What Is Demurrage? Understanding Its Differences from Detention and Storage and Checking Import FCL Costs
Interlink編集部What Is Demurrage?
Demurrage refers to charges incurred when a loaded import FCL container remains at the CY or terminal beyond the agreed free time. In Japanese, it may also be called "demareji," CY storage overcharge, container detention fee, or container over-storage charge.
In import operations, even after the vessel has arrived and the container is discharged at the terminal, immediate pickup is not always possible. Only after completing D/O exchange, D/O-less processing, import customs clearance, payment of customs duties and consumption tax, customs inspection, compliance with other legal requirements, coordination with the delivery destination, pickup reservation, and drayage arrangements, can the container be moved out from the CY. If free time expires during this period, Demurrage charges may apply.
Demurrage is not simply a charge for keeping the container longer. It is a cost arising from delays in documentation, procedures, cost settlement, customs clearance, inland delivery, or delivery scheduling somewhere in the import FCL pickup process. Therefore, when charged Demurrage, it is important to check not only the amount but also, on a timeline, when the container could have been picked up and why it was not actually moved out.
Scope Covered in This Article
| Item | Content Covered in This Article | Content Covered in Other Articles in Detail |
|---|---|---|
| Basics of Demurrage | The meaning of costs incurred when an import FCL laden container remains at the CY or terminal | The overall import FCL process, CY gate-out, and D/O exchange are covered in separate articles |
| Difference from Detention | The distinction between Demurrage incurred before CY gate-out and Detention for delayed return of empty containers after gate-out | Detention calculation, empty container return, and delays in de-vanning are covered in the Detention article |
| Difference from Storage | Distinguishing charges billed by shipping lines or NVOCCs versus terminal or warehouse storage fees | Storage, CFS storage fees, and warehouse storage fees are covered in Storage-related articles |
| Free Time | The free period allowed before Demurrage is charged, including confirmation of start and end dates | Contract conditions for free time, shipping line-specific rate tables, and extension negotiations are covered in separate articles |
| Causes | Typical causes such as D/O, customs clearance, inspections, other legal regulations, delivery scheduling, and drayage arrangements | Detailed responses by cause are covered in the article "Situations Where Demurrage Occurs" |
| When Receiving a Charge | How to check billing details, gate-out availability date, actual gate-out date, and records from involved parties | Document organization, objections, and cost allocation negotiations are covered in the article "Points to Check When Receiving a Demurrage Claim" |
| Responsibility Allocation | Clarifying the responsibilities of consignee, freight forwarder, customs broker, shipping line, and terminal | Shipping line liability, freight forwarder liability, and recourse practices are covered in the article on responsibility relationships |
| Practical Management | Chronological management and record retention from receipt of Arrival Notice until CY gate-out | Arrival Notice, D/O response, gate-out after Import Permit, and drayage are covered in respective articles |
Differences Between Demurrage, Detention, and Storage
Demurrage, Detention, and Storage often cause issues in cost management for import FCL shipments. However, they differ in where they occur, the applicable time periods, the billing parties, and the documentation for confirmation. It is important not to judge by the cost name alone but to verify where the charges arise, which period they cover, and who is issuing the invoice.
| Cost Name | Primary Location / Stage | Applicable Condition | Main Billing Party | Practical Confirmation Points |
|---|---|---|---|---|
| Demurrage | Within CY or terminal | Loaded containers remaining in the CY beyond the free time period | Shipping line, NVOCC, etc. | Verify vessel arrival date, discharge date, free time, earliest gate-out date, and actual gate-out date |
| Detention | After CY gate-out, on consignee or warehouse side | Delay in devanning and returning empty containers after loaded containers have been moved out | Shipping line, NVOCC, etc. | Confirm CY gate-out date, devanning date, empty container return date, and return location |
| Storage | Terminal, CFS, warehouse, etc. | Cargo or containers being stored within a facility | Terminal, CFS, warehouse, shipping line, etc. | Check storage location, billing party, applicable cargo, and storage period |
| When Demurrage and Storage Occur Simultaneously | Within CY or terminal | When container dwell time and facility storage overlap in handling | Shipping line, NVOCC, terminal, etc. | Verify that there is no double charging for the same period and confirm charges by category |
| When Detention and Storage Occur Simultaneously | After CY gate-out on warehouse or consignee side | When delayed empty container return and warehouse storage occur simultaneously | Shipping line, NVOCC, warehouse, etc. | Distinguish whether costs are for empty container return delay or cargo storage fees |
The Flow of Import FCL Where Demurrage Becomes an Issue
