4 tips for reducing demurrage costs

Each day, there are many instances in which cargo is delayed. Aside from unplanned effort, these delays often cause unexpected additional fees to you. One of the most frequent extra costs are demurrage charges, that result from storage costs for cargo that stays at the port of discharge too long. But what means too long?

Generally, a port offers 3-5 days of free storage. Nevertheless, these figures are not set in stone. Each terminal has slightly different rules which can change at any time. For example, Hamburg’s Port officials are very strict. They allow only three free days of storage, whereas you can negotiate with Rotterdam’s Port Authority. They offer usually 5 days of free storage. In addition, each port sets its own rates which are normally charged per day and TEU. And of course, they increase very fast. Therefore, demurrage costs are one of the most frustrating aspects of working in trade and transportation. Nobody likes additional and unexpected fees. That’s why our expert team appreciates to share the following 4 tips about reducing demurrage costs – even if they seem inevitable.

1. Advanced planning

Advanced planning and streamlining the trading process are important in terms of minimizing the risks of demurrage costs. This process should include:

  • Dispatching your cargo as far in advance as you can.
  • Schedule a little time buffer.
  • Keep in mind loading and unloading times. Therefore, you should share your shipment delivery instructions with all involved parties in advance.
  • Request the driver to keep an eye on the clock.
2. Negotiate

Try always to request extended free time. In this case negotiation can be tricky because in many cases it works only for large shippers who ship more than 800-1,000 containers per year.

3. Back-up plan

Plan a fallback option which can be very useful in terms of port congestion. It should include an alternative trucker and alternative routes.

4. Stay informed

Closely monitor the progress of your containers, to know exactly when a container has been discharged in the import terminal, waiting for pick-up. This can easily be achieved with the Demurrage and Detention Dashboards within Ocean Insights’ innovative Container Tracking Application:

All containers that have arrived at the import terminal are represented in an easy to view dashboard that highlights delays and calculates average turnaround times.

The application monitors constantly how long your containers are already located in the POD, and thus raises awareness of containers that exceed the free time.
While the operational data allows you to take action before demurrage costs incur, the performance statistics and comprehensive analysis of the turnaround time of your shipments enable you to identify possible bottlenecks and to increase the overall efficiency long-term.Demurrage Dashbord of Container Track & Trace