Demurrage and detention charges have drastically increased in recent years. Read this blog to get a complete overview of this term and these notorious surcharges. Know how much demurrage and detention charges you’ll pay and how to avoid them with Container xChange.
Freight forwarders and shippers are no strangers to the dreaded demurrage and detention charges. These surcharges are charged by shipping lines, and in recent years, they have become one of the most controversial topics in the shipping industry.
In short, you pay demurrage and detention charges when you exceed the use of containers. They continue to add up every day on a per-day basis till you deliver the containers back to the shipping lines. Such high charges may be “unjust and unreasonable” for freight forwarders. For shipping lines, they ensure the efficient use of their containers.
Ten years ago, these fines were rare. But today, they are quite common and can easily exceed $100 per container per day. And even more with disruptions like the COVID-19 pandemic, the Russia-Ukraine war, and the US labor crisis skyrocketing these fees!
We’ll see what impact these disruptions have had on demurrage and detention charges in some of the major ports across the world. And look for solutions. But you can also simply cut to the chase and get a quick lowdown on how xChange can help you avoid these expensive fees with shipper-owned containers (SOC).
But if you’ve been in the industry for a long time and already know how SOCs can help you avoid D&D charges, try our public search below to secure your SOC in minutes at competitive rates. Simply choose ‘I want to use containers’ and enter your pick-up and drop-off locations and click search. You can then pick from a list of 50,000+ containers from around 2500+ locations worldwide, from 1,500+ vetted suppliers. 👇
Demurrage and detention in shipping: What’s the difference?
Let’s start from the basics.
We know shipping lines provide containers to their customers for door-to-door transportation of their goods. These containers are called carrier-owned containers (COCs).
For shipping lines to turn around their containers, shippers need to return these COCs within a stipulated time called ‘free days’. The free days determine the number of days a shipper can use the container for free. In conventional shipping, the free days are often somewhere between 3-5 days after the container has been discharged from the vessel.
If you fail to return these containers within the free days, the shipping lines start charging late fees called demurrage and detention. These charges are usually calculated on a per-day basis.
In principle, demurrage and detention have two main purposes:
- Compensating the shipping line for the use of its container.
- Working as an incentive for the customers to return empty containers and have a fast turnaround.
Now that you have this information in your back pocket, let’s move ahead to deciphering the differences between demurrage and detention for better clarity.
Container detention vs container demurrage
Most people confuse demurrage and detention fees to mean the same. It’s true that conceptually both are essentially ‘late fines’ for the return of containers. Just as you’d have in a library. But the difference between the two charges depends on the location of the containers at the time of the delay.
You pay a demurrage charge for the delayed use of the container within a terminal. A demurrage charge comes into play if the full container isn’t moved out of the terminal to be unpacked within the free days.
While a detention charge is levied for the delayed use of the container outside a terminal. A detention charge comes into play if the container isn’t returned empty to the shipping line within the free days.
What are the different demurrage and detention charges?
The different demurrage and detention charges revolve around anything that can cause delays in the shipping process. They include,
- Discrepancy or error in documentation
- Late receipt or loss of documentation
- Issues in custom clearance or cargo inspection
- Congestion at the port
- Labor strike or labor shortage at the port
- Delay or abandoning of cargo by the consigneeWhat is a consignee? When transporting freight (by ocean, air, or land), there are two parties involved — one who is shipping and the other who is receiving the freight. The recipient of the goods b... More
- Failure to pay freight charges in full
- Bad weather
- Container rollovers
Demurrage and detention charges during import and export
As you can see from the image above you will come across demurrage and detention in both export and import activities. Hence, we want to give you a thorough understanding of both journeys so you make an informed decision for your next shipment.
Demurrage and detention during import
Let’s picture this: Your container has been unloaded at the Port of Los Angeles. But the congestion on the roads to the port has delayed your truck from reaching the port in time. As a result, your cargo container is stuck at the port beyond free days. Now, the shipping line will charge you demurrage until your container is picked up and gated from the terminal. Usually, demurrage has to be paid before the cargo is picked up from the port.