| Stage | Main Tasks | Relation to Demurrage | Points to Note |
|---|---|---|---|
| Vessel Arrival and Unloading | The vessel arrives, and containers are unloaded at the terminal | May serve as the reference date for starting free time | Confirm arrival date, unloading date, and Availability Date |
| Arrival Notice Confirmation | Receive arrival notice from shipping line or NVOCC | Becomes the basis for fees, D/O conditions, and free time calculation | Be careful not to overlook or delay forwarding the notice |
| D/O Exchange and D/O-less Handling | Complete procedures required for cargo delivery | Without D/O, CY gate-out may be impossible | Check Original B/L, Surrendered B/L, Sea Waybill, and payment status |
| Import Customs Clearance | File import declaration, customs inspection, and pay customs duty & consumption tax | Cargo may not be released until Import Permit is issued | Verify product description, tariff codes, value, origin, and compliance with other laws early |
| Customs Inspection and Other Regulatory Checks | Customs inspection and confirmation for food, plants, quarantine, PMD Act, radio waves, etc. | Release may be delayed during inspection and regulatory confirmation | Record reason for inspection, required documents, and request timing |
| Gate-out Reservation and Drayage Arrangement | Reserve CY gate-out and arrange trucks and chassis | Cargo may still remain if vehicles or reservations cannot be secured despite release eligibility | Simultaneously confirm delivery location reservations and drayage arrangements |
| CY Gate-out | Gate out the loaded container from the terminal | May mark the end of the demurrage period | Confirm actual gate-out date, time, and gate-out records |
Who Is Responsible for the Incurred Costs?
The most important aspect of Demurrage is to identify the cause of the cost incurred. If the consignee delayed document submission, failed to provide necessary information for import declaration, delayed payment settlement, delayed coordinating delivery locations, or could not secure an acceptance slot at the delivery site, these are generally organized as circumstances on the consignee’s side.
On the other hand, if the freight forwarder delayed confirming or communicating the Arrival Notice, did not properly proceed with D/O exchange or D/O-less processing, failed to promptly point out document deficiencies, or did not coordinate customs clearance or delivery arrangements, the forwarder’s responsibility for arrangements may become an issue.
Additionally, there are cases where unavoidable factors beyond the consignee or forwarder are involved, such as vessel delays, terminal congestion, CY gate-out restrictions, port operation disruptions, late announcements from the shipping line, or system failures. Therefore, with Demurrage, it is necessary to verify "why the gate-out could not be completed" in chronological order rather than deciding "who should pay" in advance.
| Cause Category | Main Contents | Verification Materials | Approach to Responsibility |
|---|---|---|---|
| Consignee-Related Factors | Late document submission, delayed payment settlement, delayed delivery site coordination, acceptance refusal | Email records, request dates, document submission dates, payment settlement dates, delivery booking records | Confirm whether necessary information or decisions were stalled on the consignee side |
| Freight Forwarder-Related Factors | Delayed Arrival Notice communication, late D/O arrangement, insufficient customs clearance planning, delayed delivery arrangements | Reception timestamps, forwarding timestamps, arrangement records, internal processing logs | Confirm if timely notification and arrangement could have been made |
| Customs and Regulatory Factors | HS code verification, customs inspection, other regulatory confirmations, document deficiencies | Declaration date, Import Permit date, inspection notice, verification request records | Distinguish between unavoidable inspections and insufficient prior checks |
| Shipping Line / NVOCC Factors | Unreflected D/O-less status, delayed notifications, system failures, delayed billing details | Arrival Notice, D/O status, shipping line responses, system failure notifications | Confirm if the shipping line delayed enabling gate-out availability |
| Terminal and Port Factors | Gate-out restrictions, port congestion, gate congestion, operational confusion | Terminal notices, gate-out booking records, gate logs | Confirm if the situation could have been avoided through relevant party arrangements |
D/O Exchange, D/O-less Handling, and Demurrage
In import FCL, delays in D/O exchange or D/O-less handling may lead to Demurrage charges. Even if the Import Permit has been issued, if the procedures required for cargo release by the shipping line or NVOCC have not been completed, the cargo may not be gated out from the CY.
Delayed arrival of the Original B/L, unreflected processing of Surrendered B/L, insufficient confirmation on the Sea Waybill, unpaid freight or other charges, or overlooked Arrival Notice can all cause delays in D/O processing, pushing back the gate-out date.
In such cases, it is necessary to distinguish whether the delay is due to the consignee’s slow document preparation, issues with the overseas B/L processing, or inadequate guidance by the freight forwarder. The mere fact that D/O processing was delayed does not determine responsibility allocation.
