How are detention charges calculated?

How are detention charges calculated?

In the calculation of Demurrage charges to the shipowner/port authority, the demurrage rate is multiplied by the number of days/part days over the agreed free days.

What are detention charges?

Within the shipping industry, the terms “detention charges” and “per-diem charges” (or, “per day charges”) are often used interchangeably. These charges are assessed to the cargo owner when a container is not returned within a set number of days (free days).

How do you avoid container detention charges?

Top 5 Tips to Reduce Demurrage, Detention and Storage Charges

1. Make Sure Your Cargo is Ready on Time to Reduce Detention Charges. …
2. Be Smart About Customs Clearance to Reduce Demurrage and Storage Charges. …
3. Use the Expertise of a Freight Forwarder. …
4. Demand Demurrage, Detention and Storage Information in Your Quotation.

What are detention charges in freight?

Container Detention Charges To alleviate the delayed or late return of the Containers, detention charges are imposed by the shipping lines for the any containers not returned within the allowed free time period.

What is the difference between demurrage and detention charges?

In these countries, “demurrage” refers to the time containers spend outside the port, while “detention” refers to the time spent on port grounds.

Who is responsible for paying detention charges?

The shipper is generally responsible for demurrage charges, but the consignee also may be legally obligated to pay, depending upon who was at fault for the delay and which party was contractually responsible to pay freight or other charges.

How does detention time work?

If a driver is stuck waiting for three, four, or five hours instead of the initially agreed-upon two hours, that’s considered detention time. Detention time takes up any of the extra time required to finish loading a shipment or unloading one.

What is the industry standard for detention?

The industry standard is to have trucks loaded in two hours. After that, shippers are expected to pay an hourly rate for every hour that a truck driver is detained. Detention pay can range from $25-100 an hour.

What is the difference between per diem and detention?

Detention is charged when the carrier’s equipment is still in use by the shipper or consignee beyond the LFD, regardless if full or empty. Per Diem: A detention fee where a fixed rate is charged per container per day until the equipment is returned to the port. Per diem and detention are often used interchangeably.

How do you reduce detention and demurrage?

4 Ways to Avoid Container Demurrage and Detention Charges

1. Know the Challenges. Supply Chains seem to be facing more and more challenges each day. …
2. Master Exceptions Management. …
3. Proper Document Management. …
4. Invest in an International Visibility Solution.

Can demurrage and detention charges be reduced or avoided?

While these charges cannot always be avoided, they can be significantly reduced with coherent planning and proactive communication.

How much is demurrage per day?

The cost of demurrage charges vary depending on carriers, terminals, and contractual agreements. However, they tend to be anywhere between $75 to $300 per container/ per day. After several days, the charges can grow to more significant amounts.

What is detention & demurrage?

Demurrage is charged by the shipping line per day per container from the date of discharge till the full container is moved out of the port or terminal for unpacking. Detention is charged per day per container from that time till the empty container is returned to the shipping line’s nominated depot.

What is combined demurrage and detention?

“Combined Demurrage & Detention” (also called merged D&D): is the charge related to the use of equipment only, the Merchant pays for carrier’s equipment kept beyond the free time offered by the Carrier, when Demurrage and Detention is combined into one single period.

What is trailer detention?

Detention is a charge made on trailers/containers held by or for a consignor/consignee for loading or unloading, forwarding directions or any other purpose. Typically, there are 2 hours free time before detention becomes an issue.

Is GST applicable on detention charges?

Yes, GST of 18% is applicable on detention charges per Government notification.

Who pays detention and demurrage?

Demurrage and detention charges during import Usually, the sea freight forwarders get a free time of 3-5 days after the container gets discharged. Mostly, the forwarders need to pay the demurrage in order to collect the cargo from the port.

What is detention in supply chain?

In the supply chain industry, detention is typically defined as the time a truck driver spends waiting at a pickup or delivery facility, rather than getting loaded or unloaded and back on the road.

What is the rate of demurrage charge per wagon?

Rates of demurrage Charge: Demurrage charge shall be levied @Rs. 150/- per 8-wheeled wagon per hour, or part of an hour, for detention of wagon in excess of the permissible free time for loading or unloading.