Logistics
29.12.2022

Demurrage in logistics: From when is there an entitlement?

Traffic jams, traffic accidents, poor planning, broken vehicles: the reasons why trucks arrive at the loading zones later than agreed are many and varied. But delays also frequently occur at the ramp itself, for example when other late trucks arrive at the same time or there is a lack of personnel or loading equipment. If a carrier has to wait a long time to load and unload its freight, even though it is not responsible for the delays, the responsible transport company is entitled to compensation - known as demurrage. This can be easily avoided with transparent real-time communication.

Table of Contents:

  1. What are demurrage times and demurrage charges in logistics?
  1. How to calculate demurrage times and demurrage charges for trucks?
  1. How to avoid litigation over demurrage?
  1. How can companies avoid demurrage charges?

What are demurrage times and demurrage charges in logistics?

If a truck or other means of transport cannot be used to transport goods and merchandise, for example because there is a longer waiting time at the unloading ramp, this causes economic damage for the transport companies and freight forwarders concerned. In logistics, the period during which the vehicle is not operational is referred to as idle time. In addition to waiting times at the ramp, idle times can also be caused by repairs, accidents, malfunctions or damage to the vehicle.

If the transport company in question cannot use the truck to transport further goods, this has a negative impact on total operating costs and sales. There are downtime costs. In addition, long downtimes can also result in reputational damage. Once the transport company has a bad reputation in the industry, this makes it more difficult to retain customers and acquire new customers and business partners.

§ Section 412 (3 ) of the German Commercial Code (HGB ) therefore stipulates that carriers are entitled to an appropriate compensation payment in the event of an excessively long waiting time - the so-called demurrage. The claim arises as soon as the carrier has to wait beyond the loading or unloading time due to a contractual agreement or for reasons that do not fall within his sphere of risk.

Since this claim is defined by law, the customer of the transport company may not simply exclude it in its general terms and conditions, as the Federal Court of Justice (BGH) ruled in a 2010 judgment (BGH, judgment of May 12, 2010, Case No. I ZR 37/09).

From when is a demurrage fee payable?

In order for a carrier or freight forwarder to claim demurrage from a customer, the agreed time slot for loading and unloading must have been exceeded. The carrier must therefore have waited longer than actually agreed for loading and unloading.

Although the Commercial Code specifies when a claim for demurrage arises, what the paragraph does not regulate is when exactly the relevant time slot has been exceeded. In practice, therefore, legal disputes about the payment of demurrage are a recurring occurrence.

The contractual conditions for road haulage, freight forwarding and logistics companies (VBGL) provide guidance. These stipulate in § 5 Para. 2 VBGL that a loading or unloading time of two hours each for vehicles with a permissible total weight of 40 tons is usual. Only after this total of four hours do the actual idle times for the truck begin - and thus the claim to demurrage.

Demurrage charges may be due if the agreed time slot is not adhered to and a truck driver has to wait through no fault of his own.

How to calculate demurrage times and demurrage charges for trucks?

Demurrage times can be calculated on the basis of the above-mentioned regulations: as soon as the carrier waits more than two hours for unloading or more than two hours for loading through no fault of his own, the transport company is entitled to compensation in the form of demurrage.

The demurrage itself, on the other hand, cannot be calculated as a lump sum - because there is no clear legal regulation here as to how high the compensation payment can or may be. However, companies can use court decisions as a guide. For example, the Unna Local Court ordered a shipper to pay demurrage for a truck in the amount of 121.80 euros.  

The driver of the truck had to wait at the ramp of the company in question from 7:30 a.m. to 12 p.m. - although the company had advised that waiting times were shorter in the early morning. The freight forwarder in question assessed a demurrage charge of 35 euros per hour, plus VAT, for the period from 9 a.m. to 12 noon. The court ruled in his favor (AG Unna, judgment dated 25.01.07, Ref. 16 C 379/06).

The Thuringia Association of the Transport Industry (LVT) considers a demurrage charge of 50 euros per hour for a truck to be appropriate. Value-added tax is added to the demurrage charge in each case. The demurrage for a truck per day is then calculated on the basis of the hourly estimated demurrage, multiplied by the number of waiting hours in hours. The reasonable waiting time of two hours each for loading and unloading must be deducted from this.

How to avoid litigation over demurrage?

Since the issue of demurrage charges is a recurring source of dispute in practice, long stand times should be avoided from the outset (as far as possible). Clear regulations in contracts and general terms and conditions can help here. In addition, every driver should compare watches with the person in charge at the loading zone after arrival and note the arrival time on a consignment note. If possible, he should have this arrival time countersigned by the person responsible.

Should a dispute actually arise, the speedometer disc or digital tachometer serve to prove the arrival time. If loading or unloading does not take place at all, or if it clearly exceeds the reasonable time, the driver of the truck must inform his dispatcher, who will then contact the customer concerned. It must then inform the customer of the claim and the amount of the demurrage in euros.

If the customer is a regular customer, it makes sense to contractually agree on a reasonable demurrage fee per hour if things do not go forward at the ramp.

Through transparent communication and real-time exchange of information, demurrage and disputes can be avoided.

How can companies avoid demurrage charges?

The answer to this question is simple: with shorter standing times. But how can waiting times at the ramp be shortened? The remedy here is an effective Time slot managementthat coordinates all loading and unloading processes at the ramp. The aim is to synchronize the times at which trucks arrive at Sites for loading and unloading in such a way that long waiting times are avoided in the first place.

Not only can additional compensation payments such as demurrage be avoided, but costs in general can be optimized. Companies that operate efficient time management save up to 30% of costs in goods receipt and goods issue processes, reduce their demurrage charges by 60% and achieve 20% higher storage capacity.

This is made possible by innovative collaboration tools such as TradeLink. TradeLink is a cloud-based platform on which transport companies can communicate in real time with both internal employees and their external partners and service providers - because one thing is clear: communication is the key to success.  

All relevant data is summarized in a clear tool: Carriers, employees and partner companies have access to the data at all times. If there is a change in the planning - for example, because a truck is stuck in a traffic jam - the software automatically communicates each update to all players who are affected by it.  

Employees at Sites and at the ramp always know what needs to be done; drivers are informed which ramp is to be approached, and automated updates mean that changes to plans can be made more flexibly. This means there are no more surprises at the loading ramp and unnecessary and expensive downtime is avoided.

100% transparency in delivery coordination

You want 100% transparency about the performance of your supply partners and service providers? Then contact our experts today for a free initial consultation and a personal introduction to our software.

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