Demurrage And Detention In Container Shipping

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Best practices as proposed by FIATA DEMURRAGE AND DETENTION IN CONTAINER SHIPPING

In 2018, the FIATA Working Group Sea Transport produced a best practice guide to assist both FIATA National Associations and their individual Member freight forwarders.

Demurrage and detention charges, FIATA noted, are an important tool for shipping lines to ensure the efficient use of their container stock which represents a substantial investment. For shipping lines, it is essential to turn around their containers as fast as possible, consequently merchants who use containers for longer periods should be discouraged from this practice.

In principle, demurrage and detention tariffs have two main purposes:

  • Compensation to the shipping line for the use of its container.
  • Encouragement for the merchant to return the container as soon as possible for the shipping line to re-use it and have a fast turnaround.

It is an obligation for shipping lines to provide a reasonable free period to allow the merchant a realistic period of time for:

  • the loading and delivery of the container for an export.
  • the pick-up, unloading and return of the empty container for an import.

In lieu of intervention by regulatory authorities, the FIATA document aims to examine the current situation and outline best practices that could be implemented voluntarily by all parties moving cargo through ports.

These best practices may help reduce unnecessary supply chain costs and inefficient behaviour that lead to detention and demurrage charges.

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