What is Demurrage?

Depending on the type of freight you are involved in hauling you may run across the term various “demurrage” within your trucking contracts . This is not in reference to ground or air freight, but by a steamship line sailing cargo containers for various supply lines. It is not a word you hear very often so a lot of people are left wondering just what it means.

You can think of it simply as storage charges from the container yard. By definition, demurrage is a charge payable to the owner of a chartered ship in respect of failure to load or discharge the ship within the time agreed, delaying the ship owner. This occurs after the number of free days allotted to you.

So with this in mind, demurrage fees will most often only affect you if you work near a shipping port that you would be hauling freight brought in or out by ship. Often through these loads you are working through a freight forwarder.

How to Avoid Demurrage Fees

Let’s talk about demurrage charges. First off, as we know from the definition that we covered above, demurrage fees and other extra charges occur in the manner of storage fees when the cargo (a full container) is not picked up in the agreed on time frame after the arrival of the cargo, causing the ship to run off of their schedule. The first and most obvious solution here to avoid these fees would be to be punctual in your arrival, load, and unload times. However, that is not always a possibility as we know things do happen.

Another tip in avoiding these additional costs is to have the shipper get the cargo pre cleared and issue you delivery instructions in advance. Some ports can be extremely congested and confusing. Having instructions to provide a game plan ahead of time in addition to the pre clearance and paperwork for the load ready to go such as the bill of lading or paperwork from the US Customs office like customs clearances.. This can really free up some valuable time and give you an idea of what needs to take place before you even arrive at the port terminal.

Demurrage Free Time

Free time for truckers in relation to demurrage is the period of time the port terminal allows you to leave the cargo within their control for a specified amount of “free days” until demurrage kicks in. This time period can vary from terminal to terminal so you want to make sure you are up to date on the rules of the port you are heading to and be ready for the port congestion.

Demurrage vs Detention

The difference between demurrage fees and detention charges is rather simple. They are both concerning the shipping container and actually very common as they are fees that occur after the allotted amount of time for pick up in relation to the cargo container. As we discussed the demurrage is at the point of the cargo arriving into the port and sitting in port storage longer than the allowed free time, detention occurs on the opposite end of this equation. After the cargo leaves the port it is given yet another free time before the empty container is due to be returned to the port. If you go over that allotted time frame you will then begin to occur detention fees.