Demurrage

What is demurrage and detention?

Demurrage is a fee levied on containers, cargo or equipment that has overstayed its time at a terminal location. Demurrage charges vary based on the shipping line, terminal, warehouse or container station.

In the shipping context, detention is a fee charged by the port or terminal when the importer has taken the container for unpacking but has not returned it empty within the given time frame.

Detention and demurrage both arise in the shipping industry, but they are not the same:

• Demurrage charges relate to removing the container for unpacking on time

• Detention charges stem from not returning the empty container on time after unpacking

Reasons for demurrage and detention charges

These charges serve a practical purpose: controlling port congestion. Congestion reduces the efficiency of individual supply chains and disrupts others moving through the same port. Fortunately, these fees are essential.

Fortunately, these fees are not arbitrary and can often be avoided.

Calculating charges

Demurrage is calculated per container daily, starting from the discharge date. Charges continue until the importer removes the full container from the port or terminal.

Detention is calculated per container daily. It begins when the allotted time frame ends and continues until the empty container is returned to the designated depot.

Port congestion and its effects on demurrage and detention charges

Port congestion can result from a range of causes, including:

• Conflicts around the world

• Worker strikes

• Weather delays

• Overbooking a port or terminal

Importers can also contribute to congestion by failing to remove a full container for unpacking or not returning the empty container after unpacking. Fees help minimize this form of port congestion.

Unfortunately, port congestion can contribute to demurrage and detention charges, even when the congestion is not the shipper’s fault.

When different factors are at play in contributing to these charges, it’s understandable to wonder who is responsible for demurrage charges. Regarding imports, the importer/shipper needs to pay the fees.

Strategies to reduce demurrage and detention charges

These fees can greatly add up from day to day, especially throughout many shipments. Cost control required consideration of ways to avoid charges. These are steps that can help:

• Carry out advanced planning and negotiation, such as negotiating extra storage days.

• Gain real-time information on container status

• Plan offloading schedules

• Learn from data and optimize free time

How Infios controls demurrage with shipment and order visibility in ocean transportation

Infios Shipment and Order Visibility helps shippers manage demurrage and detention charges by increasing visibility into freight across the entire multimodal network.

Shippers can gain detailed information on ocean freight, from the vessel and container levels to the order and item levels.

Key capabilities that help control these charges include:

• Visualizing the full shipment lifecycle

• Collecting and standardizing information from across the supply chain to provide a complete picture

• Sharing the location of ocean container shipments along with detailed information, including the current vessel location and estimated arrival time at port

Be prepared for charges in customs and ocean freight

Demurrage and detention charges are difficult to avoid entirely, particularly when port congestion is outside a shippers’ control. Still, understanding and actively managing these charges is essential—they add up, affect the bottom line and can be controlled.

Infios Transportation Management (TM) works alongside Shipment and Order Visibility to provide the end-to-end supply chain awareness required to limit demurrage exposure.

Learn more about Infios’s visibility solutions and how they help manage demurrage and detention charges.