Customs Clearance, Customs Inspections, and Demurrage
Delays in customs clearance can also lead to Demurrage charges. If there are discrepancies or deficiencies in the product name, quantity, weight, price, origin, tariff classification, or compliance with other legal procedures, the import declaration may not proceed. Additionally, if a customs inspection or document verification occurs after the declaration, the cargo may not be released immediately.
Customs inspections themselves cannot be freely avoided by the freight forwarder or customs broker. However, if there is insufficient document verification before the declaration, delays in requesting confirmation from the importer, or inadequate checks related to other legal requirements, practical responsibility may be attributed in actual logistics operations.
When Demurrage arises due to customs clearance delays, it is important not to simply accept the delay as unavoidable because an inspection took place. Instead, clarify the reasons why the inspection or verification became necessary, the timing of obtaining the required documents, and when confirmation requests were made to the importer.
Issues with Delivery Scheduling and Drayage Arrangement
Even after the Import Permit is granted and D/O processing is completed, it may not be possible to gate out from the CY if delivery appointments cannot be secured. This is especially common for large warehouses, distribution centers for mass merchandisers, locations requiring appointment-based delivery, or warehouses with limited unloading hours, where failure to secure delivery appointments may cause containers to remain at the CY.
Additionally, during peak seasons, around consecutive holidays, after typhoons or severe weather, or during port congestion, securing drayage trucks and chassis can become difficult. In such cases, delays in gate-out after Import Permit issuance may not be caused by customs clearance but rather stem from delivery destination coordination or inland transportation arrangements.
Common Misunderstandings
| Common Misunderstanding | Actual Understanding | Practical Points to Note |
|---|---|---|
| Demurrage charges from the shipping line must always be paid as they are. | The charges themselves need to be verified by checking the applicable period, starting date, and gate-out date. | Confirm the billing details against the actual gate-out records. |
| Demurrage and Detention are the same charges. | Demurrage relates to delays before CY gate-out, while Detention concerns delays in returning empty containers after gate-out. | Distinguish between the location and applicable period when verifying. |
| Storage and Demurrage are always identical charges. | Storage charges may be incurred as fees from storage facility operators. | Check who is billing and the applicable period. |
| Demurrage stops once the Import Permit is issued. | Even after Import Permit issuance, if the D/O is not completed, gate-out reservation is not confirmed, or drayage is not arranged, CY gate-out cannot proceed. | Confirm the scheduled gate-out date and actual gate-out date. |
| No one is responsible during customs inspection. | While inspections themselves can be unavoidable, they sometimes occur due to document deficiencies or delayed checks. | Clarify the reason for inspection, declaration timing, and when the confirmation request was made. |
| The inability to book delivery at the destination is a customs clearance issue. | Delays in post-Import Permit gate-out may be caused by delivery destination coordination or drayage arrangement problems. | Verify delivery booking date, vehicle arrangement date, and CY gate-out date. |
| Free time is the same for all shipping lines. | It varies depending on the shipping line, NVOCC, contract terms, and cargo conditions. | Confirm individually through Arrival Notices or rate sheets. |
| There is only one cause for Demurrage. | Demurrage may result from overlapping causes such as D/O delay, customs clearance, inspections, delivery booking, drayage, and port congestion. | Analyze multiple causes in chronological order. |
Common Practical Issues
| Case | What Becomes Problematic | Cause | Practical Response |
|---|---|---|---|
| Delay in D/O Exchange | Unable to gate out from CY even though Import Permit is granted | Original B/L not received, surrender not processed, fees unpaid | Check the D/O completion date and possible gate-out date |
| Late Confirmation of Arrival Notice | Delay in confirming free time, charges, and D/O conditions | Wrong notification recipient, forwarding omission, insufficient staff confirmation | Record received date/time, forwarding date/time, and date of confirmation request |
| Delay in Import Customs Clearance | No Import Permit issued, unable to gate out from CY | Insufficient details on product name, tariff code, value, origin, and other regulatory documents | Verify declaration preparation start date, inquiry date to importer, and permit date |
| Customs Inspection Conducted | Cannot gate out cargo until inspection is completed | Customs decision, declaration review, document and physical verification | Check inspection notification date, inspection date, inspection reason, and completion date |
| Delay in Other Regulatory Confirmations | Clearance approval delayed, causing gate-out to be stopped | Insufficient confirmation of food, plants, quarantine, PMD Act, radio waves, etc. | Organize whether procedures are required and the date confirmation was requested |
