Guest Post: Container XChange Explains Demurrage and Detention

Guest Post: Container XChange Explains Demurrage and Detention

What Is Demurrage and Detention

CoLoadX is happy to share this guest post from Container XChange.

Per definition, Demurrage & Detention are a matter of allowed free days, determining the number of days a shipper can use a 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's returned--empty--to the shipping line.

Import Containers

Demurrage refers to the time in port after arrival when a full container has not been picked up and moved out of the terminal by the consignee within the set free days. For standard shipping, the free days are often somewhere between 3-5 days after the container is 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.

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.

Export Containers

Demurrage charges occur when the container is with the shipping line but cannot be boarded on a vessel due to carrier-related errors like a lack of documentation. In this case, the carrier will be unable to load the container to the scheduled vessel. The container will have to stay in the port until the next departure. Demurrage charges are applied to the storage period until the next scheduled vessel.

Detention in exports 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 five 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

With its long coastline, India has some of the busiest ports in the world and thereby deals with issues like port congestion and inadequate facilities to work with incoming ships. As a result, shippers often end up paying demurrage charges. A document released by the Mumbai Port Trust lists some of the scenarios when demurrage will be charged.

As we know, a ship that has only a 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 is charged on all goods that have not cleared. Mails, post parcels, diplomatic postal bags, and personal bags irrespective of the weight are excluded from demurrage.

Demurrage Rates After Free Days

Rate Date Range Cost per Day (Per Ton)
From 1st to 20th Day ₹ 37.50
From 21st to 40th Day ₹56.25
From 40th Day on ₹75.00

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

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General conditions on Demurrage

  • Import goods are given three free days after they have been completely discharged from the vessel, and export goods are given seven free days in the port before they are loaded on to the vessel
  • Salvaged goods are given ten 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 three days after it reaches the destuffing point.

Demurrage Charges When Detained by Indian Customs

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

Indian Customs Demurrage Charges

Rate Date Range Cost per Day (Per Ton)
From 1st to 30th Day 20% of the applicable demurrage
From 31st to 60th Day 50% of the applicable demurrage
From 60th Day on 100% of the applicable demurrage

A few more important things to note:

  1. Demurrage is charged on the gross weight of the cargo, usually per 100 kgs
  2. Demurrage is charged on ‘shut out’ cargo from the day it arrives at the docks until it is removed. Shutout 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 three days of its arrival. If not, it will be removed by 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.

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By: Petere Pamela on Oct. 17, 2019, 11:01 a.m.