Customs Referrals, Detention and Demurrage
Many importers wonder why their shipment may have been referred by Customs for examination. Additionally, importers who import via a seaport may be presented with charges such as demurrage and detention and not be clear on what these charges relate to. Let’s take a closer look at these terms to gain some understanding.
Canada Border Services Agency (CBSA) referrals can occur at any point in the commercial process, and for a variety of reasons.
High risk referrals for examination based on health, safety and security reasons are always performed at the First Port of Arrival (FPOA). Commercial Compliance examinations are generally performed to confirm the data provided by the importer and verify the customs declaration. Commercial compliance referrals can be moved to a sufferance warehouse from the FPOA for examination.
- Pre-arrival referrals for examination on commercial goods are usually made by the CBSA National Targeting Centre (NTC) and are based on risk assessments for health, safety and security reasons. The NTC identifies goods or shipments that may pose a threat to the security and safety of Canada and they use their IT systems to screen the shipment information through a number of information and intelligence databases to identify potential risks or threats. A risk assessment is performed in advance of the arrival of the goods and a target may or may not be placed on the shipment or goods.
- Targets can also be placed on items by the National Targeting Centre for Participating Government Agencies (PGAs). PGA concerns can also be health and safety related.
- National Targeting Centre targets are referrals for exams which will take place at the First Port of Arrival. These exams are considered high risk hence the reason why they are performed at the First Port of Arrival and the Border Services Officers (BSO) are generally looking for contraband.
- The Border Services Officer at the First Port of Arrival can refer shipments for examination for a number of reasons: health, safety and security or compliance verification. This referral is known as a BSO Referral.
- The CBSA commercial system (currently ACROSS) can also present examination referrals randomly. This referral is known as a Random Referral. The Border Services Officer can heed the random examination recommendation or override it.
When a shipment has been referred by CBSA to be examined it can carry a number of charges which the importer will be responsible to pay.
Demurrage And Detention
Demurrage and Detention charges are related to the costs an ocean shipping line will charge for the use of their container.
Shipping lines will generally offer a number of “free days” wherein the importer has the use of the container to move their goods for free. Demurrage and Detention charges are applied by carriers or shipping lines to importers for possession of a container outside the free days allotted.
The importer is to use the free days to move the container from dockside and unpack the container and then return it empty to the shipping line. The free days generally range anywhere from 3 to 7 days. These days can be negotiated with the shipping line by the importer.
When the free time expires, the user or importer will be subject to demurrage and detention charges. The charges are generally calculated per diem (daily).
Demurrage relates to the amount of the time the loaded contained is within the terminal grounds. Detention relates to the extended use of the container outside the terminal and ends when the empty container is returned to the shipping line.
As an example, a container is discharged from the ship on September 1st. The importer takes delivery of the cargo and returns the container on September 15th.
- Free Days: The importer is given 5 free days from the shipping line. With the 5 free days from the date of discharge the free days expire at the end of day September 5th.
- Demurrage: The container was picked up from the terminal on September 10th. The shipping line will charge the importer demurrage for the number of days the container remained at the terminal outside the free days. The container was removed off the terminal September 10th so demurrage will apply to 5 days.
- Detention: The container was returned to the Shipping Line on September 15th so detention charges will apply on a per diem (daily) basis for those 5 days the container was outside the terminal which was from September 10th to September 15th.
Sometimes the invoice that shipping lines present to the importer do not differentiate between demurrage and detention charges. Generally the per diem rate is the same for both and applies to the time the importer had the use of the container outside of the ‘free days”. Be sure to check the timeframes or dates you are being charged are correct. Importers can also try to negotiate the rates set by the shipping line.
If you are having trouble determining the reason for a Customs Referral or why you are being invoiced for demurrage or detention please give our trade advisors a call to assist you with your shipment. Better yet, let PCB manage the processing of your shipments at the FPOAFirst Port of Arrival. We can assist with the efficient movement of your shipment.