A new solution to demurrage charges: flexible warehousing on-demand

11 June 2024

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Ashley Tebbutt

Ashley Tebbutt , Sales Director

The last thing that any importer wants to pay is demurrage.

Demurrage is a fee paid to transport operators when there’s a delay in unloading shipping containers beyond an agreed timeframe (normally around three days after discharge). In a short space of time, demurrage can cause huge damage to a business’s finances – a nightmare if there aren’t cash reserves to draw upon.

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The effects of demurrage are often severe

Demurrage can cause huge damage to a business’s finances over a short space of time – a nightmare if there aren’t spare cash reserves to draw upon.

This is especially true for smaller suppliers whose business model relies on operating with fewer overheads. They might not own or use a warehouse, instead moving goods straight from port to retailer to keep costs low and stay competitive against larger suppliers.

If a retailer needs to delay the shipment’s arrival for any reason, perhaps because they’re still trying to shift their current seasonal stock to make room, suppliers can find themselves racing against the clock to find a solution – or face potentially devastating demurrage charges. At best, these charges eat into profit margins, and at worst, they can lead to a business going under.

Off-dock storage can help – but increasingly, it’s not enough

Freight forwarders often work with off-dock storage providers to help their customers avoid paying demurrage fees.

These facilities can become congested during peak seasons or other times of high volume, such as the build-up to Chinese New Year, when importers rush to secure stock before factories close for the extended holiday. Unfortunately, it’s during these busy periods that you’re most likely to need emergency storage space. This means it’s still quite risky to rely on off-dock storage as a backup, as availability can become scarce, and high demand can lead to higher prices.

And the shipping crisis is making things worse. As the BBC recently reported, attacks in the Red Sea have reduced the global shipping capacity, causing container prices to skyrocket. Retailers are now rushing to get their Christmas stock ordered early, which brings a whole new set of problems. The mass of early deliveries will only increase the congestion around ports. As more containers take up space, demurrage and dry dock storage fees also start to rise.

Suppliers are desperate to avoid paying mounting charges, and freight forwarders want to look after their customers. It’s a stressful problem for both, one that requires a flexible solution that can be booked and accessed quickly.

Fortunately, Pallet Hotel can help.

Pallet Hotel is a fast, easy and self-serve solution to demurrage

When businesses face demurrage charges, time is in short supply. Looking for space and negotiating a viable price are high-pressure activities when costs are escalating daily.

Thankfully, helping suppliers find last-minute space is one of the many scenarios that Pallet Hotel is perfect for.

What is Pallet Hotel?

Our on-demand warehousing service is based across the whole of the UK. It’s fast and easy to set up, in fact – it effectively allows customers to self-serve. Simply search for where you want to store your goods, and you can book as much space as you need.

There’s no issue for those who aren’t sure how long they’ll need to store their stock, as there are no minimum commitment terms – you only pay for the time you’re using the space.

What are the benefits?

The advantages for suppliers are many. Over 200 warehouses are available across Visku’s network, so instead of being forced to store stock in off-dock storage near a port (which may be hundreds of miles away from the goods’ final destination), the shipment can be housed much closer to where it’s meant to end up. If a retailer suddenly decides they can now accept the stock, the goods can be quickly transported from the nearby Pallet Hotel. On the other hand, if there are further delays, the stock can remain in the Pallet Hotel for as long as is needed.

By storing goods with Pallet Hotel, there’s also a great deal more flexibility compared to traditional dry dock storage, where goods would typically stay in a container until they’re needed. Suppliers can access and process their goods as they need, opening the door for quality control checks as well as the reworking and personalisation of items, such as adding logos or monograms.

We offer devanning, palletisation, sorting, and wrapping services, ensuring that goods can be properly prepared for storage regardless of how they arrive. This relieves the chance of suppliers facing detention charges – a further unwelcome penalty fee paid when a container hasn’t been returned within the agreed period. It also enables suppliers to fulfil their orders in stages with the partial delivery of goods for when the retailer has the capacity to take some, but not all, of the stock.

Freight forwarders can rely on Pallet Hotel as a solution that will add significant value for their customers. Facilities are available to cater for all sorts of specialised requirements, and with five million square feet of storage space available across the country, you’ll always be able to solve storage problems whenever or however they arise.

Crucially, Pallet Hotel offers a fixed price per pallet for the whole year around, so it can be priced-in during contingency planning, making it a way of de-risking importing operations. With Pallet Hotel as a reliable fallback, suppliers, particularly independent suppliers, can confidently enter into large retail contracts knowing they have a plan in place to cope with any requests for delayed delivery.

A smoother flow of stock for all

Pallet Hotel is an innovation that brings much-needed relief to an industry that’s been plagued with supply chain disruptions for far too long. By giving suppliers and freight forwarders more storage options, we’re helping to facilitate a smoother and more efficient flow of stock into the UK. Not only does this reduce the chances of businesses facing demurrage, it also helps to free up containers for shipping lines and ports. It’s disrupting the industry in a way that everybody wins.

Visku helps businesses plan and find the flexible space they need.

Get in touch

If you’d like to have an informal chat about how Pallet Hotel can help your business, our experts would be happy to help.

Enquire now
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Ashley Tebbutt

Ashley Tebbutt , Sales Director

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