Demurrage and detention: what they are, how they're calculated and how to avoid them

Two charges, two places

FIATA's best practice guide tells them apart by where the container is:

• Demurrage: use of the container inside the terminal beyond the free days.
• Detention: use of the container outside the terminal or depot beyond the free days.
• Combined demurrage and detention: carriers may merge both periods into one with a single free-time allowance.
• Storage: a terminal charge for keeping the container on its ground. It is not demurrage, even though the carrier sometimes passes it on.

How it is calculated

Each carrier publishes its terms and its tariff per port, and a contract or service agreement can improve them. The structure is usually the same:

1. A number of free days, which varies by container type. Reefers usually get fewer.
2. A way of counting: calendar or working days, and from what exact moment. Hapag-Lloyd's tariff for Spain, for instance, counts calendar days from 00:01 on the day of discharge.
3. Bands with a daily rate that rises as the days go by.

Maersk's terms illustrate another important detail: on exports, the combined period runs from empty pick-up until loading on board. Picking up the empty too early uses up free days before the cargo is ready.

Who pays

The carrier invoices the merchant on the bill of lading, usually the shipper or the consignee. When there is a forwarder or NVOCC in between, the charge moves down the chain to whoever caused the delay, or whoever agreed to bear it.

In Spain, the Maritime Navigation Act regulates the demurrage of a chartered vessel, not of containers, so the practical framework is the contract and the carrier's tariff. There is no specific EU rule on container demurrage; associations such as CLECAT call for more transparency in these charges.

What to check on an invoice

The United States does regulate these invoices. The Federal Maritime Commission rule requires minimum content and, if any item is missing, the billed party is not obliged to pay. Although it only applies there, it makes a good checklist for any invoice:

• Bill of lading number, container number and port of discharge.
• Why you are the party being billed.
• Free days, with their start and end dates.
• The date the cargo became available (import) or the earliest return date (export).
• Days charged, daily rate and the tariff rule or contract that sets it.
• Contact details and the dispute procedure.

The same rule sets 30 days to invoice from the last day charged and at least 30 days for the billed party to dispute. Its general rule adds the incentive principle: the charge must serve to keep cargo moving, so charging detention when the empty cannot be returned is likely unreasonable.

How to avoid them

• Negotiate free days and, if you can, a cap on accrued charges in your contract.
• Prepare clearance before arrival so the goods don't wait for paperwork.
• Track, container by container, the terminal pick-up deadline and the empty return deadline.
• On exports, align empty pick-up with the VGM, documentation and terminal cut-offs. Carriers often close documentation and VGM several days before departure.
• Return the empty to the right depot: an empty in the wrong place keeps counting.
• If the goods are going to wait, consider unloading them in a temporary storage facility or customs warehouse and returning the container.
• Keep the actual dates of every movement: they are your evidence if you need to dispute.

Verified gross mass has been a shipper obligation since 2016 (SOLAS regulation VI/2). In Spain it is implemented by a resolution of the Directorate-General of the Merchant Navy. Without VGM the container isn't loaded, and a container that isn't loaded keeps adding days.

Check the container number before paying

A container number (ISO 6346) has four letters, six digits and a check digit. The first three letters identify the owner, the fourth the category (U for containers), the six digits are the serial number and the last digit catches transcription errors. This is how it is calculated:

1. Each letter gets a value starting at A = 10 and skipping multiples of 11: A 10, B 12, C 13, D 14, E 15, F 16, G 17, H 18, I 19, J 20, K 21, L 23, M 24, N 25, O 26, P 27, Q 28, R 29, S 30, T 31, U 32, V 34, W 35, X 36, Y 37, Z 38.
2. Digits keep their own value.
3. Each position, starting with the first, is multiplied by 1, 2, 4, 8 and so on, doubling each time.
4. The products are added up and divided by 11. The remainder is the check digit; if it is 10, the check digit is 0.

For CSQU305438 the sum is 6,185, the remainder after dividing by 11 is 3 and the full number is CSQU3054383. The BIC, which keeps the owner code register, has a calculator to check it. A number that doesn't add up is usually a copying error, and an invoice for a misidentified container is one you can dispute.