Shanghai, the world’s busiest container terminal, is still facing huge queues of vessels trying to enter the port. With ports facing unprecedented congestion, widescale staffing shortages and in some cases labour disputes, there are stumbling blocks across the logistics chain.
The concept of demurrage seems to have worked well until the global logistics logjams of the past few years developed. It also served as an incentive that would make the supply chain more efficient because nobody wants to pay extra fees for running late. It meant that those companies that owned the containers could recoup some of the expense of containers not being returned on time. The same principle applies in the opposite direction.ĭemurrage and detention fees were designed as a sensible stopgap for the container industry. If a container is not returned to the owner within the allocated time, fines begin to rack up. This allows haulage firms time to transport their cargoes, discharge with the customer and return the empty container to its owner. These stages generally last for around 12 days in total. From this point, the” detention” countdown starts until the empty container is returned to the carrier. The demurrage period lasts from the vessel’s arrival at the port until the container on board is loaded onto a truck and moved inside the terminal. The terms “demurrage” and “detention” both refer to a specific stage within the shipping supply chain. Recently, demurrage and detention have been causing havoc in the container market. While at first glance it may look like it’s caused by staffing and vessel shortages, this is only component. One of these is increased shipping costs. But the truth is, inflationary effects are being amplified by several factors. Inflation has been blamed for much of the consumer price pressure being felt today. The issues caused by these fees is likely to cause the price of food to rise further.But recent snags in the supply chain mean they are pushing up costs without raising efficiency.Demurrage and detention are essential tools to ensure the container industry operates smoothly.
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