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.
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.
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