Demurrage and Detention Explained

Demurrage and detention, defined

Demurrage and detention are daily charges for keeping shipping containers too long. Demurrage is charged for a container that stays on the marine terminal past its free time. Detention, often called per diem, is charged by the steamship line for keeping its container outside the terminal past the allowed days. A single container can incur both.

Both charges exist to keep terminals and equipment moving. A terminal has finite space, and an ocean carrier needs its containers back to load the next voyage. Free time gives importers and exporters a window to move cargo, and the daily charges start when that window closes.

This guide covers what is demurrage and what is detention, how each clock runs, the Federal Maritime Commission rules that govern invoices, and practical ways to avoid and dispute the charges.

Demurrage vs. detention at a glance

How the demurrage and detention clocks run on an import

The sequence below shows when each clock starts and stops on a typical import container.

1. 01
   Discharge and availability

   The container is discharged. Terminal free time usually starts when it is available for pickup.

2. 02
   Terminal free time

   The container can stay on the terminal free until the last free day. After that, demurrage accrues daily.

3. 03
   Gate-out

   The drayage carrier picks up the container. Demurrage stops. The detention clock starts, counting the line's free days outside the terminal.

4. 04
   Delivery and unloading

   A live unload empties the container the same day. A drop leaves it at the receiver, and the detention clock keeps running until the empty goes back.

5. 05
   Empty return

   The empty is returned to the terminal or depot the line designates. Detention stops when the return is accepted.

Example: how demurrage and detention add up

Example with round hypothetical numbers: a 40' container has four days of terminal free time and four days of detention free time. The importer picks up two days after the LFD and returns the empty seven days after pickup.

Demurrage: two days at a hypothetical $150 a day is $300. Detention: seven days out minus four free days leaves three chargeable days at a hypothetical $120 a day, or $360. The container that cost a few hundred dollars to truck has now generated $660 in time-based charges.

Many tariffs also escalate. A rate that starts at one level for the first few days can step up for later days, so a long delay costs more per day than a short one. That is why the cheapest fix for a long delay is usually to unload the container and return the empty, not to store it loaded.

Common causes of demurrage and detention

• Late customs entry. A customs hold keeps the container on terminal while free time runs. Cargo that cannot clear in time can move to a bonded warehouse.
• Unpaid freight. A freight hold blocks release until the ocean carrier is paid.
• No terminal appointments. In surge weeks, slots before the LFD can run out.
• Warehouse capacity. The receiver cannot take the container before free time ends.
• Slow unloading on drops. A dropped container sits loaded for days, and the empty is not returned.
• Empty return restrictions. The designated return location will not accept the empty on a given day.
• Chassis shortages. No chassis means no pickup, even with an appointment.

How to avoid demurrage and detention

• Track the LFD and book drayage early. Line up the carrier when the vessel sails, not when it arrives. See what is drayage.
• Clear holds before discharge. Have your customs broker file entry early and pay freight before the vessel arrives.
• Use a pre-pull for short gaps. Container storage stops demurrage when your warehouse is a few days out.
• Unload near the port for long gaps. Transloading or container unloading lets the empty go back right away, with freight held in warehousing until needed.
• Move uncleared cargo in-bond. Bonded drayage can take a container off the terminal before customs release. See our guide to in-bond shipments.
• Prefer live unloads when you can staff them. The empty leaves with the driver and detention stops sooner.
• Negotiate free time. Larger importers can often get extra free days written into the service contract.

The FMC demurrage and detention billing rule

The Federal Maritime Commission's rule at 46 CFR Part 541 took effect May 28, 2024, implementing the Ocean Shipping Reform Act of 2022. It applies to demurrage and detention invoices issued by ocean carriers (VOCCs), NVOCCs and marine terminal operators. It does not govern billing between terminals and ocean carriers.

Who can be billed. An invoice may go to the party for whose account the billing party provided the service, or to the consignee, but not both.

Deadlines. Invoices must be issued within 30 days of the date the charges were last incurred. An NVOCC passing through a carrier's charges has 30 days from receiving the carrier's invoice. If an invoice is late, the billed party is generally not required to pay it.

Disputes. The billed party has at least 30 days from the invoice date to request mitigation, a refund or a waiver. The billing party then has 30 days to resolve the request.

What a compliant demurrage and detention invoice must show

Under 46 CFR 541.6, a demurrage or detention invoice must include the following. An invoice missing required information need not be paid.

When demurrage and detention charges may be unreasonable

Separate from the billing rule, the FMC's 2020 interpretive rule at 46 CFR 545.5 explains how the Commission judges whether demurrage and detention practices are reasonable. The core test is the incentive principle: the charges should work as financial incentives to keep cargo and equipment moving.

The Commission lists factors it may consider, including whether free time and demurrage are tied to when cargo is actually available for retrieval, whether detention is charged when an empty could not be returned, how government inspections were handled, and whether notice of cargo availability was clear. Charging detention when the designated return location would not accept the empty is likely unreasonable, absent extenuating circumstances.

For disputes between motor carriers and equipment providers over per diem under the UIIA interchange agreement, the agreement offers binding arbitration as an alternative path.

How to dispute a demurrage or detention invoice

1. 01
   Check the date

   Confirm the invoice was issued within 30 days of when the charges were last incurred. A late invoice generally need not be paid.

2. 02
   Check the contents

   Compare the invoice against the required elements above. A missing free time start date, availability date or certification is grounds to refuse payment.

3. 03
   Compare dates to your records

   Match the dates charged against the terminal's availability record, your drayage carrier's pickup and empty-return confirmations, and any closure or hold notices.

4. 04
   File within the window

   Submit the dispute within 30 days of the invoice date using the contact method on the invoice, with supporting documents.

5. 05
   Escalate if needed

   If an ocean carrier does not resolve it, any party invoiced for or paying the charges can file a charge complaint with the FMC. The carrier must show its demurrage or detention charges are reasonable (46 U.S.C. 41310), and the Commission can order a refund or waiver. Charges billed by a marine terminal operator on its own account fall outside this process.

Frequently asked questions