“How demurrage, detention and port charges work
Port charges
Terminal handling fee
Terminal Handling Charge (THC) is another port charge for containers that you cannot bypass. THC is the cost of loading and unloading the container.
Cargo loading and unloading ports charge terminal loading and unloading fees.
If a container is transshipped, the port where the transshipment takes place also charges THC. In this case, terminal handling charges will be paid directly by the shipping company. This is usually not the case for THC at loading ports.
early arrival fee
The fee charged by the port for a container to arrive at the terminal before the incoming stack is opened. The acceptance of early arrival containers is at the discretion of the port/terminal operator.
late fee
The fee charged by the port for a container to arrive at the terminal after the incoming stack has been closed. The acceptance of early arrival containers is at the discretion of the port/terminal operator.
port storage fee
In the port charges line for the container, there is no bypass port storage charge. These fees are charged for FCLs that have not been cleared for import. As well as full boxes waiting to be shipped and empty boxes piling up in ports.
Port storage fees are usually passed on to shipping lines by terminal operators. Here, margin is usually added on top before the bank charges the customer.
You may end up having to pay both port storage fees and demurrage fees. However, there are places where port storage charges and demurrage charges are the same. Wondering how to avoid these storage charges?
detention
Unlike demurrage charges, demurrage charges are added when a container is out of port. If you hold the carrier’s container for more than the free days allowed, you will be charged a detention fee.
You may also be charged a detention fee when you export a container. Suppose you pick up an empty container to load it. But you don’t return it until the free days are used up. The carrier will then charge a detention fee.
These charges were added to reduce container turnaround time.
Expenses related to the goods
Such expenses are incurred due to the goods, and the amount is directly related to the type and quantity of the goods. It includes cargo port charges, handling charges, stowage charges, flattening charges, switching cabin charges, storage charges, barge charges, tally charges, etc. Except for the cargo port charges, the rest of the above charges shall be borne by the cargo owner.
All use shall be borne by the ship owner or the cargo owner or the charterer in accordance with the provisions of the bill of lading or the charter party.
Demurrage and Demurrage
While some of these port charges may be unavoidable, on the other hand, demurrage and detention charges are completely avoidable charges, but in many cases, these charges are caused by mishandling, misunderstanding, and failure to follow proper protocols. will happen.
When they do occur, these charges can have a considerable financial impact on the overall business, and sometimes these costs can be so high that some customers forgo shipments at their destination because of these costs.
Let’s see what is demurrage, demurrage, demurrage and reasons for demurrage, why is it charged, who charges, who pays..
Although the most common market practice is to combine demurrage and demurrage, there are several cases where demurrage and demurrage are charged separately, so it’s important to understand the difference between demurrage and demurrage.
Demurrage, Demurrage and Port Fee Calculation Solutions
Scenario: A container is unloaded from a ship on July 2. The consignee unloaded from the port on July 12 and returned the empty container to the designated warehouse on July 19.
Demurrage days offered by shipping lines = 7 days
Free layover days provided by the shipping company = 10 days
Port free days = 3 days
Example of demurrage calculation:
Based on the dates above, on July 12, the box will be in the port/terminal for a total of 11 days.
Based on the above, demurrage free line days will expire on July 8.
11 days stay – 7 days free = 4 days The box’s welcome time at the port/marina has exceeded its welcome time.
Example of holdover calculation:
The full box leaves the port on the 12th, and the customer only returns the empty box on July 19th.
No Detention Days = 10 days, so valid until July 21, but no detention fee due to customer returning empty on July 19.
Port storage calculation example:
Using the dates above, there will be 8 days of port storage to be paid along with demurrage until July 12, as the port only offers 3 free days that expire on July 4th.
So essentially, for this container, the client pays
Demurrage = 4 days (free from 2 July to 8 July, demurrage from 9 July to 12 July) – to shipping company
Detention = 0 days (10 days free, so July 12th to July 21st free, return empty on July 19th, so no detention)
Port Warehousing = 8 days (July 2-July 4 is Port Free Day, so from July 5-July 12, 8 days for warehousing apply) – Direct or via shipping company to port
So why do shipping companies charge demurrage and demurrage
In the operation of a container shipping company, the cost of containers, repairs, maintenance, leasing, etc. is about 20% of the cost of the shipping company. A container is like a ship, only if it’s circulating and not idle..
In the above case, the container remained with the consignee for an additional 11 days. This means that during these 11 days, the container is not under the control of the shipping company, which means that this particular container does not bring any revenue to the shipping company for these 11 days..
Demurrage and demurrage charges by shipping lines are their way of getting some compensation for the period when that container is outside the revenue generating period.”
