What you need to know about Demurrage and Detention

Definition: Demurrage and Detention

Demurrage & Detention define the number of days a shipper can use the container for free. If this free time is exceeded, the user has to pay a demurrage & detention charge, usually calculated per day.

Demurrage always relates to the time a container is inside a terminal while detention is a charge for extended use of the container until it gets empty returned to the shipping line.

Imported Containers

Demurrage refers to the time in port after arrival, when the full container has not been picked up and moved out of the terminal for unpacking by the consignee within the set free-days. For conventional shipping, the free-days are often somewhere between 3-5 days after the container has been discharged from the vessel to the terminal. Charges are applied for storage of the container until the container has been picked up and gated from the terminal. Usually, Demurrage must be paid before the cargo can be picked up from the port, you’ll often know about these fees early.

In this case, detention refers to the time outside the port, where the consignee holds on to the carrier’s container beyond the allowed free-days. Thus, a detention charge is applied when the container has been picked up, but not returned to the carrier. This is done in an attempt to decrease the container’s turnaround time and make shipping more efficient.

ExportED Containers

Here, demurrage charges occur when the container is with the shipping line but cannot be loaded on board of the vessel due to lack of documentation or other non-carrier related errors. In this case, the carrier will be unable to load the container to the scheduled vessel, and hence the container will have to stay in the port until the next departure. Demurrage charges are then applied to the storage period until the next scheduled vessel.

In this case, detention happens when the empty container has been picked up for loading and is not returned within the set free-days. Typically, shipping lines allow for 5 free-days to pick-up the container, load it and return it full to the port. Detention charges are applied to the extra days before the container returns to the terminal.

Demurrage in India

India, with its long coastline has some of the busiest ports in the world, and  deals with issues such as port congestion, inadequate facilities to work with incoming ships and shippers ending up paying demurrage charges. A document released by the Mumbai port trust, lists some of the scenarios when and when not, demurrage will be charged. 

As we already know, a ship has few free-days before demurrage is charged. The free-days at the Mumbai port exclude Sundays, Customs holidays and the port’s non-working days. Once the free-days expire demurrage will be charged on all goods that have not been cleared. Mails, post parcels, diplomatic postal bags, and personal bags irrespective of the weight are excluded from demurrage. 

The list of goods in the wharfage schedule can be found here. 

General conditions on Demurrage:

• Import goods are given 3 free-days after they have been completely discharged from the vessel and export goods are given 7 free-days in the port before they are loaded on to the vessel. 
• Salvaged goods are given 10 free-days starting from the day they are salvaged. 
• Demurrage is not charged on cargo and containers, when the port is incapable of delivering them. 
• Demurrage is also not charged when the ship cannot be brought to the destuffing point. It is charged 3 days after it reaches the destuffing point. 

Demurrage charges when detained by the Indian Customs:

• Demurrage charges can be recovered if the goods were detained by the customs for analysis or technical testing of the goods other than the normal appraisement, or if the goods are detained due to Import control formalities 

• Demurrage is charged on the gross weight of the cargo, usually per 100 kgs. 
• Demurrage is charged on ‘shut out’ cargo from the day it arrives at the docks till it is removed. Shut our cargo is cargo that the importer doesn’t require anymore and must be sent back to the exporter. It must be removed from the docks within 3 days of its arrival, if not it will be removed by the port authorities at the expense of the exporters. 

These are some of the common scenarios of demurrage charges. These charges and scenarios may vary slightly from port to port in India.