Logistics Know How

What is Demurrage and Detention in shipping for buyers?

Are you a buyer, looking for an explainer on demurrage and detention? Then, this article is for you. We explain what demurrage and detention are, how they're linked and why it's important to know about the terms.

Daan Weijers, Raju Kariya, 22 June 2022

Have you encountered Demurrage and Detention while handling your logistics and wondered what they mean?

While both can involve charges, these terms aren't something to be afraid of. As long you have a good handle on your logistics –they're just another part of your cargo's journey – and a key cog in well-planned, smooth-running global supply chains.

At Twill, we know that some of the complex terms in logistics can be daunting, so here we break down just what Demurrage and Detention mean – on their own and together.

What is the difference between Demurrage and Detention?

Demurrage and Detention are typically found together in logistics. They are two separate things, but they're closely linked. Depending on the local setup, Demurrage and detention Freetime can be offered/charged separately OR, combined together into one charge usually called Combined Demurrage and Detention.

  • Demurrage: The time the filled container(s) spend inside the terminal, from when they are offloaded from the vessel or train until they are picked up.

  • Detention: The time the container(s) spend outside of the terminal. Measured between picking them up when they’re full and returning them when they’re empty.

When you’re importing cargo, demurrage is the time the filled container(s) spend inside the terminal. This is measured from when they’re offloaded from the vessel or train until they’re picked up at the port (gated out).

Detention is the time a container spends outside of the terminal. For an importer, this is usually the time to unpack. The detention time is measured between the moment of pick up at the port and the containers are returned at the port or a depot.

Here's a handy graphic, showing how the two activities for imports follow on from each other:

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What are Free Time, Demurrage and Detention charges in shipping?

Once the container arrives at its destination, its journey doesn't end. You, as the customer, must return it to an agreed location, such as the port, or a container terminal and depots, to be reused for another shipment. In order for millions of containers to continuously move around the world, it’s important that carriers are able to keep equipment available.

Free Time, or Standard Free Time, is the period of time offered by a carrier to customers, free of charge, that covers demurrage and/or detention activities.

Demurrage and detention penalty charges are the fees incurred if you go beyond the Free Time offered by carriers. For example, if your full container is waiting too long before being picked up and gated out at the destination terminal. Or if you take too long to return the empty container to the port.

Free Time differs between ports and carriers – so it's worth keeping an eye out for it when booking shipments! At Twill we are transparent when it comes to Free Time. We show it with price details at the time of your booking on our platform, so you can plan your shipments better. Is the offered Free Time not enough for you? You can purchase extra Detention days at the time of your import booking with us, so you have sufficient time to plan the arrival of your cargo at the desired destination.

Container Detention & Demurrage: key takeaways

  • Demurrage charges always relate to the time a container is inside a terminal. Demurrage penalty fees/charges are used to prevent containers from being stored at the port for a long time.

  • Detention refers to the time a container spends outside of the port. If the consignee holds on to the carrier's container beyond the allowed free time, detention fees will be imposed. In other words, a detention charge is applied when the container has been picked up, but not returned to the carrier on time.

  • Demurrage and Detention are separate but linked in the journey of your cargo.

  • Free Time determines the number of days a supplier can use the container for free – anything beyond this time incurs a fee via Demurrage & Detention (D&D) or combined D&D charges.

Where can I get more information about logistics?

Did you find this helpful? Then, visit our Knowledge Hub – where we've got loads of articles and resources to help you brush up on your logistics knowledge and start shipping like a pro.

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