Logistics costs can stack up pretty quickly. Often time, shippers will end up with the wrong supply chain partners, with shipping vendors and freight forwarders alike hosing them on prices. But it is equally as often that additional charges could have been avoided on the part of the shipper themselves. One of the ways shippers will suffer from logistics costs is demurrage charges.
Demurrage Charges: How to Avoid Them
Demurrage charges stack up quickly-very quickly. Any time you ship cargo internationally, you are allotted a certain amount of “free time” at a port of discharge or arrival. This time is counted from the moment the cargo unloads from it’s arriving vessel/vehicle and ends when the cargo is picked up and moved off of the port.
Demurrage charges occur when the cargo has sat at the port beyond its allotted “free time”, and are generally charged on a per-day basis. Prices will vary, but can often exceed $300/day. That means in as short as a few days, you can tack on an extra $1,000 or more to your freight bill. Luckily, there are a few ways you can work proactively to reduce your chances of encountering demurrage charges. Here’s how:
1) Requesting Additional Free Time
“It’s that easy?”
Well, not really. It is possible to request additional free from from the carrier your cargo is moving with, but the chances are that request will be denied unless you are shipping high enough volumes. If your company happens to be shipping over 800 containers per year, you may be eligible to request additional free time on any containers exceeding their currently allotted amount. Generally speaking, It’s not that much extra, but a couple days can still spare you hundreds (or thousands) of dollars on a single shipment along with giving you extra time to find backup truckers, which brings us to our next point….
2) Backup Truckers
There’s a ton of congestion at international shipping ports in the U.S. – especially if you’re shipping to Long Beach port. With that kind of congestion, chances of a truck failing to pick up cargo on time are much more likely. That’s why it’s smart to have an alternative option for truckers. Schedules can get tight and if a trucker is backing out on the last day of free time for your cargo, you may be out of luck.
3) Pre-Clearing Cargo and Delivery Instructions
So much of avoiding additional charges in the shipping industry has to do with being proactive with your planning and action. One huge step that you can take is pre-clearing your cargo. Make sure you talk with your freight forwarder about whether or not they preclear cargo. That not only allows you to efficiently plan for cargo arrival and handling at the port, but also enables you to get delivery instructions to truckers or dray men and have the cargo picked up quickly before you free time expires.
Conclusion
Demurrage charges occur whenever your cargo sits at the port for longer than its allotted “free time”. Fines can get hefty – while usually sitting around the $100 mark, it is possible for charges to exceed $300/day for every day the cargo sits at the port beyond the allotted free time.
Luckily, demurrage can be avoided through proactive planning and action. Working with a forwarder who preclears their customers’ cargo, as well as issuing delivery instructions to truckers as soon as the cargo is unloaded from the vessel can help to speed the process up.
Our team at Interlog USA would be happy to answer any questions or possibly discuss how you can avoid these charges.