The Federal Maritime Commission reported in 2015 that the average fees for demurrage and detention at key US ports easily exceed $200 per day. A day of detention can increase the cost of a shipment by 11% and more. Making the most of free time is one way to avoiding these delay related charges, yet it is often overlooked. According to large carriers, not taking free time fully into account can contribute to unnecessary demurrage and detention costs on up to one-fourth of ocean freight shipments.
To recap, free time is the number of days you are granted to pick up a container from the port, load or unload your cargo from the container or deliver a container to the designated port. Free time is a contract line item just like other fees and charges, so it is important to consider. Free time days and delay related charges for exceeding the allowed days vary greatly between shipping lines and carriers.
The average free time is about five days, but details are specified in a carrier’s tariff. Bigger and longer vehicles introduce longer loading times and cause shipping delay charges but with no additional allocation of free time. Availability of a chassis is also a factor, and there will always be cases where shippers cannot access a container or return it within the allowed free time.
Always agree upon a time frame for the receipt of all necessary documentation to avoid clearance delays.
Ensure the clearance of any issues with customs or the port. All necessary releases should be secured from the authorities before the ship arrives. That expedites the discharge of your container or shipment.
Ensure that your documents offer no grounds for customs or port authorities to reject them. This includes commercial invoices, packing lists, certificates of origin and bill of entry.
Pay attention to avoid any issues with the Bill of Lading. It is the most common reason for delaying the release of container shipments.
For regular cargo, consider a Seaway Bill of Lading instead of a Negotiable Bill of Lading as you might have the option of additional free time (see also iContainers’ tips on the Bill of Lading).
Take note of which countries require an original Bill of Lading, and which ones do not. That way, you can speed up your clearance at the origin or destination.
Keep watch over your shipment and the arrival of the vessel, so you will know exactly when your free time begins and expires.
If your container is detained for inspection and you exceed your free time, ask the shipping line to be lenient and offer an extension for the inspection.
Always check with your freight forwarder in advance to clarify the amount of free days allowed.
Ensure that your shipment is pre-cleared as early as possible. This includes submitting any necessary documentation in a timely fashion.
For shipments in volume, consider requesting extended free time from your freight forwarder or carrier.
If your shipment is routed onwards, ensure that the assigned free time is sufficient. Clarify details in advance with your trucking company, for example.
Ideally, your trucking company and truckers shouldn’t have to wait. Ensure that loading/unloading of your shipment can proceed without delays.
Clarify your schedule in advance with your freight forwarder or trucking company to secure your time slots. Last-minute arrangements tend to result in delays at the loading facility.
Many US importers and exporters feel the current practices in place regarding demurrage, detention and per diem charges are unfair. The original purpose of these delay related charges was to reduce delays of shipments and speed up the processing of cargo. But shippers today generally perceive that the charges do not serve that purpose. In particular, the case of congestion at ports and facilities is causing shippers grief. In the event of a congested terminal, they cannot access their shipment but are being charged demurrage at the same time. Additionally, the existing periods of free time seem to be insufficient, in light of how terminal operators treat these cases.
The Federal Maritime Commission has yet to make determinations regarding the application of demurrage, detention and per diem charges and nor outline any course of action it may take. So always try to work with an established and reputable freight forwarder who knows these pitfalls. That way, they can guarantee a sufficient allowance of free time to avoid charges for any delays. Delay related charges remain one of the challenges of international shipping.
"The problem with these costs is that they’re often impossible to predict and are thus hardly ever considered when analyzing and comparing ocean freight rates"
Klaus Lydsal, vice president of operations at iContainers