Understanding Demurrage and Detention: How to Avoid Costly Container Charges

Demurrage and detention charges represent one of the most significant hidden costs in container shipping, often catching importers and exporters by surprise. This comprehensive guide explains these charges and provides actionable strategies for minimizing their impact.

Defining Demurrage and Detention

Demurrage is charged when containers remain at the port or terminal beyond the allocated free time after vessel discharge. It compensates the terminal for storage space occupied by cargo that should have been collected.

Detention is charged when containers are held outside the port (at your warehouse or facility) beyond the free time allowed for unpacking and returning the empty container. It compensates the shipping line for equipment kept out of circulation.

Understanding Free Time Allocations

Most shipping lines provide 3-7 days of combined free time at destination ports, though this varies by trade lane, carrier, and contract terms. Peak seasons often see reduced free time as carriers seek to accelerate container turnover.

Negotiating extended free time should be a priority when selecting carriers—the difference between 5 and 10 days free time can save thousands of dirhams on a single shipment if delays occur.

Common Causes of Charges

Customs clearance delays account for the majority of demurrage charges. Incomplete documentation, classification disputes, and inspection requirements can extend clearance by days or weeks.

Warehouse congestion and labor shortages cause detention charges when containers cannot be unpacked promptly. Seasonal demand peaks, holidays, and unexpected events can overwhelm receiving capacity.

Prevention Strategies

Pre-arrival documentation should be submitted 48-72 hours before vessel arrival, allowing customs to begin processing before the container is even discharged. Electronic documentation reduces errors and accelerates review.

Warehouse scheduling should account for expected arrivals, with labor and equipment reserved before containers leave the port. Buffer capacity for unexpected volumes prevents backlogs.

Dispute Resolution

When charges seem unreasonable, dispute them promptly with documented evidence. Port congestion, vessel delays, and carrier errors can justify charge waivers or reductions.

Maintain detailed records of container movements, gate tickets, and communication with carriers. This documentation is essential for successful dispute resolution.