Avoiding Demurrage & Detention Charges: Smart Planning for Shippers

The conditions known as demurrage and detention is usually a source of terror to exporters and logistic teams operating between India and the USA. They are days of unforeseen accruals, containers and stagnant assets and supply chain breakdowns. And in the case of global supply chains that are not only complex but include both sea freight forwarding services and air freight logistics, not to mention specialised equipment such as iso tank containers, it is not a choice but central to survival after profitability.

The industry statistics indicate that, the USD 35–80 per container in a day of operation in Indian export can be the demurrage and detention costs. It can be considered what it will do to your bottom line when you multiply it by hundreds of shipments. Nevertheless, shrewd shippers are already ready with such fees — they track the cues, devise countermeasures, and they liaise with logistics firms that know the topography well.

Three primary areas on which to mitigate demurrage and detention are listed below and are employed to convert a potentially controlled risk into a control benefit.

Get to Know Your Free Time and Trigger Points

You cannot even book a container or an asset, which could be a normal 20-foot box, or a 40 ft unit or some specialised iso container tank before you even have any idea of the amount of free time the carrier or port will offer you. Free time means the amount of days you are able to utilize the terminal, the container or the asset without the charges. The next step is the free time then comes the demurrage (assets at port) and detention (assets outside port).

As an example, in India, exporters can be given free days of containers of export; and in the extra slab, there will be USD 35–110.

Action steps:

• Another thing that you should always remember is to carry the free-time days chart of your contract or bill of lading.
  
• Identify the clock kick off, vessel arrival, container discharge, gate-in, etc. This detail is a wrong one that one can easily overlook.
  
• Plan your in-house logistics according to the free time: loading, terminal transportation, customs, empties collection or container delivery.
  
• When you are using a cargo move on Tank container depots in India, or you are using iso tank operators in India, those extra days are normally spent in the documentation delays, equipment returns, or hand-off, and not the shipping time.
  

Plan Documentation, Pickup and Clearance Processes

Many of the demurrage/detention cases are not due to transit time but circumventable logistic gap. Common triggers include:

• Late clearance of the goods or unavailability of documents.
  
• Congestion at the yard or congestion at the terminal leading to a reduced gate-in or gate-out.
  
• Failure to coordinate inland transport and container yard and port properly.
  

To reduce exposure:

• Make shipping (invoice, packing list, customs permits) papers ready because the container will come past you (you see its speed).
  
• Ensure that your inland transport partner is willing to pick the container as soon as it is discharged.
  
• Allow real-time visibility (especially in case of perishable or hazardous products via iso tank in Mumbai, iso container in Nhava Sheva) to have the capability of tracking and intervening in the instance of delays.
  
• You need to take into account additional handling time when planning in case of specialised assets, e.g., liquid cargo in iso-tanks or intermodal transport.
  

With documentation matching up, transport and handover you end up cutting down on the days spent idly at the port or container yard and hence minimizing the chances of incurring demurrage.

Rebate Equipment and Productively Cycle

Delay issues not in the port are the foundation of detention charges: when an entire container is gathered, loaded/offloaded and the empty container is not returned as part of a time-constrained circumstance. The clock will continue to run until the empty returns to the depot or other designated yard of return.

The effect is larger to shippers with costly equipment such as iso tank containers or working under ISO tank depot services in India — the cost of the equipment being held is not only direct (daily charges) but also indirect (equipment not available to load next).

Best practice:

• Set specific deadlines on the shipper or the ship operator.
  
• Monitor turnaround time of any container or tank in your operation.
  
• Collaborate with Best logistics agents in India that delivers a cycle tracking and alert system of having containers/tanks.
  
• Always add a contingency buffer in your schedules — like in case equipment takes a long time to clean or be serviced, you are not going off detention.
  

By treating your container or tank as an active (as opposed to passive) inventory, you will attain cost and availability control.

Recommendation: Demurrage and Detention Cost Metric Should Be Controllable

No shipper is ready to cover demurrage or detention, however, very many situations can occur when these costs were paid due to the negligence of shippers who did not take into account all the steps of the journey. There are many moving parts in the port discharge, customs clearance, inland transport, equipment return, etc. Nevertheless, with forwarding service of sea freight, air freight logistics, and integrated Supply chain management for ISO tanks you can track all the legs and all the handovers.

The accuracy of planning is even more important in the scenarios of applying specialised equipment like iso container in Mundra, 20ft iso tank container in Mumbai, or liquid cargo transportation with the help of iso tank in Hazira to the exporters that operate between India and the USA. Review your current working process: what are the points of contention? Document delays? Idle assets? Then partner with a logistic firm that brings about visibility, cycle tracking and performance benchmarking.

The FAK Worldwide is a combination of expertise of sea and air freight, port agency services, and tank-container logistics to help the shippers spend less time on idle conditions and avoid demurrage/detention, and, furthermore, make their supply chain more profitable.

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