Shipping is expensive without any additional add-ons. If you’re moving cargo internationally via ocean shipping modes, you’re already dealing with consolidation or dray charges, land carriers, ocean carriers, and any final mile truckers or intermodal shipping companies that are fingerprinting your cargo while en-route to its final destination. On top of that, you’re pay for someone to organize it all – your freight forwarder.
Luckily, logistics charges are generally pretty logical. You add up the costs of every step along the way, someone takes a bit of margin for the trouble of organizing it all, and everyone is on their merry way to their next project. However, the simplicity of that all changes when unforeseen charges – such as demurrage charges – strike.
Why You Got Burned with Demurrage Charges
Demurrage charges are no fun (come to think of it, we can’t imagine any charges that are fun…). Demurrage are financial penalties enforced when cargo exceeds its allotted “free time” at the port.
Free time is a period of time, defined in days, that cargo is allowed to sit at a port after arrival in the destination country (which would be the U.S. in the case of an import). Generally speaking, you get a couple days of free time allowing you to get a trucker in to pick up your cargo without issues. What happens if that free time expires and your cargo is still at the port? You may incur charges up to $300 per day depending on the port and circumstances.
If you’ve ever received demurrage charges, or are attempting to avoid it in the future, here are a few reasons you may have been burned by demurrage penalties:
1) No Backup Plan
You lined up a trucker to pick up your cargo when it arrives – great! Or is it…
Some ports are incredibly congested, like LA or Long Beach. Truckers will often be waiting for hours to pick up a single container depending on the time of year. Occasionally, that means a trucker may have to call off plans and come pick up your cargo another day, which may mean exceeding your goods’ allotted free time at the port.
You want to be proactive when lining up backup trucker plans. Make sure you have additional options for draymen to get your cargo out of the port in a timely and efficient manner.
2) Freight Forwarder Communication Disconnect
People often incur additional charges due to communication and customer service disconnect with their freight forwarder. Freight forwarders will either under-communicate to their clients, or drown their clients in a sea of useless notifications, causing them to miss the most critical ones.
Missing a key notification around cargo sail or arrival dates can be just enough to overstay your free time at a port. If you’re being charged demurrage because you were late to receive crucial information fro your freight forwarder, you may want to consider switching.
Interlog USA guarantees proactive and targeted communication through our SHIELD Protocol using GEMCA. This keeps you aware on the 5 milestones that mean the most to you, allowing you to steer clear from demurrage charges.
3) Special Requirements and Concerns
Not every product is viewed and treated the same by U.S. Customs. If you are importing a product that you feel may cause red flags at U.S. Customs, make sure you take all necessary precautions to avoid delays at the destination port. Your cargo may be pulled for an inspection, which can take anywhere from a couple hours to a week, and that inspection time is no exception to your allotted free time at the port.
Conclusion
Demurrage charges begin when your cargo sits at the destination sea port for longer than its allotted free time. These penalties aren’t always avoidable, but you can greatly decrease your chances of encountering them by being proactive with your trucker planning, picking a freight forwarder that properly communicates with you, and making sure any cargo-specific requirements are met before your shipment sets off any red flags at U.S. Customs!
Our team at Interlog USA would love to show you how GEMCA works and can keep you from demurrage charges. Feel free to reach out and ask any questions!