Detention and Demurrage - What Is The D&D Charge In Shipping?
Detention and Demurrage refer to the time a container spends either on terminal premises or outside the port premises. Learn all about the charges and how to handle them.
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The Importance of Detention and Demurrage
Transporting ocean freight is very complex and many parties involved, such as ports or shipping companies, charge various costs and fees. One of the most significant costs for shippers are Detention and Demurrage (D&D) fees.
Container terminals only have limited capacity that they can make available to cargo owners. Therefore, it is important for both parties to calculate exactly when containers will be picked up and unloaded or returned to the port once they ’re empty. Ports and shipping companies charge D&D fees so that the handling of the countless containers remains in a constant flow and forwarders can keep the material available. This process is used to determine the container rent as well as the shipping Demurrage and shipping Detention charges after the contractually agreed free time has expired.
What is Detention and Demurrage?
In the logistics industry, the terms Detention and Demurrage are mostly used interchangeably. This often leads to confusion among freight forwarders, importers, and exporters because the two terms are closely related but have different meanings.
Detention and Demurrage are essentially delay charges that incur after the expiration of the container free time. Free time is the period of time that shipping lines allow their customers to retrieve containers from terminals and rail facilities free of charge. As this cannot always be adhered to for unavoidable reasons, Hapag-Lloyd offers its customers Additional Freetime, a digital product that allows traders to purchase additional detention free time.
The difference between the two cost items depends solely on where exactly the containers are located at the time of the delay. While terminal container Detention refers to charges for delayed use outside the terminal, terminal container Demurrage is incurred if the container is still in the terminal at the end of the free time.
Detention refers to the container rental charged by the carrier to the billable party. It is charged for each day the container is outside the port or terminal area after the contractually agreed "free time" has expired. In other words, it is charged if the container is not returned to the depot empty on time. Demurrage is the daily charge incurred when a discharged container is not removed from the port area after the "free time" has expired. This fee varies from port to port and terminal to terminal. Often a fee is also charged, which increases with the length of the shipping Demurrage period.
How do imports and exports affect Detention and Demurrage?
To further separate Detention and Demurrage, it is helpful to divide the two charges into import and export.
During import, containers arrive at a terminal for buyers or importers - it is not uncommon for them to be charged both fees. If the containers are not picked up on time after arrival, Demurrage is charged: After an average of seven days, ports charge the consignee a fine. Depending on the shipping line, this can range from $50 to $200 per day. If buyers take the containers to be unloaded but then return them to the port, the authorities can charge shipping Detention fees for the delay.
On the export side, traders typically have seven to ten days to collect empty containers from the port and load them with their goods. If the process is delayed for more than ten days, shipping companies charge a shipping Detention fee. Shipping Demurrage is charged to exporters when goods arrive before the agreed shipping date. For example: The ship is scheduled to arrive on May 15, and there are 7 free days before the shipping company charges Demurrage. However, the exporter delivers the goods on May 5, which means he must pay for two days (from May 5 to May 7).
Best ways to handle Detention and Demurrage Fees
In order to avoid fees and make the port handling of containers as smooth as possible, there are several things that traders and cargo owners need to pay attention to when it comes to Detention and Demurrage.
1. Optimal Time Management: The success of a shipment begins before an empty container arrives. The cargo should be ready for collection in time so that the shipper can act quickly. This ensures that the container arrives at the port before the free time expires.
2. Smart Customs Clearance: It makes sense to clear cargo in advance, if possible, to reduce storage time. The right freight forwarder will usually handle this task, gathering all the necessary documents and administrative steps in advance.
3. Stay Informed: Retailers should make sure that Detention and Demurrage charges, as well as free time, are always clearly stated in the quote.
Don’t get lost in Fees
Importers and exporters can easily lose track of the various costs and charges in container shipping. In particular, Detention and Demurrage are often confused because the two terms are often used together but do not mean the same thing.
In order for global container shipping to function smoothly, shipping companies' free periods must be adhered to precisely. Otherwise, traders may have to pay high fees for the storage or provision of containers.
To make sure everything runs smoothly, it pays to plan ahead and use helpful tools like the D&D Calculator.
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