Demurrage

Demurrage is a charge imposed by an ocean carrier when an import container is not picked up from the port terminal within the allotted free time period. Free time is the number of days the carrier allows the container to sit at the terminal after the vessel is discharged before daily fees begin accumulating. Demurrage is distinct from detention (which applies after the container leaves the terminal) and from terminal storage fees (which are charged by the terminal operator rather than the carrier). For importers, demurrage is one of the most common and avoidable costs in international shipping.

How Demurrage Accrues

When a vessel arrives at a U.S. port and containers are unloaded, the ocean carrier grants the consignee a set number of free days to pick up each container. The typical free time allowance is 3 to 5 calendar days from the date the container is discharged from the vessel (some carriers count from the date the container is available for pickup, which may differ slightly).

Once free time expires, demurrage charges begin on a daily basis. Rate structures vary by carrier and port, but a common schedule looks like this: Days 1 through 4 after free time: $100 to $150 per container per day. Days 5 through 9: $200 to $250 per day. Day 10 and beyond: $300 to $400 per day. These rates are published in the carrier’s tariff and can change without notice.

A single 40-foot container that sits at the terminal for 7 days beyond its free time can accumulate $700 to $1,500 in demurrage. During port congestion events (such as the 2021 backlog at Los Angeles/Long Beach), containers routinely sat for 10 to 20 days past free time, generating demurrage bills of $3,000 to $6,000 per container.

Demurrage vs. Detention vs. Per Diem

These three terms are frequently confused. Demurrage applies while the full (loaded) container sits at the marine terminal awaiting pickup. Detention applies after the container has been picked up from the terminal and is in the importer’s possession for unpacking. The carrier charges detention for each day the container and chassis are not returned to the designated drop-off location after a defined free period (usually 4 to 7 days). Per diem is the chassis rental charge, assessed by the chassis pool or leasing company.

In practice, an importer can face all three charges simultaneously: demurrage at the terminal, followed by detention and per diem charges after pickup if the container is not unloaded and returned promptly.

Why Demurrage Accumulates

The most common reasons containers exceed free time include: customs holds (CBP or a PGA has placed the container on hold for examination), missing documentation (the customs entry cannot be filed because the broker is waiting for invoices or permits), freight payment issues (the carrier will not release the container until ocean freight charges are paid), and warehouse receiving backlogs (the importer’s warehouse or prep center does not have dock availability to unload the container).

Of these, customs holds and documentation delays are the hardest to control. A CBP examination can add 3 to 10 days to the container’s terminal dwell time, and the importer has no ability to accelerate the process. The demurrage accrues regardless of the reason for the delay.

Reducing Demurrage Costs

File the customs entry before the vessel arrives so the container is released immediately upon discharge. Ensure ocean freight charges are paid before arrival so the carrier issues the delivery order promptly. Coordinate with your trucker to schedule pickup within the first 2 days of free time, leaving buffer days in case of unexpected delays.

Pre-pulling (picking up the container and delivering it to an off-dock yard or warehouse yard) is the most effective tactic when the warehouse is not ready to unload. The pre-pull stops the demurrage clock at the terminal, and the container waits at a location with lower storage costs.

Negotiating extended free time with the carrier is possible for high-volume importers. A shipper moving 50 containers per month has leverage to request 7 to 10 free days instead of the standard 4 to 5. This extended window provides a meaningful buffer against the delays that cause demurrage.

Disputing demurrage charges is also an option when the delay was caused by factors outside the importer’s control. The FMC (Federal Maritime Commission) issued an interpretive rule in 2020 clarifying that demurrage should incentivize cargo movement, not serve as a revenue source when the container cannot be retrieved due to carrier or terminal actions.