DEM DET là gì? What is the difference between DEM DET and Storage charge in the field of freight? These are issues that many people are concerned about. If you are also wondering these things or do not really understand the 3 types of fees DEM, DET, Storage, then follow the following article!
What is DEM? (Demurrage Charge)
In fact, many people have heard of DEM fees but do not really understand this fee. DEM stands for Demurrage charge, which means the fee for storing containers at the port's yard. This fee is collected by the shipping company.
In commercial chartering, charter is an ancillary cost representing damages liquidated as a result of delay. It occurs when the ship is prevented from loading or unloading the specified cargo during loading (see Carriage: under the Charter of the Parties). In the oil industry, it refers to the excess time required to discharge or load, as the case may be, beyond the allowable rest period. Laytime is the term used to quantify the amount of time allowed within which an activity is allowed to be performed. Demurrage used laytime less than allocated laytime (if any). Ship masters must provide a Notice of Readiness (NOR) for hire when the vessel has arrived at the port of loading or unloading. NOR notifies charterers that the vessel is ready to load or unload. The NOR date and time determine when the outage begins.
Relationship between DEM DET and STORAGE fees with exports
Relationship between DEM DET and STORAGE fees with exports
It can be understood that, DEM is the fee that the shipping company has to pay to the port. And to have money to pay, shipping lines will have to collect from customers. Money collected from customers is returned to the port by the shipping line with a separate agreement. This fee will be charged per container unit.
Find out what is Demurrage charge?
Find out what is Demurrage charge?
Depending on each shipping line, the specific policy of free time or days when storing containers at the yard may be different. Customers only have to pay the DEM fee after the free period has passed.
How to calculate DET for 1 container:
(Number of days customers keep the case – number of free days) x unit price for storing the container by day
Example of imported goods: On August 7, Customer A pulled the goods from the port to exploit, the shipping company specified that the DET free time was 5 days. Thus, guests will not be charged if they return the shells to the designated shipping company's yard from August 7-12. If the customer returns the case after 12/08, the customer will be charged $10 per day overdue.
In fact, customer A returns the case on August 16, so the number of days that customer keeps the case is 9 days, minus 5 free days, so the customer has to pay DET fee for 4 overdue days which is 4 x 10$ = 40$
Example of export goods: The shipping line issues a booking with an estimated departure date (ETD) of September 28, DET free time is 7 days. Thus, guests will not be charged if they take the shell from September 22-28, if it is taken earlier, the customer has to pay $ 10 for 1 day to keep the shell. Because customers need to close the goods soon, they should ask the company for a case on the date (Source: dhlogistics.com.vn)
Demurrage fee is divided into 2 types: fee for import goods and fee for export goods. Specifically:
For imported goods
If it is a dry container, the DEM fee will be waived in about 1-7 days. If it is a refrigerated container, the free time for DEM is shorter, from 1-3 days
The DEM charge period will start from the first day after the free expiration to the day you pick up the item.
The unit of charge for DEM is money/day/container, which depends on the type and size of the container.
For example: To better understand what the demurrage charge is for export goods, for example, you currently have an import shipment to Cat Lai port. This is a shipment of imported scrap steel and you get free DEM for 5 days, counting from the date of arrival of the ship. The information on the D/O will indicate the date of arrival of the ship and you will receive the goods on April 10, 2021. Thus, from April 10, 2021 to April 15, 2021, you will not be charged DEM. However, if after April 15, 2021 you have not received the goods, the shipping company will start charging. You will not be able to complete the documents to receive the goods until April 18, 2021. As such, you will have to pay DEM fees for days 16, 17 and 18. That is for 3 days and the fee is calculated by progressive accrual method.
For export goods
Dry container will be free DEM for 1-7 days and refrigerated container is 1-3 days.
Unlike imported goods, exported goods are rarely charged DEM, unless you clear customs late, so the goods are dropped and have to be shipped later. Or maybe for some other reason.
For exports there is a free time DEM
For exports there is a free time DEM
Example: You can clearly understand what demurrage is for exports through concrete examples. If you receive booking and information on booking, write ETD 10/04/2021 and closing time is 09h00 on 10/04/2021. Thus, you will be given 7 days of DEM by the shipping line, that is, 7 days before the ETD date, if you lower the container, you will be free of DEM. But if you downgrade earlier than the time in ETD, there will be a fee. Or more specifically, if you lower the container on 04/04/2021, you will get free DEM. Note, it is not recommended to do the subtraction because the shipping company will calculate April 10, 2021 as 1 day.
