What is Demurrage?
Demurrage is a penalty charge imposed when shipping equipment (containers, railcars) is not picked up or returned within the allotted free time period. It incentivizes efficient use of equipment and port/terminal space.
Demurrage vs Detention
- Demurrage: Charges while equipment is at the port/terminal
- Detention: Charges while equipment is outside the terminal (at shipper/receiver)
How Demurrage Works
- Container arrives at port/terminal
- Free time period begins (typically 3-7 days)
- If not picked up within free time, demurrage accrues daily
- Charges increase the longer equipment is held
Demurrage Rate Structure
Demurrage charges typically escalate:
- Days 1-3 over free time: Lower daily rate
- Days 4-7 over free time: Medium daily rate
- Days 8+: Higher daily rate
Avoiding Demurrage
- Track container arrivals proactively
- Pre-clear customs before vessel arrival
- Schedule drayage promptly
- Ensure documentation is complete
- Plan warehouse receiving capacity