Have you ever did a shipment, and encountered Demurrage fees? If you do, you sure as hell know that you should avoid it, evade it, run away from it.
It is just totally stay away from the D word as much as possible. Let’s just focus on the example of shipping a container. Sending a container and the container got ‘stuck’ at the port for some reason or another? Why would a container get ‘stuck’? It really depends. On some occasions it is because of Customs, some others might due to some issues with container or goods themselves. Demurrage fees are incurred when the container stays in the port for too long. The port will then charge a ‘fee’ for putting the container over the -free parking duration provided. They charge a fixed rate per day. If you think the fee is nothing, think again.
Why it happen?
There are cases where they can’t settle the payment for the container, and therefore cannot obtain the Bill Of Lading document from their supplier. This is one of the worst cases that can happen to you. Let`s do a simple example: Buyer A requests for shipment from Supplier B, and Supplier B does a CIF shipment to Buyer A. Supplier B waits for Buyer A to complete full payment before the item is release to Buyer A. Buyer A then has some problems with their company, and thus can’t afford the payment. Assuming demurrage fees for Buyer A’s port is $100 per day, a month delay will therefore costs approximately $3000 extra for a shipment. Now think about it, a full container might costs about 2000-4000 for a delivery to anywhere in the world. Now add another extra $3000 and the fee just doubled.
How price measured?
Throw in Sales Tax and Import Tax, and add the price of your goods themselves, that’s a whole whopping figure. If Buyer A delays for too long, the demurrage will keep going up. It will reach point where price becomes so expensive that container just stays stuck in the port with the goods. Yes, that happens everywhere, everyday, all the time. It’s really common. Looking at those ports with many containers have self doubt and think about how many containers are left-over containers instead. What is demurrage? Penalty charges against consignees for delaying the carrier’s equipment beyond allowed free time. Demurrage applies to cargo; detention applies to equipment. If you store a container at the port beyond free days, then demurrage and detention applies. If you keep container for too long on any other premise then only detention applies. Shipping container is metal container that is use for shipping purposes.
These containers come in a variance of sizes, and are able to be ship worldwide. These shipping containers are normally waterproof in most cases, as well as airtight so that your goods are safe from the elements. There are prefixes that are use in the container numbers that are use to determine the carrier name.