With the above information and examples, you must have a clear understanding of what DEM is. Next we will explain about DET fees.
What is DET? (Detention)
There are a lot of people who don't understand what DET is or confuse DEM and DET fees. DET is an acronym for detention charge. Similar to DEM, you also have to pay this fee to the shipping line. At the same time, the shipping line also offers a policy on how to free time and charge DET fees. The DET fee will be calculated on a daily basis and also depends on the type and size of the container.
It is necessary to distinguish DEM and DET
It is necessary to distinguish DEM and DET
How to calculate DEM fee for 1 container:
(Number of days of container storage – number of free days) x unit price of container storage per day
For example: XYZ company has a ship on May 10, the shipping line regulates DEM free time is 7 days. Thus, customers will not be charged for towing from May 10-17. If the customer pulls the goods after May 17, the airline will collect $ 15 for 1 overdue day.
There is customer A towing the goods on May 20, so the number of days to keep the container at the port is 10 days, minus 7 free days, the customer has to pay the DEM fee for 3 overdue days, which is 3 x 15$ = 45$. (Source: dhlogistics.com.vn)
DEM DET fees are charged for both import and export goods. Specifically, with DET, the calculation is as follows:
For imported goods
The shipping line will charge your DET starting from the date of empty payment later than the specified free period.
Example: We will continue with the above example. When the ship arrives on April 10, 2021, you will be given a 5-day DEM and 7-day DET by the shipping line. The date you pick up your order is April 12, 2021. If you pick up items on this date, you will not have to pay the DEM fee. Until DET 18/04/2021, that is, 7 days after receiving the goods, you must return empty. But if for some reason you haven't paid until April 20, 2021, it means you have paid 2 days late compared to the DET free time offered by the shipping company and must pay the prescribed fee.
For export goods
The DET fee for exported goods is calculated by the shipping line based on the date the shipping line allows to take the container compared to the actual date of taking the container. The shipping line will waive DET in case of late pick up and charge as prescribed in case of early pick up.
Example: We still consider based on the example given, ie ETD is 10/04/2021 and closing time is 09:00 am on 10/04/2021. Based on ETD information and regulations of the ship, you can empty it 10 days before the train runs, that is, April 1, 2021 (April 10 is still counted as 1 day). However, you need to pick up the goods earlier because the factory is far away, the volume of goods is large, etc. to be able to close the goods in time. So you have to get empty on 02/28/2021. That is, you will get it 1 day before the free DET time that the shipping company offers.
What is Storage Charge?
Besides DEM information what is DET? Many people still wonder about another fee, which is Storage charge. In freight, Storage charge is the fee for storing containers at the port. This fee you do not pay through the shipping company anymore, but will pay directly to the port.
In essence, the storage charge is the fee that is separated from the DEM. Therefore, many people confuse the DEM fee with this fee. As for the Storage charge fee, it can be understood that if the port is holding your goods and the DEM free period has expired, you will have to pay the container storage fee directly to the port. At that time, the fee to pay for the port is the storage charge. So you must have understood what Storage charge is and not confused with DEM fee anymore.
Relationship of DEM, DET and STORAGE fees with imports
Relationship of DEM, DET and STORAGE fees with imports
Things to note and experience about DEM / DET
For those who need to import and export goods, it is necessary to understand the 3 types of DEM DET Storage fees. The following issues should also be kept in mind:
You are not charged DET when packing at the yard.
DEM/DET and Storage fees will be calculated based on the type, size of the container as well as the number of days of delay. Compared to other types of containers, refrigerated containers will usually be charged much higher.
DEM and DET fees will be charged both weekends, Saturdays, Sundays and public holidays, except for special cases.
Import and export goods should pay attention to DEM, DET and Storage fees phí
Import and export goods should pay attention to DEM, DET and Storage fees phí
Different shipping lines will charge different Demurrage and Detention fees.
You are entitled to apply for an extension of the free period of DEM and DET if you have a good relationship with the carrier, the ship has a policy for this case or the volume of monthly volume is large, etc.
You need to take care of the booking issue as well. Even if you contract according to the terms of the incoterm, regardless of the terms, it is always a good idea to ask clearly about the free DEM DET period, the fees at the port of loading and the port of discharge.
How to charge DEM, DET and Storage phí
In freight transport, there are many different types of fees, including storage fees, storage fees, and storage fees. Here is how to calculate Demurrage, Detention and Storage charges in ocean freight?
