Demurrage & Detention

In international supply chain, there are several penalty risks to be aware of. Two common examples, often surrounded by confusion, are demurrage and detention charges. These charges can rapidly add up, creating a heavy financial burden in your shipping cost.

Don’t worry! Today, we'll take a closer look at the intricacies of these shipping fees. By the end of this article, you'll have a solid understanding and the confidence to navigate them without incurring unnecessary costs!

Below is the picture of quick differentiation between Demurrage and Detention charges.

Understanding the difference between demurrage and detention is essential for managing the complexities of shipping costs. Although both are fees related to container delays, they occur in different scenarios and affect various parts of your supply chain.

What is Demurrage?

Demurrage is a form of shipping fee charged by the Shipping Line when a container exceeds its allotted "free time" after being unloaded from a ship at the terminal. 

Free time is the period during which a container can remain in the terminal without incurring additional charges. This period typically lasts between 3 to 7 days, depending on the specific agreement. It provides time for processes like customs clearance, paperwork, and other necessary steps before the container must be moved.

What is Detention?

Detention is imposed by the shipping line when a container is held onto by the shipper or consignee for longer than the agreed-upon period outside of the terminal.

Similar to demurrage charges, there is also a free period for unloading or handling the container once it leaves the terminal. However, this time frame must be negotiated in the booking contract and can vary based on the specific agreement and intended use of the container.

Who is responsible for demurrage and detention shipping charges?

The specific party responsible for the demurrage and detention charges is ultimately determined by the agreed upon incoterms ( https://www.asicolog.com/post/incoterms ) in the shipping contract. These internationally recognized terms define responsibilities at various stages of the journey.

We hope this article has been helpful and provides valuable insights on managing your containers more carefully. Feel free to reach out to us for more advice on arranging your shipments and minimizing any potential penalty charges!