Demurrage and detention charges: free time and how to avoid them
Demurrage is the charge for a full container that stays in the terminal longer than the free time allows, and detention is the charge for keeping the carrier's container outside the terminal before it is returned empty (or full, on export). Carriers apply both under their tariffs, usually as daily rates that step up over time. The best protection is negotiated free time and documents that are ready before the vessel arrives.
By Hiram Trade Editorial Desk
- Published
5 min read
Definitions
Wording differs between carriers and countries, but the split used in container shipping is the one Maersk describes:
- Demurrage measures the time a full container spends inside the terminal: from discharge off the vessel or train until it is picked up at the terminal gate.
- Detention measures the time the container spends outside the terminal: from pickup of the full container until the empty is returned to the port or a depot.
- Free time is the period during which the carrier does not charge for use of its equipment.
On export the direction reverses. Detention runs from release of the empty container to the shipper until it returns to the terminal, and demurrage from gate-in of the full container until it is loaded on the vessel.
Carrier demurrage is not the same as terminal storage charges. In some ports the carrier combines both into one tariff, in others you will receive two separate invoices.
How free time is counted
Carrier tariffs differ in details that drive the invoice amount:
| Element | Variants found in tariffs |
|---|---|
| Type of days | calendar days or business days |
| Start of the clock | e.g. first day after complete discharge of the vessel, or day after equipment release |
| Structure | separate demurrage and detention free time, or combined free time |
| Rates | daily tiers, e.g. a higher rate from a given day |
| Equipment type | different rules for dry containers, reefers, flat racks |
For example, in the Atlantic Container Line tariff demurrage starts at 00:01 on the first day after free time expires, and the start of counting depends on the port: in one it is the first calendar day after the vessel completes discharge, in another the first business day. There is no single rule for all ports; you have to read the specific carrier's tariff for the specific port.
What causes the charges
Most cases come down to a handful of causes:
- Documents. The original bill of lading did not arrive in time, the invoice has errors, a certificate of origin or other certificate is missing. See our overview of international trade shipping documents.
- Customs. A hold for inspection, a classification query, a missing EORI number. The process is described in EU customs clearance step by step.
- Payment. Under documentary collection or a letter of credit the bank releases documents only after payment or acceptance; a delay on the buyer's side means days in the terminal. More in our article on payment terms.
- Inland transport. No trucks or terminal time slots available.
- Consignee warehouse. The container waits at the dock because there is no space or labour to unload.
- Empty return. The depot named by the carrier is far away or not accepting containers on that day.
How to reduce charges in practice
- Check free time before booking. Ask the forwarder or carrier for free time for the specific port and equipment type in writing, not in general terms.
- Buy extra days upfront. Maersk points out that additional detention days can be purchased at booking. This is usually cheaper than charges incurred after the fact.
- Prepare documents before arrival. With a regular supplier, consider a sea waybill or telex release instead of original bills of lading, if your payment security allows it.
- Lodge the customs declaration early. The Union Customs Code (Article 171) allows a customs declaration to be lodged before the goods are expected to be presented to customs; agree this with your customs broker.
- Plan trucking and unloading. Book the truck and terminal slot before the vessel calls, and agree the unloading date with the warehouse.
- Track deadlines. Record the free time expiry for each container and compare it with actual pickup and return.
What to negotiate with the carrier or forwarder
With regular volumes, free time and charge terms are negotiable. Worth putting in the contract or quote:
- free days separately for import and export and for each equipment type,
- whether days are calendar or business days and which event starts the clock,
- whether free time is combined, which gives flexibility between terminal and warehouse,
- rates after free time for each tier,
- no charges for days when pickup was impossible for reasons on the terminal or carrier side,
- invoicing deadline and dispute procedure, with required data: container number, dates, basis of calculation.
Who pays: the sales contract
Incoterms 2020 rules allocate transport costs and risk, but they do not mention demurrage or detention by name. In practice the charges fall on the party that has the relationship with the carrier and controls that stage, but disputes between seller and buyer are common, for example when a container is stuck because of an error in the seller's documents. It is worth adding to the contract who is responsible for charges caused by delays in documents, payment and collection.
On Hiram, every quote states an Incoterms 2020 rule and place, and negotiation outcomes are recorded in successive, versioned rounds, so you can later check what the parties agreed on dates and documents. If you are looking for a supplier or buyer, see current offers and requests.
Sources
- Maersk: What is demurrage and detention in shipping for buyers? (opens in a new tab)
- Atlantic Container Line: Free time, demurrage and detention (opens in a new tab)
- European Commission: Customs declaration (opens in a new tab)
- Regulation (EU) No 952/2013 laying down the Union Customs Code, EUR-Lex (opens in a new tab)
This article is for information only and is not legal, tax or customs advice. Rules and rates change: check the current official sources or consult an adviser before you decide.