A Complete Guide to Detention and Demurrage Charges in Ocean Freight
Category: Logistics Author: — Date: — Reading time: —
Detention charges, demurrage charges — the infamous “dem/det” — and storage fees are a fundamental component of ocean freight. These three types of charges are often confused but cover distinct situations.
Detention Charges
Detention charges apply when containers remain in the possession of the consignee outside the terminal beyond the free time granted by the shipping line.
Generally, a shipping line grants a free time period during which the consignee can keep the container at no additional charge. If the container is not returned within the allotted time, detention charges begin to accrue, billed daily until the container is returned to the designated terminal (inland or port terminal). This free time period varies depending on the carrier and the contract terms.
These charges are billed by the shipping lines and vary according to the type of container, the carrier, and the country. In France, they average around €70 per day for a 40’ container and can rise up to €140 per day beyond 19 days.
Calculating Detention Duration
Container return date – Terminal gate-out date.
NB: Weekends and public holidays are included in the calculation.
Demurrage Charges
Demurrage charges relate to the period during which the container remains at the port terminal after being discharged from the vessel and before being collected from the terminal.
These charges are also calculated on a daily basis and begin once the free time has elapsed. Demurrage charges are designed to prevent port congestion by incentivizing consignees to collect their containers promptly.
The free time for demurrage varies depending on the shipping line’s policies, but it is generally a few days. Once this period expires, demurrage charges apply.
These charges are billed by the shipping lines and vary according to the type of container, the carrier, and the country. In France, they average around €70 per day for a 40’ container and can rise up to €140 per day beyond 19 days.
Calculating Demurrage Duration
Terminal gate-out date – Vessel discharge date
NB: Weekends and public holidays are included in the calculation.
Storage Charges
Storage charges apply when the container remains at the terminal beyond the free time granted by the port terminal operator.
These charges are billed by the port terminal and vary according to the type of container, the terminal, and the country. In France, they average around €60 per additional day for a 40’ container and can rise up to €110 per day beyond 15 days.
Storage charges are in addition to the demurrage charges billed by the shipping line.
Calculating Storage Duration
Terminal gate-out date – Vessel discharge date
NB: Weekends and public holidays are included in the calculation.
Importance and Management
Understanding and proactively managing detention, demurrage, and storage periods is essential for optimizing logistics operations and reducing costs associated with ocean freight. Each contract and each carrier offers different free time allowances, which can be combined (detention and demurrage merged) or separate (one free time period per category).
Tips:
- Request free time details from your freight forwarders: When booking, ask your freight forwarder about the free time allowances associated with the proposed rates.
- Negotiate free time: Depending on market conditions, carriers may be open to negotiation.
- Use a TMS: A Transport Management System (TMS) such as OneChain can help you proactively manage your deliveries and reduce the extra costs associated with free time overruns.
Effective logistics management includes a thorough knowledge of detention, demurrage, and storage charges in order to minimize additional costs. Good coordination with carriers — whether for road, air, inland waterway, or multimodal transport — along with optimized flow management, is crucial to ensuring fast and efficient delivery of goods.
The importance of transport contracts and bill of lading terms should not be underestimated, as they define each party’s responsibilities and the conditions for shipping goods, including customs clearance procedures and regulatory requirements.