Shipping 101: Understanding The Difference Between Demurrage And Detention
When you wish to engage in international shipping in Dubai, there are fees you can incur. While custom duties and value-added tax are typically well known, there are others you may be unfamiliar with. Demurrage and detention charges are two of them that you may not know. However, they could significantly affect your final shipment expenses. We will explore what they are in this article and the difference between them.
What are the demurrage and detention charges?
When items arrive on the cargo ship at their destination, consignees are expected to retrieve them on time. Suppose your shipment is a small package that has been part of an LCL (less than container load) cargo. In that case, most shipping companies in Dubai will handle them on your behalf. You will not have to be part of the container unloading process. However, suppose you obtained an FCL (full container load) cargo. In that case, even if a shipping company is involved, you may still be part of the unloading process.
Container unloading is an essential part of shipping. Due to the sheer quantity of items within them, most shipping carriers tend to allow consignees (recipients) to move them to their location, unload the contents and then give the container back. You will be usually given a period of seven days within which you are expected to complete the process. If you fail to collect or return the equipment on time, you could be charged with either a demurrage or detention fee.
How are they different?
While they may seem similar, they serve two different purposes. Demurrage is charged when the container is full and is still at the port. Recipients are generally given a specific time within which they need to retrieve the container for unloading. While the standard length can vary, typically, you are given a week. Until you take possession of the shipment, it stays under the shipping carrier’s control, who will be responsible for maintaining it. Suppose the allocated time passes, and either you have failed to retrieve the items or they have not yet received customs clearance. In that case, the liner will charge the demurrage fee.
Detention charges are levied when the container is not at the port. Once you retrieve a container, you will be given a specific timeframe within which you will need to unload all of the contents and return the equipment to the shipping carrier. If you fail to send it back within the allocated time, you will be charged the detention fee per day.
Why are the charges applied?
The charges are levied to protect the shipping liner from bearing the brunt of expenses incurred through maintenance and lost earnings. The container can be used by other companies; hence, when they are unable to be given due to delays, it can cut into their earnings significantly. If the client fails to send the container back, then it could further increase expenses. Demurrage and detention fees help the carrier recuperate losses while also encouraging consignees to retrieve and return the container on time.
The above information provided some insight into the difference between demurrage and detention fees and how they can affect you. Global shipping can already be a high expense; avoiding these fees is crucial if you want to ensure your costs are low. If you wish to find out more information on the international shipping process, contact us at Extra Space.