Demurrage and Detention
If there’s one thing everyone can agree on, it’s that fees are a real pain. Unfortunately, they also seem to be inescapable at times. This is especially the case for shippers when it comes to demurrage and detention.
What are Demurrage and Detention?
In simple terms, demurrage and detention are essentially the same things: fees charged to shippers when containers aren’t picked up or returned within the specified timeframe. Explaining the difference between demurrage and detention is easiest when broken down in terms of import containers and export containers.
Import demurrage fees are accrued when containers are left in the control of the carrier company and not picked up by the consignee for longer than the allotted time.
Import detention fees begin stacking up after the consignee has had possession of the container for longer than the agreed-upon period of time.
Export demurrage fees are assessed when a carrier has possession of a container but is unable to ship it for reasons for which the shipper is responsible, such as when the shipper fails to provide completed documentation on time.
Export detention fees are charged to shippers for every day the container remains in possession of the shipper after the agreed-upon limit (usually 5 days).
Why Do Demurrage and Detention Fees Exist?
Many shippers feel like demurrage and detention fees are primarily a way for carriers to milk more money from their customers. Carriers, on the other hand, insist that these fees are in place to stop shippers from using their terminals as storage facilities. As with most things, the truth lies somewhere between these two ideas.
The Federal Maritime Commission (FMC) took notice of complaints regarding demurrage and detention fees, undertaking an investigation in late 2018. The results led to the FMC approval of the establishment of a Shipper Advisory Board to aid in the implementation of the recommendations outlined in the Fact Finding 28 Final Report.
The intended purpose of these recommendations is to “aid in the fluidity and overall performance of the American freight delivery system.” One of the key recommendations is to increase the “transparency of demurrage and detention policies, including dispute resolution policies…”
While these changes will not do away with demurrage and detention charges, they should make them easier to understand and dispute. Contact ClearFreight to consult with our logistics and brokerage experts today!