Now, let’s imagine your container has reached the distribution center. But due to the shortage of labor, you were unable to unload the cargo in time. As a result, the container is now stuck at the distribution center beyond free days. The shipping line will now charge you detention until the empty container is returned to the carrier. These charges are an attempt to decrease the container’s turnaround time and make shipping more efficient.
Demurrage and detention during export
It’s possible for demurrage charges to occur during export. Let’s picture your container waiting to get loaded onboard a vessel in the port of Shanghai. But due to issues in the documentation, the container is not able to load in time for the vessel’s scheduled departure. The container will, therefore, have to stay in the port until the next departure. The shipping line will now charge you demurrage for the storage period until then.
Now, let’s imagine you have picked up an empty container from the shipping line to load your goods. But the weather turns bad and you’re unable to send the container to the terminal in time. Typically, shipping lines allow 5 free days to pick up the container, load it, and return it to the port. The shipping line will now charge you detention for the extra days before the container returns to the terminal.
You already have to pay so many charges for international freight shipping. Certainly, you can avoid demurrage and detention charges by taking precautions and preparing well in advance. But in the last several years, we have seen unprecedented external causes to shoot up the demurrage and detention tariffs.
Let’s look at what the industry has undergone in the last few years.
Decoding the increase in detention demurrage charges using our report
In the last few years, shipping lines have drastically reduced the number of free days and increased the tariff of demurrage and detention charges. These soaring demurrage and detention charges have become the most hotly debated topic in the shipping industry.
In our Demurrage & Detention: Annual Benchmark 2022 report, we compared these charges across 60 ports and 8 shipping lines from 2020 to 2022. Our analysis shows that the global average of demurrage and detention charges has increased from US $586 in 2020 to US $664 in 2022. It’s a steep rise of 12%!
A rise of 12% on a per-day basis can rack up to become a huge amount. And hence, shipping lines were labeled ‘abusive’ for increasing these surcharges. Especially, when the entire shipping industry is extremely volatile.
Now, you must be wondering why shipping lines would do so. The answer lies in the disruptions caused by the pandemic that collectively rocked the entire industry.
With the onset of the COVID-19 pandemic in 2020, shipping lines reduced services on major trade routes. So, they were unable to reposition empty containers to key demand locations. This led to port and terminal congestion, as the empty containers couldn’t get evacuated. The carriers were then burdened by terminal storage fees and the leasing cost for each container. As a means of damage control, they began to pass on these costs to shippers in the form of increased demurrage and detention charges.
What does demurrage and detention charges look like in 2023?
Demurrage and detention charges in 2023 are centered on a turnaround on the issues regarding congestion and capacity seen during the pandemic and other global disruptors mentioned above. This in turn can help with port congestion, hence decreasing demurrage and detention charges. Here’s what’s happening with D&D in 2023:
Real-time container tracking is good for supply chain visibility as it enables you to monitor your shipment locations and status in real-time. This helps you improve operational flexibility and identify potential delays or disruptions. On xChange we have a tracking feature that monitors your containers in near real-time and gives you alerts on ETAsWhat is estimated time of arrival? Estimated time of arrival, commonly known as ETA, is a frequently used term globally to denote the time of coming. In the shipping & logistics industry, it is ... More, delays, rollovers and so much more. You can read more about our tracking feature here.
Easy access to Information
Manual data collection is very time-consuming but using automation to streamline processes and access data stored virtually allows you to improve your daily operation, proactively plan for disruptions, and avoid D&D fees. On our platform, our management software helps you manage and automate your daily tasks. It increases efficiency and output by streamlining the entire process which includes sourcing containers at good rates, invoicing and payment tracking, and getting all necessary shipping documentsWhat are shipping documents? In shipping, shipping documents are documents that provide information about the goods being shipped. They may include information such as the origin and destination of th... More in one place. To know more you can read our separate blog here.
Integrated (API) Solutions
API integration facilitates container tracking, communication, management of fleets, documentation and so much more. This gives you the power to optimize operations to help prevent demurrage and detention. On xChange we have an API-integrated interface that can manage your fleet of containers, automate your data collection process and give you more control of your shipment by providing real-time information. Read more about it here.