We need to understand Demurrage fee = Demurrage time = Demurrage fee = Demurrage charge = DEM = Storage time = Storage fee. (calculated in days – including holidays and Saturdays and Sundays). It is understood as the period of time that the shipping line allows the shipper to leave the container at the yard/port.
Demurrage fee = Detention time = Detention fee = Detention charge = DET = Cont storage time = Cont storage fee. (calculated in days – including holidays and Saturdays and Sundays). It is understood as the period of time that the shipping line allows the shipper to keep the container in its warehouse
Ports will give shippers a certain number of DEM/DET days so that shippers can promptly arrange to pick up/return empty containers/conts at both ends. It is customary for shipping lines to collectively call DEM and DET freetime. If the goods owner uses within these days, he will not be penalized. Using more than this number of days, will start to be charged a penalty fee. The penalty amount is usually progressive (For example, late from 1st to 3rd day, the penalty is 20USD/cont 20'/per day; from 4th to 7th day”: 30USD/cont 20'/per day ; from the 8th day onwards: 40USD/cont 20'/per day). Usually, the DET fee or double the DEM fee.
Freetime of most shipping lines ranges from 05 to 07 days DEM and 05 to 07 days DET
Cases where goods are charged DEM/ DET/ Storage
Besides Storage, what are DEM and DET? You should also inquire into the circumstances under which these fees are charged. Currently, there are many cases that cause you to pay Storage, DEM and DET fees. Eg:
Wrong document information
In case the bill of lading for the consignee or the bank has incorrect information about the vessel, address, etc. or is wrong with other documents when submitting to the destination customs, for example, the certificate of origin of goods C/ O or commercial invoice and must be corrected as required by customs or the goods will not be processed. Although the container has arrived at the port, you are not eligible to receive a Delivery Order. As such, you will have to pay an additional Demurrage charge or Detention charge.
Late receipt of voucher
You will also be charged in case of late receipt of the voucher. The cause of late receipt of documents may be due to the fact that documents such as bills of lading, packing lists, C/O needed for air cargo clearance arrive on time by:
The shipper did not prepare enough documents, leading to late delivery.
There is a system error or some other reason causing the shipping company to issue the bill of lading late.
In case of purchase and sale of L/C and documents that do not arrive at the issuing bank in time, it may be delayed by the nominated bank.
Goods bill of lading form
Goods bill of lading form
Lost voucher
In the process of transportation, it is possible to lose documents and bills of lading due to carelessness. This will take a long time to get the bill of lading back.
Customs clearance, slow goods inspection
When the container arrives at the port, in addition to providing documents, you also have to clear customs to get the goods. According to regulations in countries, including Vietnam, the recipient will be required to provide detailed and specific information about imported goods. At the same time, the information on the voucher and the commercial invoice must match.
When inspecting goods, customs will pay great attention to checking HS code for the purpose of classifying and declaring goods correctly. You may be fined, even under suspicion when entering the following shipments if you declare the wrong HS code.
Delays in customs clearance are very common and there is no estimated time period for this.
Wrong declaration of HS code leads to many troubles
Wrong declaration of HS code leads to many troubles
Slow cargo release at destination
The cause of this may be because the shipping line receives the original invoice for endorsement. For example, not yet endorsed by the shipper on the bill of lading under the "To Order of Shipper" order, but not until the bill of lading is sent to the consignee, then the recipient will have to return the bill of lading to the shipper for endorsement . The shipper then re-sends the bill of lading. This is time consuming and leads to delays.
Or it may be that the shipping line has not received the money from the recipient at the destination, so it is delayed in returning the goods. This is largely due to the fact that the receiver does not know the details of Incoterms and thinks that the shipper has already paid all the local charges.
Can't reach the consignee
If the goods have arrived at the port but the shipping company does not contact or reach the consignee on the bill of lading, leading to the expiration of the free time limit for DET, DEM, and Storage, the goods may be charged. This case mainly occurs when the sender, receiver, even both abandon the shipment but do not notify the shipping line.
Video explaining how to charge Luu Cont, Luu Bai, Luu Kho (in Vietnamese)
summary
The above content is shared for the purpose of helping you understand and distinguish what Storage, Demurrage and Detention are, and how they are different. All three of these fees appear at the port of loading and unloading. While DEM and DET fees are paid by shipping lines, Storage fees will be paid directly to the port. In addition, all three types of fees are applied to both retail and container cargo.
Above is all the important information about Storage fees, what is DEM DET? If you have any questions, please contact SAMCO VINA for more detailed advice.
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