Storage Fee

What Is a Storage Fee?

A storage fee in global shipping is a charge imposed by ports, warehouses, or shipping companies when cargo remains at a storage facility beyond the allowed free period. This fee covers the cost of space and handling, while incentivizing timely collection and preventing congestion. Storage fees vary by location, type of goods, and duration, and they typically accumulate daily.

What Are the Differences Between Storage Fees, Demurrage, and Detention?

Demurrage and detention, and storage fees are seemingly similar fees relating to container storage. The following table shows the key differences between these three types of fees: 

Which Factors Influence the Price of Storage Fees?

A typical free period for storage ranges from 3-7 days at most ports, although it varies depending on location, port policies, and container type. High-traffic ports may have shorter free periods due to space constraints, while some regions may offer extended free periods for specific goods, or during low-demand seasons.

Once the free period has ended, there are several factors that influence the price of storage fees:

• Location: ports in high-demand areas, or major trade hubs, often have higher storage fees due to space limitations and traffic volume
• Container size and weight: larger and heavier containers require more space and resources, which can increase storage costs
• Type of goods: hazardous, perishable, or temperature-sensitive items may incur higher fees as they require special storage conditions
• Duration of storage: fees typically increase the longer cargo remains, with rates often calculated daily after an initial free period
• Seasonal demand: fees can rise during peak shipping seasons, as storage space becomes more limited
• Port or warehouse policies: each facility may have unique pricing structures, impacting costs based on their space and operational constraints

A large, heavy container with perishable goods being stored at a U.S. port would incur high storage fees due to size, weight, location, and special storage requirements (refrigeration). In contrast, a smaller container with non-perishable items stored in a European port would have lower fees, as it requires less space, no special conditions, and may benefit from generally lower rates in some European locations (see below).

How Do Different Regions Compare in Terms of Storage Fees?

Storage fees vary significantly by region. Here’s a comparison:

1. North America: major U.S. ports, like Los Angeles and New York, typically have higher storage fees, due to high traffic volumes and limited space. Free periods often range from three to five days, with daily rates increasing significantly thereafter.
2. Europe: European ports, such as Rotterdam and Hamburg, can offer competitive storage fees, but they also vary widely by country and port efficiency. Some regions may provide extended free periods for specific goods, while others impose strict time limits.
3. Asia: Ports in Asia, such as Shanghai and Shenzhen in China, can have lower initial storage fees, but they may increase quickly due to high demand and congestion. Free periods may be around five to seven days, depending on the port.
4. South America: storage fees in South American ports can be relatively high, often influenced by infrastructure challenges and lower competition. Free periods tend to be shorter and rates can escalate quickly after the grace period.
5. Africa: storage fees can be unpredictable in many African ports, due to varying infrastructure and port capabilities. While some facilities may offer lower rates, others impose higher fees, due to operational inefficiencies and limited space.

Overall, businesses should carefully evaluate storage fees in relation to specific ports and regions, to make informed decisions about shipping and logistics.

Who Is Responsible for Paying a Storage Fee?

The importer, exporter, or consignee is typically responsible for paying a storage fee. If the cargo is not collected within the free storage period, these parties are responsible for any storage fees incurred, covering costs for leaving goods at the port or warehouse. In some cases, freight forwarders or third-party logistics providers may handle payment initially and bill the consignee later.

Additionally, the shipping company is responsible in some circumstances for paying the storage fee. For example, if goods were shipped under CFR (cost and freight) Incoterms and the contract includes storage provisions, the shipping company may be responsible for storage fees, until the buyer takes possession of the cargo.

How Do Storage Fees Impact the Supply Chain?

Storage fees are a powerful motivator for businesses to streamline their operations and improve their supply chain logistics. The prospect of incurring these fees encourages companies to optimize shipping schedules, to ensure timely cargo pickup and delivery. Awareness of potential storage costs can drive organizations to adopt just-in-time inventory practices, which minimizes the time goods spend in storage.

In an effort to avoid delays that would trigger storage fees, companies tend to invest in better coordination with suppliers, shipping lines, and logistics providers. This need to mitigate storage fees can drive businesses to analyze and refine their supply chain processes.

What Are Five Things Shippers Can Do to Avoid Storage Fees?

Shippers can take several proactive measures to avoid storage fees:

1. Timely communication: maintain open communication with all parties involved in the supply chain to coordinate pick-up and delivery schedules 
2. Efficient planning: plan shipments in advance, considering lead times and potential delays, to ensure timely arrival and pick-up of goods
3. Use technology: tracking and management software monitors shipments in real time, enabling quicker responses to delays and potential storage issues
4. Negotiate terms: work with shipping companies to negotiate favorable storage terms that include adequate free storage periods

Alternative warehousing: use distribution centers, or other off-port facilities, which may offer more flexible storage terms