Now’s the time to make your voice heard. Below details what demurrage charges are and a trade initiative that FMC is currently requesting comments on.
What is demurrage?
- Demurrage is “a penalty charge against shippers for delaying a shipment/container at a port of loading or destination beyond the allowed free”.
How Much Time is Provided for Free?
- “Free time is the grace period for which neither of these charges will be incurred.” There is no standard amount of free time. Free time can change from carrier to carrier, from port to port and sometimes from container type to container type. Normally it is anywhere between 3-5 calendar days.
- Free time is supposed to include a realistic time period to assemble cargo for loading, and provide consignees a realistic time period to retrieve cargo at a terminal after unloading.
- The fee charged after the expiration of the “free time” varies. For example, for one carrier, the per diem fee can range anywhere between: $200 to $800 per day!
What is Being Done to Change this Demurrage Fee?
- Back in December, “the Coalition for Fair Port Practices, a group of 25 members that represent shippers, receivers, motor carriers, port draymen, freight forwarders, third-party logistics companies and customs brokers”, petitioned the Federal Maritime Commission (FMC) in hopes that the FMC would issue a ruling on extending the free time for container storage and equipment use that is disrupted by events outside of their control. Such events could be poor infrastructure, weather events, a carrier bankruptcy, port labor issues, etc.