What is Demurrage?
Demurrage is a charge payable to the owner of a chartered ship when there is a failure to load or discharge the ship within an agreed time perio. This failure to abide by the rules agreed upon in a charter agreement results in demurrage.
There are a set number of ‘free’ days allocated for importers and exporters to get goods in and out of ports, including the logistics involved in this process. If these free days are exceeded, demurrage charges apply. These charges are paid per day to the shipping company and are specified in the contract with your shipping company.
The Impact of Demurrage and Detention Costs on Supply Chains
In today’s fast-paced global economy, managing your supply chain efficiently can make the difference between success and setbacks. One challenge that often plagues businesses is the specter of demurrage and detention costs. These charges can add significant expenses and delays to your logistics operations. Demurrage and detention charges can significantly impact a company’s bottom line and disrupt supply chain operations. These charges are incurred when containers are held at ports or terminals beyond the allotted free time. Fortunately, technology has provided innovative solutions to mitigate these costs and enhance supply chain efficiency.
Mitigating Demurrage and Detention Costs with Technology
In this blog post, we’ll explore how container tracking and supply chain in-transit visibility services can provide powerful tools to help your business mitigate demurrage and detention costs.
The average demurrage cost in the US is between $75 and $300 per day per container. However, the actual demurrage charges may be higher or lower depending on the specific circumstances. Demurrage charges are typically higher at major ports and during periods of high congestion. For example, according to the “Container xChange Demurrage & Detention Benchmark 2023” report, one of the ports with the highest demurrage charges is the Port of New York and New Jersey, with an average demurrage charge of $3,182 per day per container.
Contguard’s CGI Platform: Your Solution for Cost Savings
Contguard’s CGI platform is specialized in demurrage and detention management with several features that are specifically designed to help shippers reduce these costs, such as demurrage and detention cost forecasting. One of the primary offerings is real-time container tracking, with the ability to monitor the exact location of your containers at any given moment, enables smart preplanning of the container pick-up and return with precision. This minimizes the risk of exceeding free time and incurring demurrage and detention charges due to delays.
Proactive Notifications and Data Analytics
In addition, the system can send automated alerts and notifications when containers approach their free time limits. These proactive notifications allow you to take timely action, such as rescheduling or accelerating container movements, to avoid unnecessary charges.
Contguard leverages data analytics and historical container movement data to predict potential delays. By avoiding congested routes or ports with a history of delays, you can reduce the risk of detention and demurrage charges while optimizing your supply chain.
Managing container-related documentation can be a complex and time-consuming process. Contguard’s CGI platform helps you streamline this by providing tools to manage and track the status of all necessary paperwork. Ensuring that documentation is in order and submitted on time can prevent demurrage charges resulting from administrative issues.
Analyzing Historical Data and Customized Solutions
Contguard’s analytics tools provide valuable insights into your container management practices. By analyzing historical detention and demurrage charges, you can identify patterns and trends, helping you make informed decisions to minimize these costs in the future.
Every business has unique supply chain characteristics. Contguard offers customized solutions tailored to your specific needs, ensuring that you receive the most relevant and effective support for demurrage and detention cost savings.
Conclusion: Leveraging Technology for Cost Savings
In the world of supply chain logistics, where efficiency is paramount, technology stands as a valuable ally in your quest to reduce demurrage and detention costs. Through real-time tracking, predictive analytics, automated alerts, and improved collaboration, tracking technology empowers your business to optimize operations and minimize the financial impact of container delays. In a competitive global market, leveraging such advanced technology can make all the difference in achieving cost savings and maintaining a seamless supply chain.