Guide to Import Demurrage and Detention Charges

Container transportation is a huge business.

Let me give you couple of statistics related to container carriage to better explain its boundaries.

According to World Shipping Council, 17.8 million containers are in circulation in international sea transportation as of 2008. 

Containers consist of 66% percent of all maritime transportation.

Big size container vessels could carry around 11,000 pcs of 20ft containers.

Finally world busiest seaport Shanghai Seaport handles 33,6 millions of TEU (Twenty-foot equivalent unit) cargo in year 2013.

There is only one way that you can manage so much container traffic at ports of loading and ports of discharge. 

Clearing containers from the port terminals as soon as they have been discharged from the vessels.

Shipping industry has developed some certain rules in order to secure a constant traffic of containers in and out of the sea ports.

Free time, demurrage and detention charges are the most important 3 rules, which can be grouped under these rules.

Today I would like to explain free time and related port charges such as demurrage and detention on this article.


Definition of a Free Time: What is free time? What does free time mean in international shipping?

Free Time: Free time is the period allowed the consignee of the cargo to accept delivery and clear the goods from port before any sort of port related charges begin to accumulate. 

You can find another definition of the free time from CMA-CGM, which is one of the biggest global container carrier line:

“Free time” the period of time allowed to the merchant free of charge, covering both demurrage period and detention period, beyond which additional charges such as, but not limited to demurrage and detention charges, will be due to the Carrier.  

Free time changes from port to port, carrier to carrier and even container type to container type. 

As a result there is no valid predetermined free time period exists for any type of containerized cargo.

Let me give you couple of import free time examples from different ports to clarify the definition further.

Port of Singapore: Import Containers
  • Carrier:Orient Overseas (International) Limited
  • Starting Point of Free Time: Commences from the time the container is discharged from the vessel
  • Free time of General Purpose Containers: 72 hours
  • Free time of Refrigerated Containers: 72 hours
Felixstowe Ports: Import Containers
  • Carrier: Orient Overseas (International) Limited
  • Starting Point of Free Time: If a vessel arrives at the port PRIOR to 0800 hrs on Day 1, this day (Day 1) and the following calendar day (Day 2) are given prior to the commencement of the Demurrage free time. e.g. if vessel arrives 07.50 hrs Monday, then the first day of Demurrage free time is Wednesday. If a vessel arrives at the port AT or AFTER 0800 hrs on Day 1, this day (Day 1) and the following 2 calendar days (Days 2 & 3) are given prior to the commencement of the Demurrage free time. e.g. if vessel arrives 08.10 hrs Monday, then the first day of Demurrage free time is Thursday.
  • Free time of General Purpose Containers: 5 calendar days 
  • Free time of Refrigerated Containers: 4 calendar days
Port of Bremerhaven: Import Containers
  • Carrier: Orient Overseas (International) Limited
  • Starting Point of Free Time: Vessel arrival date
  • Free time of General Purpose Containers: 4 calendar days
  • Free time of Refrigerated Containers: 2 calendar days

If the consignee of the goods could not clear the laden container from the port terminal within the free time applicable in the import operation, then the consignee will be charged with demurrage charges.

Definition of Demurrage Charges: What is a demurrage charge? What does demurrage charge mean in international shipping?

Demurrage Charges: Demurrage charges will be applied to the consignee of the container when the consignee holds the carrier's container and other related equipment inside the port of discharge's terminal for a longer period of time than the agreed free time.

Sometimes demurrage charges are related to the use of the carrier's equipment only. 

In that case the demurrage charges do not include storage costs and reefer services which are charged separately.

Demurrage charges are applicable to all types of containers, general purpose containers, reefer containers, tank containers etc., that remain at the terminal longer than the agreed free time.

Demurrage charges change from port to port, container type to container type and carrier to carrier, as a result before accepting a freight offer you have to be make sure that the buyer will not be paying huge demurrage charges at the port of discharge.

Let me give you couple of demurrage charges examples from different ports to further clarify the definition.

Port of Hamburg: Import Demurrage Charges Seaport (storage charges included in demurrage)
  • Carrier: Seago 
  • Starting Point of Free Time: Commences from the time the container is discharged from the vessel including the day of discharge. 
  • Ending Point of Free Time: Day when laden container has been picked up from the terminal (gate out full date) 
  • Free time of General Purpose Containers: 72 hours 
  • Free time of Refrigerated Containers: 72 hours 
  • 20ft Dry Container Demurrage Charges: Day 1 - 6 is EUR 50, Day 7 - 13 is EUR 75, Day 14 - 21 is EUR 120, Day 22+ is EUR 140. 
  • 40ft Dry Container Demurrage Charges: Day 1 - 6 is EUR 65, Day 7 - 13 is EUR 120, Day 14 - 21 is EUR 170, Day 22+ is EUR 190. 
  • 20ft Reefer Container Demurrage Charges: Day 1 - 6 is EUR 120, Day 7 - 13 is EUR 150, Day 14 - 21 is EUR 190, Day 22+ is EUR 230 
  • 40ft Reefer Container Demurrage Charges: Day 1 - 6 is EUR 140, Day 7 - 13 is EUR 180, Day 14 - 21 is EUR 240, Day 22+ is EUR 280.
Port of Rotterdam: Import Demurrage Charges Seaport(storage charges included in demurrage)
  • Carrier: Seago 
  • Starting Point of Free Time: Commences from the time the container is discharged from the vessel including the day of discharge. 
  • Ending Point of Free Time: Day when laden container has been picked up from the terminal (gate out full date) 
  • Free time of General Purpose Containers: 4 calendar days 
  • Free time of Refrigerated Containers: 4 calendar days 
  • 20ft Dry Container Demurrage Charges: Day 1 - 7 is EUR 45, Day 7+ is EUR 75 
  • 40ft Dry Container Demurrage Charges: Day 1 - 7 is EUR 65, Day 7+ is EUR 105 
  • 20ft Reefer Container Demurrage Charges: Day 1 - 7 is EUR 135, Day 7+ is EUR 195 
  • 40ft Reefer Container Demurrage Charges: Day 1 - 7 is EUR 135, Day 7+ is EUR 195
Demurrage charges could cost quite a lot of money to the importers if the container could not be cleared from the port of discharge within the permitted free time period. 

