Explain shipping term, demurrage
This post explains about shipping term, demurrage.
Containers are used to transport the Import and Export cargo 's on the container ships. The containers are essential to the efficient cargo flow of all Import and Export cargo movements.
Demurrage is generally charged by shipping lines. Demurrage is assessed on cargo that is left at the terminal beyond the allotted free time. A limited number of free days are offered, which can vary depending on the shipping line and the location where the cargo has to be sent. Once that free time expires, the demurrage charges will be incurred for each additional day. This charge is intended to discourage the use of the carrier’s container for storage purposes and to compensate the carrier for the use of their container. Demurrage amounts may differ based on terminal or carrier and often increase after an initial period of time.
In import demurrage charges are charged when import containers are still full and under the control of the shipping line. In this situation, the container has not yet been picked up by the consignee, and the free time for pick up set by the ocean line has expired for the container. The free period starts when the container has been discharged from the vessel to the terminal. Demurrage is applied after the free time has expired, and ends the day when the container has been picked up and out gated from the terminal.
Demurrage may be caused due to a various reason. Most common reasons, Consignee did not receive the documents in time for customs clearance. Documentation received by consignee is incorrect or insufficient. Container has been stopped by customer, police or other authorities for inspection of the cargo which may take longer than expected. Consignee was unaware of the arrival of the cargo and was unable to do the customs clearance in time. Consignee does not have the finances in order to clear the container in time. Dispute between shipper and consignee. Cargo received was not as per the sales order.
In export demurrage charges occur after the loaded export container has been returned to the possession of the shipping line but cannot be shipped out due to non-carrier related errors once the allotted free time has expired. In case, if the exporter fails to provide required export information or documentation in a timely manner, the shipping line will be unable to load the container onto the originally scheduled vessel and will roll the container to a new vessel. Container demurrage charges would apply for the additional storage period until the container is shipped on board the next vessel.
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