In the world of international logistics, there are several terms that shippers and freight forwarders need to be familiar with to ensure smooth operations. Two such terms are “Free Time” and “Demurrage.” In this article, we will delve into these concepts along with a related term called “Detention.” Understanding these terms is crucial for effective cargo management and avoiding unnecessary costs.
1. Free Time:
When it comes to Full Container Load (FCL) shipments, one term that always demands attention is “Free Time.” This refers to the period during which a container can be stored at the port free of charge. Typically, the agreed-upon duration of Free Time ranges from 7 to 14 days but can be extended upon request by the shipper or consignee.
It’s important to note that different shipping lines may offer varying durations of Free Time. Therefore, it is essential to confirm this when making cargo reservations. For instance, refrigerated containers or open-top containers usually have less than seven days of Free Time.
2. Demurrage:
Demurrage is a fee charged for storage after exceeding the allocated Free Time period. Ports are not designed as long-term storage facilities due to limited space availability; hence demurrage charges serve as an incentive for prompt clearance and release of containers.
The cost of demurrage varies depending on factors such as location and container size/type. Storing 5 containers beyond their Free Time can result in substantial additional costs. Therefore, it is crucial to avoid demurrage fees by ensuring timely clearance and container retrieval.
3. Detention:
Detention refers to the time allocated for the pickup, unloading, and return of an empty container back to the port. If this timeframe is exceeded, extra charges may be imposed. It’s important to note that containers belong to shipping lines, and they operate on a system where all shipping containers must be returned after cargo delivery.
To illustrate how Free Time and Detention work together:
Assuming 14 days of Free Time and 7 days of Detention:
– Estimated Time of Arrival (ETA): June 1st.
– Container unloaded at the port on June 3rd.
– In this case, Free Time will extend until June 17th since two days have already been consumed.
– If you retrieve your container on June 17th (the last day of Free Time), then Detention begins from that day onwards until June 24th.
It’s worth mentioning that different countries calculate Free Time based on ETA or actual arrival date; therefore, it is essential to clarify these details with your freight forwarder beforehand.
Common Issues Related to Free Time:
Several challenges can arise during the period of free storage at ports:
a) Customs Clearance Delays:
Customs processes can sometimes take longer than expected. This delay can eat into your free storage time if not accounted for properly in advance.
b) Lack of Storage Space at Warehouses:
Sometimes warehouses run out of space due to various reasons such as high demand or unforeseen circumstances like equipment breakdowns or labor shortages. When there’s no available space at warehouses, shippers are unable to retrieve their cargo promptly within the given free period.
c) Organizing Drainage Services:
Certain goods require special drainage arrangements before they can be released from ports. These procedures may take some time depending on the nature of the cargo, causing delays in container retrieval.
To mitigate these issues, it is crucial to plan ahead and ensure all necessary documents are prepared accurately.