But what could prevent importers to clear containers from the port of discharge so that they have to pay demurrage charges?

Reasons of demmurage charges:
  • Vessel could have reached to the port of discharge before the documents have been received by the importer. As a result without having original documents on hand , importer could not clear container from the port of discharge. This scenario is highly possible when the transit time is very short between port of loading and port of discharge.
  • Original bill of lading may have been lost during the courier dispatched. Importers could not clear the goods unless locate the original bill of lading or having issued a telex release to the exporter.
  • Importer could not get the original bill of lading and other shipping documents from his bank if letter of credit has been selected as a payment method under the current international trade transaction. According to letter of credit rules each bank have 5 working days to check documents.
  • International courier dispatch services has been blocked by acts of god such as extreme natural disasters, which prevents importer to locate original shipment documents including original B/L.
Both exporters and importers must work together to overcome causes of demurrage charges at the beginning of the transaction. 

Especially if the transit time is very short (sometimes t/t is 3-4 days) between port of loading and port of discharge, each party must be in high alert in terms of demurrage charges.

Definition of Detention Charges: What is a detention charge? What does detention charge mean in international shipping?

Detention Charges: Detention charges will be levied when the consignee of the containerized cargo holds the carrier's container and related equipment outside the port of discharge terminal longer than the allowed free time.

You can find another definition of detention charges from CMA-CGM, which is one of the biggest global container carrier line:

Detention”: The charge the Merchant pays for detaining Carrier's equipment outside the port, terminal or depot, beyond the free time.
Detention charges change from port to port, container type to container type and carrier to carrier, as a result before accepting a freight offer you have to be make sure that the buyer will not be paying huge detention charges at the port of discharge.

Let me give you couple of detention charges examples from different ports to further clarify the definition.

Port of Antwerp: Import Detention Charges (storage charges not applicable) 
  • Carrier: Seago 
  • Starting Point of Free Time: Day after the date when laden container has been picked up from the terminal (gate out full date is excluded) 
  • Ending Point of Free Time: Day when empty container has been delivered on the terminal / depot (gate in empty date) 
  • Free time of by truck deliveries: 2 Working days 
  • Free time by rail deliveries: 4 working days 
  • 20ft Dry Container Detention Charges: EUR 35 per day after free time. 
  • 40ft Dry Container Detention Charges: EUR 45 per day after free time. 
  • 20ft Reefer Container Detention Charges: EUR 100 per day after free time. 
  • 40ft Reefer Container Detention Charges: EUR 100 per day after free time.
Port of Marseille: Import Detention Charges (storage charges not applicable)
  • Carrier: Seago 
  • Starting Point of Free Time: Day when laden container has been picked up from the Agent (gate out date) 
  • Ending Point of Free Time: Day when empty container has been delivered to the Agent (gate in date) 
  • Free time of General Purpose Containers: 5 Calender days after gate out full 
  • Free time of Refrigerated Containers: 5 Calendar days after gate out full 
  • 20ft Dry Container Detention Charges: EUR 30 per day after free time. 
  • 40ft Dry Container Detention Charges: EUR 30 per day after free time
Summary:
  • Global freight container traffic is huge. Top container ports of the world have to handle millions of container traffic each year. 
  • There must be some strict rules and punishments should exist at the ports of loading and ports of discharge to keep the container traffic consistent. 
  • Free times, demurrage and detention charges are the main rules and fees that regulates the container traffic in international transportation. 
  • Free time duration changes from port to port, carrier to carrier and container type to container type. 
  • Generally there are two different free time exists in import operations. The first one determines the free time before demurrage charges to accumulate and the second one determines the free time before detention charges to accumulate.
  • Demurrage charges have to paid by the consignee of the cargo if the container could not be cleared from the port of discharge within allowed free time. 
  • Detention charges have to paid by the consignee of the cargo if the container could not be returned back to the port of discharge or any other pre-determined area within allowed free time. 
  • Both exporters and importers should take all necessary steps to prevent occurrence of any demurrage and detention charges.

Free Time, Demurrage and Detention Periods of Top World Container Ports:

MSC 
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