Nine (9) Essential Steps to Avoid or Reduce Demurrage, Detention and Storage Charges Due To COVID-19.
It is no longer news that the COVID-19 pandemic has greatly disrupted the normal business operations/activities across various industries in the world and one of which is the operational aspect of the ports.
The port authorities of several countries have made considerable moves to ease the operations of freight forwarders by including additional free days to demurrage.
For the purpose of this article we would define a few terms:
- A Freight forwarder is a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution. This can also be known as a Port Agent.
- Demurrage is a charge required as compensation for the delay of a cargo beyond its scheduled time of departure. It is a charge payable to the owner of a chartered ship on failure to load or discharge the ship within the time agreed.
The Nigerian Ports Authority (NPA) directed all Terminal Operators to suspend all applicable terminal storage fees on consignments (demurrage) for an initial period of twenty-one days effective March 23, 2020. The Directorate-General of Shipping of India issued an order advising shipping lines not to impose demurrage charges until 7 April while the Ghana Ports and Harbours Authority (GPHA) has said that it has not suspended demurrage – fees paid for overstayed containers – and rent charges at the port, due to outbreak of the COVID-19in the country.
Demurrage is billed per container and per day, generally, the standard is 4-7 days and the charged amount varies per location and container type or equipment type. The longer the cargo stays in the terminal, the more the charges. Daily demurrage charges can range between $75-$150 per container per day, but usually for the first 5 days. Although, demurrage is not the only type of port charge freight forwarders run into when precautions are not attended to, detention and storage charges are also one of the most unavoidable charges.
Detention is a charge required when a container is kept beyond the allotted free time. The amount of this charge can vary by carrier and port but usually ranges between $50-$100 a day while Storage is the charge for the usage of space of occupied by a container on terminal grounds, inside a warehouse or at the container yard during storage.
Consignees are expected to pay charges when the free time given elapses.
For some ports, Demurrage-free days offered by the shipping line is 7 days, Detention-free days offered by the shipping line is 10 days while Storage-free days at the port is 3 days.
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