers, they have a set amount of free time for the shipment to stay at the port/rail (if you go over this, you incur demurrage fees also known as storage).
You ALSO have a set amount of time with the container itself, off the port. If you keep the container longer than advised, you may incur detention charges, also known as per diem fees.
Like demurrage fees, per diem fees vary by port/rail and carrier. In addition to those fees varying by ports/rails and carriers, they can also vary by cargo type. For example: if your cargo is any kind of specialized cargo, the free time is severely limited, and these fees are more likely to occur.
3 Tips to Avoid Demurrage Fees
Want to keep your budget in check and avoid demurrage fees? Here are three tips to help you do just that:
1. Have a backup plan
Congested ports/rails are a fact of life today, thanks to the lingering effects of the COVID-19 pandemic and worldwide supply chain issues.
Because dealing with congested ports/rails is guaranteed (and you won’t be spared demurrage fees even if the delay isn’t your fault), it’s wise to have trucker options, which BYC provides.
2. Ask the port/rail for some extra time
If you’re a large shipper, you may be able to petition the port/rail for some extra “free time.”
Keep in mind that this approach usually only works for large shippers since ports/rails tend to allocate free time based on container volume.
In most cases, you’ll need to move about 800 containers at a time to be considered for additional free time, but it’s always worth asking.
If the port/rail agrees, you may get a few extra days to move your container and avoid demurrage fees.
3. Onboard a partner to help you plan your shipping
Working with a team like Book Your Cargo can help you plan every step of your drayage transportation, so your container doesn’t sit at the port/rail and rack up demurrage fees.
While importing and exporting have gotten more complicated in recent years, having a skilled team like Book Your Cargo on your side can help you navigate the gray areas and keep your containers moving.
Partner With Book Your Cargo and Avoid Sky-High Demurrage Fees
Demurrage fees can quickly create financial hardship for your business and your drayage activities. Fortunately, you don’t have to accept demurrage fees blindly. While ports/rails are more congested than ever and supply chain logjams persist, there are ways to plan your container drayage intelligently to avoid or reduce demurrage and detention fees.
Here at Book Your Cargo, we specialize in helping teams like yours avoid demurrage charges and detention fees.
Ready to learn more about our team, our services, or how we can help you?
Request your demo now!