The loading and unloading process in this port does not always go smoothly. Some ships may even fail to reach the port on time. Consequently, there will be demurrage charges for it. In this article, we will talk about the definition of demurrage.
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In short, demurrage is a fee or fine payable by the consignee or shipper regarding the use of the container.
Here, the shipper has to pay a fine to the shipping or container company. Everything about it is written inside a pre-determined time frame contract.
Imposing it occurs when the clearance of the goods in the port does not correspond to the estimated time in the contract.
Causes of Demurrage
In several cases, there are usually several reasons demurrage may be incurred, including:
1. Bad Weather
First, sudden bad weather can cause you to pay a fine. In this case, the delivery and unloading of goods may be hindered.
2. Lack of Coordination With The Port
Second, lack of coordination between the owner of the goods and the port operator can cause this to happen.
When there is a lack of coordination, it results in slow delivery and storage of goods.
Avoiding the Demurrage Costs
Moreover, there are several ways you can avoid a demurrage charge, including :
1. Revise The Regulations
First and foremost, it is necessary to revise ineffective regulations. You can identify and change the cause of it, so that it does not occur in the future.
2. Discuss With The Container Company
You can also negotiate the rules together with the port operator. As these rules also concern cooperation agreements, there may be a revision in the contract if both agree.
You can discuss the tolerance days for demurrage, up to a clause in case things happen that are beyond your control, such as bad weather.
3. Plan a Good Management System
Besides the points above, you also need to plan for the most effective management possible. Because the very high density of the port combined with chaotic management increases the risk of demurrage.
Demurrage Time Period
The time limit set by shipping companies varies widely.
As a rule, the company gives a time limit for the use of containers. Usually, it is 7 to 10 days from the arrival of the goods at the port.
Nonetheless, shipping companies can grant a free period based on an agreement. Usually, it is three to seven days for the cost of demurrage.