If you’re like most importers or exporters, you probably shuddered when reading the subject line. Oh, the horror of receiving an unexpected bill showing demurrage, detention, or per diem!  Not only did you not plan for those fees, you may not be completely certain of the cause for such charges.

Well, I’m here to set the record (somewhat) straight.  Let’s talk about when you may see these charges and how you might be able to avoid them.

What Are Demurrage Charges?

Demurrage is assessed on cargo that is left at the terminal beyond the allotted free time.  Free time in contracts can vary, so be sure to check yours to ensure you understand exactly how much free time you get.  Generally, the standard is 4-5 days.  Once that free time expires, you will be charged a daily storage fee (demurrage) until you pull the cargo from the terminal.  Demurrage amounts may differ based on terminal or carrier and often increase after an initial period of time.  Daily demurrage charges can typically range from $75 to $150 per container per day, but that’s just for the first 5 days or so.  Charges generally increase the longer the cargo stays on the terminal.

Tips to Avoid or Reduce Demurrage Charges

  1. Pre-clear your cargo and issue delivery instructions to your inland carrier in advance.  If you work with a proactive broker like Shapiro, your cargo will be pre-cleared whenever possible so that coordination with the truckers can begin well before free time expires.
  2. Have a trucker “back-up” plan.  If you’re dealing with a particularly congested port, having an alternate option for a trucker could be a life saver when time schedules become tight.
  3. Request extended free time.  This only works for large shippers though, since they are based on the volume of containers you have arriving on a vessel at any given time.  You might be wondering how much shipping would get you to the “large shipper” status.  That really varies from carrier to carrier but you’ll probably need to be moving at least 800 containers a year to be even considered for this perk.

A final thought about demurrage:  Because it must be paid before the cargo can be picked up from the port, you’ll often know about these fees early. While you can’t guarantee that you’ll never face a demurrage charge, advanced planning is the key to mitigating your exposure.

What are Detention or Per Diem Charges?

Detention is a tough one since you can hear it used in several contexts.

As with on-terminal storage, you also have a set amount of free time with the container itself.  Keeping the container beyond that free time often results in a detention charge, frequently called a per diem (per day) fee.   The amount of this charge can vary by carrier and port but usually ranges between $50 and $100 a day.

This is where it can get confusing.  You may also see a detention charge from your inland carrier as a trucking-related fee based on driver waiting time.  Typically, for imports, drivers will allow 1 to 2 hours free of charge to have the container unloaded so they can bring back the empty back to the port.  For exports, drivers will normally wait the same to bring the loaded container to the terminal for onboarding onto the vessel.  Anything beyond that waiting time will be charged as a driver detention charge.  With the domestic trucking market in a bit of disarray, courtesy of driver and chassis shortages, new restrictions on hours of service, equipment issues, and port congestion, driver wait times appear to be at an all-time high.

Tips to Avoid Shipping Detention Fees

  1. Dispatch cargo as far in advance as possible.  This gives the trucking company time to schedule the pick-up and/or delivery.  Make sure that the loading party (for exports) or the unloading party (for imports) is ready to take action when the container arrives.
  2. Negotiate more time for live loads/unloads.  If you know the container takes longer than the allotted free waiting time to load or unload, try to strike a deal in advance for a bit of extended time.  Otherwise, make sure you know your allotted free time and when the clock for billing starts.  At least then you can be cognizant of the coming fees while loading/unloading the container.
  3. Schedule your loading/unloading with the detention clock in mind.  This is important with dropped containers.  You may think you have longer than you really do.

Oh My!

I know that was a lot to take in so let’s do a quick recap.  Demurrage is issued when your cargo exceeds time allotted sitting at the terminal, and detention/per diem is the fee associated with keeping the equipment past the contractual time frame or could also mean the fees for making truckers wait extra time when loading/unloading containers.

Demurrage is paid to the port, and detention is paid to the steamship line that owns the cargo container and/or to the trucker.  If you get a bill for any of the above, it can’t hurt to double check both the terminal records as well as the proof of delivery from the carrier, just to confirm the dates/times.

With all the moves a container makes, mistakes can happen, so do a little checking to make sure there are no errors.  As always, we recommend partnering with a Customhouse broker and freight forwarder that helps you mitigate these additional charges by making sure your cargo is moved timely. Shapiro can help!

Contact Us       Request a Quote

Do you have any horror demurrage or detention stories to share?  (Who doesn’t, right?)  Also feel free to ask us any other questions on this issue below.

Love this blog?  Click here to subscribe!