A freight intermediary (also known as an OTI or Ocean Transportation Intermediary) is someone who assists an exporter or an importer in securing competitive freight rates while providing the most efficient routing for their cargoes and alsoRead more
The Demurrage and Detention Headache
Sometimes despite following your company’s process in booking freight shipments, delays can happen and result in extra charges. Take for example, the unfortunate bankruptcy of South Korea’s Hanjin Shipping Co., the seventh largest container line. Due to the confusion of the announcement, cargo owners were unable to pick up containers on time and later were prevented from returning containers and chassis.
Among these ‘extra charges’ is what’s known as Demurrage. Demurrage charges, as described in the Hanjin example, vary country to country as well as by carrier and are often incurred in the timing of loading or unloading containers, storage, additional handling and more at ports. To further complicate the understanding of these fees, they are also applied per container as well as per day after a designated free time of typically 3-5 days.
What sorts of fees are typically applied are dependent on the specific port and carrier. It’s generally up to the forwarder to be aware of all of these potential charges and to communicate these charges as well as apply accurately to the shippers’ invoice.
A variety of tariffs and fees exist for each port. While too many to include in this blog post, the Port of Rotterdam, as an example, posts all of their charges, including demurrage, in its 48 page brochure available for download on their website.
Carriers are required to update their fees, including demurrage charges on their websites. As illustration, CMA-CGM’s current (as of May 15, 2017) demurrage charges are:
Certainly because of the Hanjin bankruptcy and other industry concerns surrounding ports, demurrage and detention charges have received even more attention within the US of late. As such, according to publication, DC Velocity, the "Coalition for Fair Port Practices" requested the Federal Maritime Commission (FMC) to adopt a policy “to extend the number of free days before demurrage would be charged in the event of port congestion, weather disturbances, and other port disruptions or delays beyond the control of parties picking up or returning containers. Demurrage and similar fees charged during such incidents would be declared "unreasonable" under the Shipping Act of 1984, a law that gave the FMC rulemaking power over this issue”.
No More Headaches
Unveiled as a prototype at the transport logistic exhibition in Munich in May, PLS’ GPM Demurrage & Detention offers users an intuitive window into their global demurrage & detention (D&D) spend, storing all Free Time agreements in one portal, from where global container movements and costs can be easily tracked. Fees can be prevented through proactive warnings of upcoming D&D charges, invoicing becomes simplified, and the drain on resources incurred by managing D&D can be halted.
“The complexity of D&D costs and management is a huge issue for everyone within this industry. But these costs often fall somewhat under the radar as they exist outside the spectrum of the normal transportation movement and associated costs. However, every company, from every part of container logistics, feels the pain,” said Henning Voss, Co-founder and CEO of PLS. Furthermore, Voss noted, “the new software gives users an unparalleled global overview of D&D activity, with easy calculation of applicable D&D cost, and the ability to drill down and refine views, as well as determining which containers are at risk and actual costs being incurred. Users can then search for individual containers, customers and a host of other options. Information can be easily accessed, analyzed and, if desired, downloaded into Excel.”
GPM Demurrage & Detention is expected to be launched to the wider logistics market during the second half of 2017.
Find Out More
To learn more about PLS and GPM please visit our website.
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