| Unable to Secure Delivery Reservation | Unable to gate out from CY after customs clearance, resulting in container dwell time | Lack of available delivery slots, unloading time restrictions | Check delivery site confirmation date, reservation availability date, and scheduled gate-out date |
| Unable to Arrange Drayage Vehicle | Gate-out possible in theory, but cargo cannot leave CY | Peak season, before/after public holidays, post-typhoon, port congestion | Confirm vehicle arrangement request date, confirmation date, and gate-out reservation date |
| Restrictions by Shipping Line or Terminal | Gate-out is restricted even if consignee is ready | System failure, gate congestion, gate-out restrictions, port operation disruptions | Check notifications from shipping line/terminal and gate-out reservation records |
Documents to Check When Receiving a Charge
| Document / Record | Items to Confirm | Party to Confirm With | Purpose of Confirmation |
|---|---|---|---|
| Demurrage Invoice Details | Relevant container, applicable period, unit rate, number of days, billing entity | Shipping line, NVOCC, freight forwarder | Verify the validity of the billing period and amount |
| Arrival Notice | Arrival date, free time, charges, D/O conditions | Shipping line, NVOCC | Confirm free time and gate-out conditions |
| B/L and Surrender Confirmation | Original B/L, surrendered B/L, Sea Waybill, consignee name | Overseas party, shipping line, NVOCC | Confirm the period when D/O processing was possible |
| D/O Related Records | D/O issuance date, D/O response reflection date, payment settlement date | Shipping line, NVOCC, freight forwarder | Confirm the completion timing of cargo handover procedures |
| Customs Records | Declaration date, Import Permit date, customs inspection, compliance with other regulations | Customs broker, importer | Check if there were any customs-related restrictions on gate-out |
| Gate-Out and Delivery Records | Gate-out reservation date, drayage arrangement date, actual gate-out date, delivery date | Drayage company, warehouse, consignee | Identify where the cargo was held after gate-out became possible |
| Communication Records | Requests to consignee, responses, awaiting confirmation, instruction dates | Consignee, freight forwarder, customs broker | Confirm whose decision was pending |
| Terminal and Shipping Line Notifications | Gate-out restrictions, gate congestion, system failures, closure information | Shipping line, terminal | Confirm unavoidable circumstances beyond involved parties’ control |
Comparison Table of Freight Forwarder Involvement
| Category | Support They Can Provide | What They Should Not Definitively Assert | Practical Handling |
|---|---|---|---|
| Free Time Confirmation | Confirm deadlines from Arrival Notice and shipping line information, then share with the consignee | Explain that Free Time will always be extended | Clearly communicate deadlines, the start date of the count, and the containers involved |
| D/O Procedures | Confirm D/O exchange, D/O-less status, fee settlement, and B/L processing status | Assume that cargo can be picked up without D/O completion | Record the processing completion date and the date when pickup is possible |
| Customs Clearance Preparation | Check required documents, planned declaration, inspection presence, and permit date | Explain that customs inspection can always be avoided | Organize requested confirmation date, declaration date, and permit date |
| Delivery and Transportation Coordination | Coordinate gate-out reservation, delivery reservation, and drayage arrangement | Immediately attribute delivery delays caused by the consignee to customs delays | Separately confirm gate-out availability date, actual gate-out date, and delivery reservation date |
| Invoice Confirmation | Reconcile invoice details, applicable period, days, unit price, and container numbers | Assume the invoice is always correct upon receipt | Cross-check free time with gate-out records |
| Responsibility Allocation | Organize timelines, emails, documents, and arrangement records | Immediately conclude that only one party is at fault | Confirm whether multiple factors may be overlapping |
| Cost Negotiation | Assist with explanations, waiver or reduction requests, and submission of supporting evidence | Guarantee that waivers or reductions will necessarily be granted | Confirm the decisions of the shipping line/NVOCC and contractual terms |
Decision Checklist
| Confirmation Stage | Party to Confirm With | Items to Confirm | Action if Issues Arise |
|---|---|---|---|
| Upon Receiving Arrival Notice | Shipping line, NVOCC, freight forwarder | Vessel arrival date, unloading date, free time, D/O conditions | Share deadlines with consignee and calculate planned gate-out date |
| Before D/O Processing | Consignee, overseas party, shipping line, NVOCC | Original B/L, Surrendered B/L, Sea Waybill, cost settlement | Identify pending items and confirm expected completion date |
| During Customs Clearance Preparation | Consignee, customs broker, freight forwarder | Invoice, Packing List, product description, HS code, value, origin, other regulatory requirements | Request missing documents promptly and set response deadlines |
| During Customs Inspection | Customs broker, customs authorities, consignee | Inspection notification date, inspection date, inspection reason, estimated completion | Share delays due to inspection with all stakeholders |
