Why it matters
Demurrage and detention are charges that arise when a shipment plan slips, and they often grow to unexpected amounts. Cargo held at customs, a missing document or congestion at the consignee's warehouse can all cause daily per-container charges to pile up. Understanding the logic of these charges reduces both the cost and disputes between the parties.
Three different charges
Free time: The number of days the carrier (shipping line) lets you use the container free of charge. It varies by route, port, container type and the agreement with the customer.
Demurrage: A daily charge paid to the carrier when a container stays inside the port or terminal after the free time has run out. For imports the clock starts when the container is discharged from the vessel and stops when the container leaves the terminal.
Detention: A daily charge paid to the carrier when a container taken outside the terminal is not returned empty within the free time. For imports the clock starts when the container leaves the terminal and stops when the empty container is returned to the depot named by the carrier.
Storage: A charge paid to the terminal operator because the cargo or container is waiting at the terminal. It can run in the same period as demurrage, but it is paid to a different party.
Some carriers do not give separate free time for demurrage and detention but a combined free time (combined D&D). In that case the days inside and outside the terminal are added together and deducted from a single free time.
Timeline
The chart below shows the journey of an import container. Hover over the bars to see which clock is running at each stage.
Summary table
| Charge | Where? | When does it start? | When does it stop? | Paid to |
|---|---|---|---|---|
| Demurrage | Inside the terminal | For imports, discharge from the vessel (charged once free time ends) | When the full container leaves the terminal | Carrier (shipping line) |
| Detention | Outside the terminal | When the container leaves the terminal (charged once free time ends) | When the empty container is returned | Carrier (shipping line) |
| Storage | Inside the terminal | When the terminal's free storage period ends | When the container leaves the terminal | Terminal operator |
Example timeline: 9 days in the terminal, 8 days outside; 5 days' free time each for demurrage and detention and 3 days' free storage are assumed. For exports the order is reversed: the empty container is collected (detention) and the full container is delivered to the terminal (demurrage).
Cost calculator
Enter the free time, waiting days and tiered daily rates from your own quotation. The default values are examples; real tariffs vary by carrier, port and container type.
Worked example
| Example (2 containers) | Chargeable days | Per container | Total |
|---|---|---|---|
| Demurrage (9 days in terminal, 5 days free) | 4 | 100 USD | 200 USD |
| Detention (8 days outside, 5 days free) | 3 | 75 USD | 150 USD |
| Total | 175 USD | 350 USD |
Example tiered tariff (not a real tariff): chargeable days 1–5 at 25 USD, days 6–10 at 50 USD, and from day 11 at 80 USD per day per container.
Most carriers apply a tiered tariff: the first days after the free time are charged at a lower rate and later days at a higher rate. This is meant to encourage returning the container as quickly as possible.
Not to be confused with vessel demurrage
In shipping, the word "demurrage" is also used for chartered vessels. There, demurrage is the amount the charterer pays the shipowner when the vessel exceeds the time agreed for loading or discharging in port (laytime). If the time is shorter, the shipowner may pay the charterer despatch. Container demurrage and vessel demurrage use the same word but are different concepts.
How to reduce the cost
- Prepare the customs documents before the vessel arrives, and use pre-arrival declaration options.
- Negotiate free time at the booking stage; ask for extra free days on regular cargo.
- Plan unloading capacity at the consignee's warehouse in advance.
- State clearly in the sales contract and the Incoterms rule who bears these charges at destination.
Test yourself
- A container is held at customs and cannot leave the terminal. Which charges run? (Answer: Demurrage if the free time has been exceeded, and storage because it is waiting at the terminal.)
- A container stayed at the consignee's warehouse for 12 days without being unloaded. Which charge runs? (Answer: Detention.)
- Combined free time is 14 days; the container spent 6 days in the terminal and 10 days outside. How many days are charged? (Answer: 6 + 10 = 16 days; 16 − 14 = 2 days.)