In 2021, the Port of Los Angeles/Long Beach experienced unprecedented congestion that impacted 40% of U.S. imported goods. Demurrage is a method used to mitigate container congestion at ports or rail yards. Demurrage fees can add up to several thousand dollars if a shipper has an issue or isn’t paying attention. Here is a breakdown of where these fees originate so shippers can escape the doom of demurrage.
Shipment Fee Structure
Typically, demurrage fees occur when containers overextend the time limit at a port or yard. The storage fees accumulate each day a container sits over what is allowed contractually. Most agreements allow containers to sit without charges for three to five days. So, what causes a container to become stuck? Several things lead to demurrage:
- Bad planning or communication
- Shipping delays
- Unforeseen circumstances or bad weather
- Congestion
- Labor shortages
- Customs or clearance issues
Tips to Prevent Demurrage
- Negotiate terms upfront to give your container more room in case of delays. Demurrage is rolled into the larger per-diem fees in the contract. You may use container volume to negotiate fees in a contract.
- Work with a reliable broker or freight forwarder that manages the schedule and tracks the container.
- Work with a professional who knows and understands the customs clearance process and regulations. Have your documentation in order before your shipment departs. Plan ahead if your cargo requires specialized documentation (food/animal products).
- Partner with a reliable drayage partner that understands the importance of moving your container in a timely fashion.
- Share cargo and delivery documents and communicate updates with everyone involved including carriers, vendors, and third-party providers.
In most cases, the bill of lading consignee is responsible for demurrage charges. If charges are required, they must be paid before the container is let go from the port or rail. On average, ports will charge shippers $200-$400 per day to store cargo.
Bottom line, there are always going to be bumps along the road with a long journey. There are external factors beyond our control that lead to demurrage. But having the proper tools, contract terms, and expertise on your side can mitigate or eliminate extra fees.
Working with a shipping expert like Evans Distribution Systems is a good starting point for avoiding demurrage. Contact us at 1-800-OK-EVANS or sales@evansdist.com to discover why it’s easier with Evans.