Does a shipping line charge demurrage and detention for LCL shipments the same way they charge for FCL shipments..?? This question was raised by a reader of this resource..
As explained in my article about the difference between demurrage and detention
- Demurrage relates to cargo (while the cargo is in the container)
- Detention relates to equipment (while the container is empty after unpacking or before packing)
As you can see, both Demurrage and Detention relates to containers or equipment that is owned or operated by the shipping line but used by the customer on a temporary basis after which they have to return it..
Till such time as the container remains in the hands of the customer, it will incur either Demurrage or Detention depending on whether the cargo is still inside or not respectively..
However, in the case of LCL shipments, the shipping line operates the container and therefore, is responsible to off load the contents of the container at their CFS..
So they cannot charge anyone for the demurrage or detention as the container is under their control and not in the hands of a 3rd party client like in the case of FCL cargo..
But if the cargo is lying uncleared in the CFS under the control of the shipping line, the shipping line may charge storage charges on the volume of space occupied by the cargo..
If the container is however operated or under the control of a Groupage operator, it maybe possible that the shipping line can charge demurrage or detention to the Groupage operator because they kept the box more than the allowed free time..
Yes there is a difference between LCL and Groupage..
In many cases there may be situations where shippers don’t have enough cargo to fill a full container and they have only small parcels.. They deliver these small parcels to the shipping line’s Container Freight Station..
These small parcels are known as LCL which stands for Less than Container Load..
The shipping line collects these small parcels and make up a Full Container Load..
In these cases, although there is a full container load, as the shippers are many, the shipping line would issue their individual bills of lading to the various shippers..
These bills will be the direct line bills of lading and will have a term CFS/CFS mentioned.. This means that the shipping lines responsibility begins at the CFS (Container Freight Station) in port of load and ends at the CFS in port of discharge..
The freight charges for these are charged by the line directly to the shippers in proportion to the amount of cargo they have received from the shipper..
In some countries however, the shipping lines do not offer LCL shipping services and these services are handled by Groupage Operators..
In these countries, the LCL cargo is delivered by the client to a warehouse for packing into a container.. The act of collecting the LCL cargo from the various shippers and packing into a container is known as Consolidation.. The entity that handles such operations are known as Consolidators (Groupage Operators).. The box consolidators handle is called a Consol Box..
In the case of consolidation cargo, the consolidators issue their House Bill of Lading to the shippers and secure a Master Bill of Lading from the shipping line for the container which is booked with the line as an FCL and which will show them as a shipper on the lines bill of lading..
Depending on the contract with their customers the House Bill of Lading maybe termed as CFS/CFS or Door to Door.. The consolidators responsibility and delivery terms will depend on these terms mentioned on the bill of lading..
The freight charges for these are charged by the Consolidator to the shippers in proportion to the amount of cargo they have received from the shipper..
Which model is popular in your country – LCL or Groupage..??
Article republished after critical updates