Demurrage and detention: how the charges build up, and who pays

The two clocks

A container discharged from a vessel gets a number of free days at the terminal. After that, demurrage starts. Once you collect it, you get a number of free days to unload it and return it empty. After that, detention starts. They are separate clocks with separate rules, and one container can run up both.

	Demurrage	Detention
Where the container is	Inside the port or terminal	Outside, with you or on the road
The clock starts	When it is discharged	When it leaves the terminal full
The clock stops	When it leaves the terminal	When it is returned empty
Set by	Carrier or terminal tariff	Carrier tariff or contract

Terminals may also bill their own storage separately from the carrier’s demurrage, so the same box can be charged twice for sitting in the same place. Read the tariff for both.

How the cost escalates

Free time is commonly a few days, often somewhere between three and seven, but it depends on the port, the carrier and what you negotiated. After it, daily rates usually step up. Here is an illustration with invented numbers, shaped like a real tariff:

• 5 free days at the terminal.
• Days 6 to 10: 100 a day.
• Day 11 onward: 200 a day.

If the container is collected on day 12:

The container sat two days beyond the point where the rate doubled, and those two days cost almost as much as the first five combined. That is the pattern to watch for, because a small delay at the start becomes an expensive one before anyone notices. Check your own tariff rather than relying on figures like these.

Who pays

The honest answer is: whoever the contract says, and the contract is usually the sales terms plus the bill of lading.

• The Incoterm sets the starting point. It decides who is responsible for the goods and the carriage at each stage. Under terms where the seller delivers all the way to your named place, delays before that point are generally theirs; under ex-works, almost everything after the factory gate is yours. Sources differ on the edge cases, so confirm against the actual terms of your shipment.
• Incoterms do not decide fault. They say who carries cost and risk at a stage, not who caused a delay. A customs hold caused by the supplier’s wrong paperwork can still land on the consignee’s bill unless the contract says otherwise.
• The carrier bills the consignee. The party named as consignee on the bill of lading is usually the one the carrier chases, whatever you and your supplier have agreed between yourselves. Recovering the money is then a separate claim against the supplier.

What causes it, and what helps

The usual causes are boring: a customs hold for incomplete documents, a payment that was not released in time, no warehouse slot on the day, or nobody watching the arrival date. So the fixes are boring too.

• Get documents before the ship arrives. Not the day it docks. Check them against the order for quantity, descriptions and the tariff code.
• Track the expected arrival against the free-time end date, per container, in a place somebody checks daily.
• Negotiate free time up front for routes where your clearance is slow. It is cheaper to buy extra days in the booking than to pay for them at the tariff.
• Book the haulage and unloading slot before arrival, so that the container leaves the terminal on the first day it can.
• Put the cost where it belongs. If delay is the supplier’s fault, write the recovery into the order terms; see landed cost for where the charge sits in the numbers.

In the software

Procurement Control Tower does not model container demurrage or detention tariffs. What it does do is track the dates they depend on: what was committed and when, and what actually shipped and arrived. On the logistics side you can record waiting and detention as a charge against a trip. A late supplier shipment and the contractual damages it triggers are part of the worked example.