Demurrage and detention are two concepts that often get confused, despite having different implications. Demurrage is a fee charged by the shipping company when a container is kept at the port for longer than the allowed time. At the same time, detention is a fee charged by the shipping company when a container is kept at the customer’s premises for longer than the allowed time.
In other words, demurrage fees are incurred when delays are due to uncontrollable circumstances (e.g. bad weather). In contrast, detention fees are incurred when delays are due to controllable circumstances (e.g. congestion at the port).
While demurrage and detention may be seen as penalizing the customer for delaying the return of the container, detention is seen as being more punitive as it charges the customer for not returning the container on time, even when it is their fault. For this reason, detention is often seen as a way for the shipping company to recoup losses caused by delays.
On the other hand, demurrage is usually seen as a way of incentivizing customers to return containers on time, as it incurs a fee for each day the container is late. In most cases, demurrage is also lower than detention fees.
While demurrage and detention are two distinct concepts, there can sometimes be some overlap. For example, if a customer has kept a container at their premises for longer than the allowed time, they may be charged a detention fee. However, if the container is returned to the port and kept there for longer than the allowed time, they may also be charged a demurrage fee. In such cases, it is essential to differentiate between the two fees so that the customer can be appropriately charged.
How can you avoid these fees?
Use a shipping company that doesn’t charge demurrage or detention fees
Some shipping companies don’t impose these fees. While they may be more expensive, it may be worth it to avoid the hassle of having to pay these fees.
Use a shipping company that offers free time
Some shipping companies offer a certain number of days for free before they start charging demurrage or detention fees. It can be helpful if you know you will need more time to return the container.
Negotiate with the shipping company
You may have the option to negotiate with the shipping company to get a lower rate for demurrage or detention. It is usually only possible if you have a good relationship with the company and if there is some leeway in their pricing.
Use a customs broker
If you are having trouble understanding the shipping company’s terms and conditions, you may consider using a customs broker. They can help you navigate through all of the paperwork and ensure that you are not charged any unexpected fees.
Time your shipments correctly
The best way to avoid demurrage and detention fees is to time your shipments correctly. You will need to know how long it will take for the container to arrive at its destination and ensure that you have enough time to return it to the port.
Keep track of your containers
It is crucial to monitor your containers to know where they are. This way, you can avoid any delays in returning them to the port.
Pay attention to the shipping company’s terms and conditions
It is essential to pay attention to the shipping company’s terms and conditions to know any fees that may apply. It will allow you to know what to expect down the road.
Get a custom quote
Should any prices be vague, you can always get a custom quote from the shipping company. It will allow you to see exactly how much you will be charged for each service.
Use a freight forwarder
If you are having trouble understanding the shipping company’s terms and conditions, you may consider using a freight forwarder. They can help you navigate through all of the paperwork and ensure that you are not charged any unexpected fees.
Try to ship your goods in an LCL container
Using an LCL container (less than container load) can be a great way to avoid demurrage and detention fees. You’ll only pay for your goods’ space in the container. By shipping your goods in this way, you can avoid any unexpected fees.