Container xChange helps avoid detention and demurrage charges with SOCs
Despite the good news in 2023 for D&D, you know that the shipping industry is volatile. And high demurrage and detention charges only add pressure on shippers. In this unpredictable market, it’s best to look for alternate container sourcing methods for flexibility and security.
Container xChange can help you with that. You can easily lease 50,000+ SOC containers from genuine container owners on our online container leasing platform. SOCs are owned by shippers. So, when you lease containers from shippers, you’re under no obligation to pay demurrage and detention charges to carriers. We have 1,500+ members leasing SOC containers for one-way use on a daily basis in 2,500+ locations globally.
To join in on this journey, all you’ve to do is state your requirement, including pick-up and drop-off locations and the container type. You’ll receive a list of offers from vetted container companies or owners in one dashboard. You can then compare these offers carefully to shortlist the best deal for you.
So go ahead and kickstart your journey free of demurrage and detention charges on our platform by clicking the banner below.
Top ports with the highest and lowest demurrage and detention charges
Now that you’ve got your SOC secured, we want to circle back to the middle of the blog, where you read about how demurrage and detention charges vary on the basis of port, region, and circumstance.
In our comprehensive report on the latest trends of demurrage and detention charges, we’ve ranked 60 ports on the basis of the highest to lowest charges across shipping lines. Let’s take a look at the top 10 most expensive ports for D&d.
|Top 10 most expensive ports for D&D charges|
|Ranking in 2022||Port Location||Average D&D charges after 14 days for standard containers in USD|
|7||Hong Kong, S.A.R||$1,062|
These are the average accumulated demurrage and detention charges you will pay after 14 days for a standard container. So according to this data, if your container is stuck in New York (the US) for 14 days, you’ll have to pay the shipping line a whopping $3,182!
Plus, you can also see that the top 5 most expensive locations are all in the US. This is because the demurrage and detention charges not only differ from port to port but also on the basis of regions and circumstances.
So, what has happened in the US for the charges to be this high? You must know that China is the US’ biggest trade partner. Since American ports were overwhelmed by Chinese imports during the pandemic, the former suffered from the worst congestion and container pile-up. These high charges are a result of containers stuck both inside and outside American ports.
For more info on US ports, check out our blog on the 10 busiest ports in the US.
List of the least expensive ports for demurrage and detention
Now, let’s look at the top 10 cheapest ports for D&D.
|Top 10 cheapest ports for D&D charges|
|Ranking in 2022||Port Location||Average D&D charges after 14 days for std container in USD|
These are the average accumulated demurrage and detention charges you will pay after 14 days for a standard container. So according to this data, if your container is stuck in Busan (South Korea) for 14 days, you’ll only have to pay the shipping line $114.
So why does Busan have such low demurrage and detention fees? This is because the South Korean port has high productivity and very few restrictions. Plus, Busan acts as a transshipment facility. This reduces demurrage and detention requirements, as cargo is just transiting through the hub.
Detention demurrage charges by popular shipping lines
Did you know, that the biggest decision maker about these charges is the shipping lines themselves? So, choosing which shipping line to opt for can make a huge difference in these charges.
The industry is, today, ruled by few shipping lines. Let’s look at how the demurrage and detention charges differ across 8 such shipping lines. Here are the shipping lines ranked by highest to lowest D&D charges across ports:
|D&D charges by shipping lines|
|Ranking||Shipping Lines||Average D&D charges after 14 days for std. container in USD|
You should be careful when narrowing down your carrier service. As seen in the table above, different shipping lines have different demurrage and detention tariffs. One informed decision can save you thousands of dollars in the long run! Let’s see this through an example.
At the port of Rotterdam, the average detention and demurrage charge at the end of the two weeks period is $469. But if you choose to ship with Maersk, the demurrage and detention fee becomes $679. Compared to the port’s average, you’d be increasing your container shipping costs by about 45%. This is huge!
Instead, you can opt for COSCO Shipping with a demurrage and detention charge of $176 at Rotterdam. This way, you reduce your container shipping costs by almost half. Therefore, carefully comparing them before making a choice can save you a lot of money.
