Demurrage and Detention

Hapag Lloyd, the 5th largest container shipping line in the world operating over 1.7 million TEUs and 249 ships became the 2nd carrier to...

- Drastic ocean freight rate increase due to market forces of supply and demand - A dozen recommendations made to alleviate US supply chains disruptions -...

Even though there are distinct differences between demurrage, detention and port charges, many are still oblivious to these differences and there have been several questions on this blog relating to these charges..

Let me explain how demurrage, detention and port charges work..

The Federal Maritime Commission (FMC) issued an Advance Notice of Proposed Rulemaking (ANPRM), seeking comments from the trade (public) whether they should require common...

Demurrage and Detention charges, the pain in the posterior, the bane of existence for BCOs, the mega bone of contention between carriers and customers,...

Demurrage and detention are two terms that often confuse people in global trade, shipping, freight, and logistics. This has also led to financial losses...

Does a shipping line charge demurrage and detention for LCL shipments the same way they charge for FCL shipments..??

The FMC set up Fact Finding 29 in March 2020 in response to many complaints raised with the FMC to investigate challenges to the freight delivery system in the USA and possible violations of the Shipping Act.

Commissioner Rebecca F. Dye was tasked by the FMC to carry out the investigation with the full authority under 46 C.F.R. §§ 502.281 to 502.291, to perform such duties as may be necessary in accordance with U.S. law and Commission regulations.

In her Executive Summary to the Subcommittee on Coast Guard & Maritime Transportation in June, Commissioner Dye reported that four key key measures to improve efficient cargo movement in US Ports have been identified.

Today, the Federal Maritime Commission voted to move forward with two demurrage-and-detention related initiatives proposed by Commissioner Rebecca F. Dye as part of Fact Finding 29. Unlike Commissioner Dye’s other Interim Recommendations, these initiatives required formal Commission approval.

What is the difference between a shipper owned container and a carrier owned container..??

A shipper owned container is a container owned by the shipper of the goods and a carrier owned container is a container owned by a carrier..

But the question may be a bit deeper than just the difference in definition between the two.. Let's see..

In one my previous articles, I explained the Difference between Demurrage and Detention..

After reading this, a few of my readers have asked me to explain the causes of demurrage and detention..

There are several reasons a container(s) can incur demurrage and/or detention or combined demurrage and detention.. Here are some of the major reasons..

The Federal Maritime Commission (FMC) has been thrust into the limelight recently due to various challenges faced by the trade and complaints laid by customers...

To many customers around the world, demurrage and detention costs represent some of the most expensive fees that they will incur in the process of a trade transaction..

Although demurrage and detention are not standard charges that are applicable on every shipment, there are many shipments on which these charges are levied..

They are probably two terms that top the list of controversial charges levied by shipping lines on customers..

The seriousness of demurrage and detention charges is evident when you consider that EVERY shipment has the potential to incur both these charges during loading and unloading..

Demurrage and Detention really are avoidable costs and it is something that can be defeated with data..

Learn exactly how, in a webcast which focuses on ways and means customers can reduce and/or avoid demurrage and detention charges through the effective usage of data..

The issue of what the Federal Maritime Commission (FMC) may consider in assessing whether a demurrage or detention practice is unjust or unreasonable has seemingly been put to rest with FMC having the final word..

On the 28th of April 2020, the FMC issued its final rule on its interpretation of the Shipping Act prohibition against failing to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property with respect to demurrage and detention..

International trade continues to experience growing pains related to demurrage and detention charges.

Unfortunately, global transport interpretations result in an assumption that these terms are interchangeable.

Depending on the origin and destination, they have different meanings, especially in the U.S. In fact, the Federal Maritime Commission (FMC) took the exuberant step to eliminate confusion and streamline port management.

While beneficial, the new interpretive rule still leaves room for error, notes FleetOwner, lacking the force of legally bound duties.

To avoid an assumption of decreased demurrage and detention fees and keep ocean freight spend under control, shippers need to understand their real impacts and how these fees amount to significant issues in the global supply chain.

Demurrage and Detention has been a bone of contention between shipping lines and customers for several years..

Shipping lines have been charging demurrage and detention costs on containers that the customers do not pick up or turn in on time, a situation that prevents shipping lines from utilising their equipment effectively..

Customers (importers mainly) on the other hand have been complaining about shipping lines using unfair practices when charging demurrage and detention even if the fault is not on their side..

Maybe there is truth on both sides and in terms of this issue, the Federal Maritime Commission (FMC) is not leaving anything to chance..

The FMC has called for public comment on its Interpretive Rule on Demurrage and Detention under the Shipping Act and in assessing just and reasonable regulations and practices relating to demurrage and detention charges..

Demurrage and Detention - two terms that may be at the top of the most controversial charges levied by shipping lines..

While shipping lines may consider demurrage and detention a necessary evil, importers and exporters around the world may beg to differ..

A question that one of the readers raised was

Is there a correlation between demurrage and detention and freight rates..??

As you maybe aware, the Federal Maritime Commission initiated investigation, Fact Finding 28, in March 2018 to look into the question whether demurrage and detention charges in the shipping industry were justified..

Industry stakeholders raised a petition to address the question whether demurrage and detention fees charged to shippers for storing containers and using equipment beyond the carrier's or terminal's allowed "free time" were just and reasonable..

This question arose on the back of demurrage and detention charges levied by the port, terminal and shipping lines to the shippers especially in the key USA gateways of Los-Angeles/Long Beach on the West Coast and New York-New Jersey on the East Coast..

Here are the results of the investigation and its findings..

Shippers are becoming increasingly active stakeholders in the logistics business, forcing carriers and forwarders to adapt. Portrix Logistic Software’s Global Head of Marketing, Christian Sørensenon, talks to Shipping and Freight Resource about the changing shipping landscape and provides tips for shippers and logistics companies to stay ahead of the curve.

Are demurrage and detention charges justified..??

No this is not my question..!!

This is a question that has arisen on the back of rising demurrage and detention charges incurred due to port and terminal congestion at key USA gateways such as Los-Angeles/Long Beach on the West Coast and New York-New Jersey on the East Coast..

Are demurrage and detention charges paid by the shippers to the ports, terminal and shipping lines justified especially in light of the port congestion..??

Is there a link between the demurrage charged by the shipping line and Incoterms®..?? This question was prompted by the below question from one of the readers.. Thank you Rizwan.. We have received huge shipment from our suppliers on CFR basis In the Bill of lading the Consignee is To The order of Seller and our company name is in Notify party. The seller has sent us the original Bill of lading 20 days after the vessel has arrived at destination port. Hence there is a delay in clearing the goods. Can the shipping line claim demurrage charges from us or they should put claim on seller /shipper since the shipping line contract is with the seller and not us