In the process of importing and exporting, we often encounter two types of Demurrage and Detention fees, abbreviated as DEM and DET, long-time businesses in the industry are probably no strangers to these two fees. DEM and DET fees are probably the two most frequently incurred fees. So what causes DEM and DET fees to arise?. Let’s work with FBI LOGISTICS to find out the causes of DEM and DET fees in Logistics!
What causes DEM and DET fees?
Causes of DEM fees
There are many causes for containers to incur DEM and DET fees, so what are the causes? Let’s work with FBI Logistics to find out the causes of DEM and DET fees in Logistics through the article below.
- Incorrect vouchers, incorrect types, wrong content, etc.
- Delivery of documents is slow
- Lost documents
- Complicated customs clearance or inspection
- Due to the process of releasing the goods at the port of destination
- Unable to contact CNEE
Incorrect documents – Causes of DEM/DET fees
When the document information is incorrect, it will also causes of DEM and DET fees, for example, the recipient’s B/L has different information such as: address, ship number, cargo information, … or documentary information such as Commercial Invoice or Certificate of Origin, false or any misleading information. Customs will require correcting information to be allowed to clear customs.
During the editing process, if the cargo ship has docked, it is forced to wait until the documents are processed and there are no errors. Thus, during the period of storage and warehousing, the recipient is forced to bear additional costs of DEM and DET until the goods are taken out of the yard.
Delivery of documents is slow
There are also cases where necessary documents for customs clearance of goods such as B/L, Packing list, etc., do not reach the consignee in time. These problems are usually caused by:
By the bank
Delay at the nominated bank (seller’s bank) if related to L/C and documents not reaching the opening bank (buyer’s bank) in time.
By the seller
Shipper does not plan in advance to prepare all related documents but waits until the last minute to collect all and send to CNEE. So even if only one set of parts in a set of documents has a problem, it will affect the whole set of problematic documents, which will affect the whole set of documents that cannot be sent in time.
By the shipping company
The shipping line’s delay in issuing an application to the Shipper, may be due to:
- System error.
- The export customs documents were not received from the exporter at the port of departure.
- The port has not yet confirmed the container.
- The exporter has not yet paid the freight to the shipping line.
Lost documents – Causes of DEM/DET fees
This is a very common problem that is also the main causes of DEM and DET fees. There are many cases where documents are lost because they are lost during the transportation of the courier company, in which the biggest problem is the loss of documents.
Some procedures can take a long time to process, especially if a bank guarantee is required. Sometimes customers do not have enough 200% or 300% of the value of the goods as required by the shipping line for the guarantee.
In such cases, CNEE will not be able to pick up the goods (because there is no documentation) and the containers will be subject to heavy DEM and DET fees.
Complicated customs procedures
The documents are complete, the container has arrived at the port of destination and CNEE approaches the customs office to clear the goods. Need to declare customs about the details of imported goods, customs declaration information needs to match the information printed on the goods, (each HS code will be charged a separate customs duty), false declaration HS codes can not only lead to fines but also lead to suspicion surrounding CNEE’s activities.
One of the important information that customs need to check is the HS code to make sure the goods have been classified and exploited correctly. The customs office is especially careful with retail goods, shoes, accessories, etc. So the inspection of such cases is very common.
Testing in these cases usually doesn’t have a fixed time frame for how long it will take. Different countries will have different inspection levels and during that inspection the container may incur DEM and DET fees.
Due to the process of releasing goods at the port
Another reason, which is also considered a causes of DEM and DET fees, is that the release of goods is delayed, the shipping line receives the original bill of lading without a suitable endorsement, (this is a very common case) and is the causes of DEM and DET fees.
For example: The bill of lading shown in the Consignee section is “To Order Of Shipper”, the Shipper did not sign the logistics for the original bill of lading, (this was discovered at the time the goods arrived at the port of destination). To get the goods, the original bill of lading must be sent back to the Shipper for endorsement and then sent back to CNEE.
Another fairly common cause of delayed release at the port of destination is the shipping line’s failure to receive funds from CNEE at the port of destination. This is often seen from the CNEE’s lack of understanding of where Incoterms are applied. CNEE then assumes that the merchant must pay some or all of the Local Charge surcharges.
Can’t contact CNEE – Causes of DEM/DET fee
Last but not least, there are cases where the shipping line cannot contact CNEE or the Notice mentioned on the bill of lading. In most cases, it may have been abandoned by the sender or receiver without the shipping line being informed of this.
The shipping line still thinks that someone will come to pick up the goods, so they still send a notice of goods to (Notify party).
It is not uncommon for shipping lines to hold freight forwarders responsible for goods that are not cleared, such cases also generate DEM and DET costs.
Recently, the sharing of FBI LOGISTICS about the causes of DEM and DET fees . Hopefully, through this article, readers can grasp and understand the causes of DEM and DET fees, and take notes later to avoid this type of fee.
Here FBI LOGISTICS has useful knowledge about Logistics industry you can refer to:
Distinguishing DEM and DET fees in Logistics
Distinguish between specified goods and normal goods
The fastest way to look up Hs Code
You can watch more of our DEM vs DET Differentiation video here!!!
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