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Demurrage and detention in logistics
The cargo is almost there, the main stages are behind us, and the final picture of the deal is already forming in our minds. And suddenly, a bill appears that ruins the whole idyll. Demurrage and detention are exactly the kind of expenses that are often thought of last, but which can quietly ‘eat away’ at your profits. Usually, they are remembered when it is too late to change anything.
Therefore, it is better to understand in advance how to avoid losses. We will discuss this in a new publication on the LLC «FabriQuanta» blog.
Therefore, it is better to understand in advance how to avoid losses. We will discuss this in a new publication on the LLC «FabriQuanta» blog.
What are demurrage and detention charges?
Demurrage is a charge for extra days of container storage at the terminal after unloading. When a container stays longer than the free time allowed, a charge is applied for each additional day.
Demurrage is a charge for delaying a container outside the terminal. It applies if the container has been removed but not returned on time.
How free time works
Free time is the free time allowed for storing or using a container. It is a specific period after which paid days begin. Free time for demurrage and detention is calculated differently. The problem is that at the planning stage, this time seems sufficient. But in reality, the days pass very quickly. Documents are delayed, transport does not arrive on time, there is a pause between stages or some other force majeure occurs - and the free period ends.
Where do additional charges come from?
Demurrage is most often associated with delays in paperwork, queues, and terminal congestion. The cargo is nearby, but it cannot be picked up. Detention is almost always related to internal processes: the warehouse is not ready, transport is delayed, unloading is taking too long, container return has been postponed. Therefore, demurrage often arises due to external circumstances, while detention arises due to how your work is organised.
Demurrage is a charge for extra days of container storage at the terminal after unloading. When a container stays longer than the free time allowed, a charge is applied for each additional day.
Demurrage is a charge for delaying a container outside the terminal. It applies if the container has been removed but not returned on time.
How free time works
Free time is the free time allowed for storing or using a container. It is a specific period after which paid days begin. Free time for demurrage and detention is calculated differently. The problem is that at the planning stage, this time seems sufficient. But in reality, the days pass very quickly. Documents are delayed, transport does not arrive on time, there is a pause between stages or some other force majeure occurs - and the free period ends.
Where do additional charges come from?
Demurrage is most often associated with delays in paperwork, queues, and terminal congestion. The cargo is nearby, but it cannot be picked up. Detention is almost always related to internal processes: the warehouse is not ready, transport is delayed, unloading is taking too long, container return has been postponed. Therefore, demurrage often arises due to external circumstances, while detention arises due to how your work is organised.
What can be planned in advance
Many losses can be avoided if you take deadlines as seriously as you take your budget. You need to clearly understand when free time begins and ends, keep track of documents, plan container removal and return in advance, and check warehouse readiness. It is useful to immediately consider not only the ideal scenario, but also possible delays at each stage, according to experts at LLC «FabriQuanta».
Sometimes the situation gets out of control. Terminal malfunctions, schedule changes, restrictions or errors that have already occurred can lead to charges regardless of how well you are prepared. At such moments, it is important to act quickly and not waste time hoping that the problem will resolve itself. Delays in decision-making almost always increase costs.
Many losses can be avoided if you take deadlines as seriously as you take your budget. You need to clearly understand when free time begins and ends, keep track of documents, plan container removal and return in advance, and check warehouse readiness. It is useful to immediately consider not only the ideal scenario, but also possible delays at each stage, according to experts at LLC «FabriQuanta».
Sometimes the situation gets out of control. Terminal malfunctions, schedule changes, restrictions or errors that have already occurred can lead to charges regardless of how well you are prepared. At such moments, it is important to act quickly and not waste time hoping that the problem will resolve itself. Delays in decision-making almost always increase costs.
How to reduce costs
When you know the exact dates and understand what additional payments are charged for and when, the likelihood of unnecessary expenses decreases significantly. It is important not just to close ‘unsuccessful’ deals and move on, but to periodically return to such situations and analyse them step by step to understand where time was lost. It often turns out that one small change in processes yields greater results than attempts to dispute bills that have already been issued.
Demurrage and detention are not an inevitable evil. They are the result of inaccurate time management. With a careful approach, they become not a problem, but a controllable part of logistics.
When you know the exact dates and understand what additional payments are charged for and when, the likelihood of unnecessary expenses decreases significantly. It is important not just to close ‘unsuccessful’ deals and move on, but to periodically return to such situations and analyse them step by step to understand where time was lost. It often turns out that one small change in processes yields greater results than attempts to dispute bills that have already been issued.
Demurrage and detention are not an inevitable evil. They are the result of inaccurate time management. With a careful approach, they become not a problem, but a controllable part of logistics.
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