There are many such tips, comparisons, learnings, comments, and the latest analysis to discover in the report we talked about earlier – Demurrage & Detention: Annual Benchmark 2022 report. Get an in-depth overview and industry insights about demurrage and detention charges across 60 ports and 8 shipping lines for free. Click here to get your free copy today!
Ways to avoid demurrage and detention charges
After having a look through the charges at different ports in varying locations, and costs for shipping lines, you now have a clear idea that demurrage and detention charges are in most cases out of your hands. But there are ways to avoid demurrage and detention fees, check them out below:
- Be prepared for local customs – Ensure that you are aware of the customs process and the port regulations at the location your goods are headed.
- Leave no room for miscommunication- It’s important to be 100% sure about what “available” means. For some ports, a container is available as soon as it hits the ground. While others argue that it needs to be accessible to be available.
- Manage your schedule efficiently- It’s important to be on time and prepared. Always have all the documentation required to move cargo from one location to another updated and ready.
- Negotiate terms and free days- Try to negotiate instead of accepting a quote as it is. Negotiate with port officials or carriers. You can, for instance, request more free days for your cargo and thereby save on demurrage and detention.
Lease SOC containers
Using shipper-owned containers (SOCs) instead of COCs helps you avoid demurrage & detention charges. Just as the name suggests, SOCs are owned by shippers. So, when you lease containers from shippers, you’re under no obligation to pay demurrage and detention charges to carriers.
You simply use SOCs for one-way use and return them to your partner’s depot at the port of destination. In fact, most of the time, you don’t even have to pay any per diem charges on top of the pick-up charges. This is because most container owners aren’t only interested in a quick turnaround. They, in fact, want you to just reposition their equipment. In that way, they can keep a good balance and charge almost no per-diem fees. It’s a win-win!
And the good news for you is that you now know where can you lease SOC containers from container owners directly – Container xChange.
Lease SOCs on xChange to avoid expensive demurrage and detention charges
You already know the benefits you’ll get with SOCs when it comes to D&D but did you also know that after you’ve moved your SOC on a one-way trip, you can sell the container again on our platform at a good price and help in repositioning them too?
Also, by using a SOC container you can save a lot of money on demurrage and detention as your daily rental fees do not depend on the duration of the rental. They stay the same price per day. The benefits just keep getting better!
So, find your SOC container from our 50,000+ containers in 2,500+ locations worldwide. Source them from reliable and vetted 1,500+ partners directly at negotiable prices that suit you. You’ll see all the prices upfront thanks to our market price transparency. Following this, you can compare prices and pick deals. You won’t get these competitive rates anywhere outside our platform, so make the best of it.
And speaking of payments, by delivering you a single, combined bill, our payment handling feature secures and streamlines your transactions. Additionally, when it comes to tracking you can receive updates on the estimated time of arrivalWhat is estimated time of arrival? Estimated time of arrival, commonly known as ETA, is a frequently used term globally to denote the time of coming. In the shipping & logistics industry, it is ... More and misuse warnings and track your boxes in near real-time.
We’ve got you covered from all angles, haven’t we? It’s time you make your move now. Join our platform by clicking the banner below to lease your SOC so you can do away with D&D charges for good!
Demurrage and detention: Common FAQs
Why is demurrage charged?
Demurrage is charged when shippers fail to move the containers out of a terminal within the free days. It's a fine for the delayed use of shipping line's containers inside a terminal.
Who is responsible for detention charges?
Shippers and consigneeWhat is a consignee? When transporting freight (by ocean, air, or land), there are two parties involved — one who is shipping and the other who is receiving the freight. The recipient of the goods b... More are responsible for detention charges for the delayed use of containers outside a terminal.
What is detention free time?
Detention free time refers to the number of days a shipping line allows a consigneeWhat is a consignee? When transporting freight (by ocean, air, or land), there are two parties involved — one who is shipping and the other who is receiving the freight. The recipient of the goods b... More to use the container outside a terminal for free. Once the free time ends, the shipping line will start charging detention charges on a per day basis.
What is a detention fee?
Detention fee is a surcharge levied by shipping lines for delayed use of container outside a terminal by a shipper.