5 Tips to Minimise Unexpected Demurrage Fees
Estimated reading time: 5 minutes
Laytime and Demurrage
Laytime and demurrage are traditionally one of the most contentious issues in the shipping industry, owing to the frequency with vessels are delayed in port, the cost caused by such delays, and the often ambiguous wording in charter parties and contracts for the international sale of goods.
To maintain a harmonious business relationship between shipowners and charterers, it is desirable to avoid disputes on charter parties. Therefore, the establishment of a clear and solid contractual basis on laytime calculations and demurrage rules for all parties is one of the utmost importance. A firm understanding of the legal and practical issues of demurrage can make a significant difference in securing advantageous trade deals, as well as avoid costly legal disputes in the unfortunate event of charter delays.
Here are 5 tips to minimise demurrage fees.
- Think Ahead
- Have a Plan B
- Be Informed
- Negotiate Wisely
- Be as Prepared as Possible
- Think Ahead
When possible, prepare everything early as it is normal for delivery schedules to be delayed. This may be due to different reasons such as bad weather, or backlogs at the port. This would affect the delivery schedule and by dispatching your cargo in advance for example, you provide buffer time and avoid potentially paying additional fees.
- Have a Plan B
A contingency plan is always a solid investment. This means either finding an alternative trucker in case port congestion is particularly bad or even assessing the rate options and traffic patterns at nearby terminals in case rerouting cargo is needed.
- Be Informed
Be informed on your contract details, that includes being aware of the port regulations and customs processes. It is important to note that demurrage and detention fees are officially determined by the terms of your individual contract. Furthermore, different countries have different definitions and room for negotiation.
- Negotiate Wisely
It always helps to negotiate for more free time for your cargo, for both demurrage and detention. Talking to your driver in advance allows for more flexibility during the loading and unloading process, as well as a common understanding as to how much time is needed on the port. This reduces the risks of running additional fees.
- Be as Prepared as Possible
Lastly, working with a trusted freight forwarder eases the whole process. Processes such as pre-clearing cargo, issuing instructions to delivery drivers prior, preparing the receiving facility to handle incoming containers and communicating effectively with customs and terminal officials is a key time saving strategy. Ultimately, this helps reduce the risk of unwanted fees.
No time? Download the free PDF versions of the articles below!
- 5 Tips to Minimise Unexpected Demurrage Fees
- To Understand the Different Types of Charter Party
- For Tips to Avoid or Reduce Demurrage Charges
