Shipping goods around the world requires precise organization and preparation of documentation, but some costs, such as demurrage fees, can appear unexpectedly. Find out what the demurrage fee is, how it is calculated and what steps can help you avoid or reduce it.
What is a demurrage fee?
Definition of demurrage
Demurrage is a fee charged when a container exceeds the time allowed for it to remain at the terminal, after the agreed period of time without charge has expired. The standard number of “free days” is usually 4-5 days.
Reasons for charging demurrage
A storage fee may arise due to:
- Lack of necessary documentation.
- Customs clearance delays.
- Problems with loading cargo.
Financial impact
Detention fees can be up to 20 times the value of the container itself, with daily costs between $75 and $400, depending on the terminal and country. You can calculate your detention here .
How is the storage fee calculated? (
Calculation example
20 foot container:
- Free period: 5 days .
- Daily price for the first 10 days: 60 USD .
- Daily price after 10 days: $120 .
If the container remains at the terminal for 25 days, the fee is:
20 days × (10 days × $60 + 10 days × $120) = $1,800 .
Variable costs
- Fees increase proportionally to the duration of container retention.
- Larger ports often have higher tariffs due to limited space and greater congestion.
How to avoid or reduce the storage fee?
Practical advice
- Plan ahead: Prepare documentation before the cargo arrives.
- Proactive communication: Coordinate information with transportation providers.
- Shipment tracking: Use IoT devices and platforms for real-time tracking.
- Leveraging Freight Forwarder Resources: Leverage their expertise to optimize shipping.
- Providing additional storage: Organize capacities outside the terminal.
- Choosing less congested ports: Consider alternative access points such as smaller ports.
Process digitalization
- Automated notifications reduce the possibility of delays.
- Digital platforms enable timely monitoring of containers and elimination of problems.
Additional measures for storage management
Analysis and backup plan
- Analyze inventory costs regularly to improve future processes.
- Prepare alternative scenarios for unforeseen situations.
Automation
Automated processes ensure:
- Timely notifications to all participants.
- Better coordination of teams and transportation service providers.
- Reducing human errors in the process.
Defining responsibilities
Clearly define tasks for each team:
- Who is responsible for customs clearance?
- How will delays be handled?
- What urgent measures are needed?
Conclusion
Demurrage charges can be avoided or reduced by proper planning, digitization of processes and timely tracking of shipments.