| After Import Permit | Consignee, delivery destination, drayage company | Gate-out booking, delivery booking, vehicle arrangement, allowed unloading date | If delivery destination convenience affects schedule, confirm earliest acceptance date and share cost impact |
| Before CY Gate-Out | Shipping line, terminal, drayage company | Gate-out ready status, gate reservation, gate-out restrictions, unpaid charges | Identify unresolved issues and update gate-out availability date |
| Upon Receiving Invoice | Shipping line, NVOCC, freight forwarder | Billing period, days charged, unit rate, applicable containers, free time | Reconcile with actual gate-out records and inquire if discrepancies exist |
| During Cost Responsibility Discussions | Consignee, freight forwarder, customs broker, shipping line | Cause of delay, communication records, arrangement records, avoidability | Create chronological summary and organize basis for cost responsibility |
Scenario 1: Delay in D/O Exchange Prevents Gate-Out
The vessel has arrived, and preparations for import customs clearance are progressing; however, due to delays in the arrival of the Original B/L or the unreflected status of a Surrendered B/L, the D/O exchange or D/O-less procedures have not been completed. In this case, even if the Import Permit has been issued, the cargo cannot be gated out from the CY unless the shipping line or NVOCC has completed the cargo delivery processing.
For this case, confirm the type of B/L, the surrender processing date, the completion date of the D/O processing, and the date of cost settlement. It is necessary to categorize whether the delay is due to the consignee’s late document preparation, a delay on the overseas side, or insufficient guidance from the freight forwarder.
Scenario 2: Demurrage Occurs Due to Delays in Import Customs Clearance
This scenario occurs when there are discrepancies or omissions in the product name, tariff number, price, country of origin, or confirmations related to other regulations, resulting in delayed import declaration or Import Permit issuance. If customs clearance is not completed, the container with cargo cannot be gated out from the CY, and once Free Time is exceeded, Demurrage charges may apply.
In this case, it is important to verify when the required documents were requested from the importer, when a response was received, the date of declaration, and the date the Import Permit was granted. Chronologically organize whether the discrepancies were identified early by the customs broker or freight forwarder, or if the importer delayed responding.
Scenario 3: Delay in Gate-Out Due to Customs Inspection
This is a case where, after filing the import declaration, customs inspection or document verification occurs, preventing immediate container gate-out. While customs inspections themselves cannot be freely avoided by involved parties, deficiencies in the declaration, incomplete documentation, or inadequate verification of cargo details may be underlying causes.
In this case, it is important to check the date of inspection notification, inspection date, inspection completion date, the reason for inspection, and timing of additional document submissions. Rather than simply accepting "customs inspection is unavoidable," it is crucial to verify if any preventable oversights occurred before the inspection.
Scenario 4: Unable to Gate Out from CY Due to No Delivery Appointment
This case occurs even though the Import Permit and D/O processing are complete, but the consignee's receiving slot cannot be secured, preventing CY gate-out. At large warehouses, distribution centers for mass retailers, or delivery points requiring appointments, the dates available for unloading may be limited, causing a mismatch between the eligible gate-out date and the delivery date.
In this situation, the cause of Demurrage is likely related not to customs clearance but to coordination with the delivery destination or arrangements for inland delivery. It is important to check when the delivery appointment was requested, when the appointment was secured, and whether gate-out was possible immediately after obtaining the Import Permit.
Scenario 5: Unable to Gate Out Due to Lack of Drayage Vehicles
Even if the Import Permit and Delivery Order (D/O) processing are complete, there are cases where drayage vehicles or chassis cannot be secured and CY gate-out is not possible, due to busy seasons, periods around consecutive holidays, typhoons or severe weather, and port congestion.
In such cases, check when the vehicle arrangement was requested, when the gate-out reservation was made, and what responses were received from the drayage company. Clarify whether the vehicle shortage could have been anticipated, if last-minute arrangements were the cause, or if there were unavoidable circumstances such as port congestion.
Scenario 6: When Demurrage Arises from Multiple Overlapping Causes
In actual practice, demurrage is not always caused by a single factor. For example, a delay in D/O processing by one day, additional time taken for customs clearance confirmation, and failure to secure a delivery appointment may collectively result in exceeding the free time allowed.
In such cases, focusing only on the final cause of delay can lead to incorrect judgments about who should bear the cost. It is important to arrange the timeline showing the receipt date of the Arrival Notice, D/O processing date, declaration date, Import Permit issuance date, delivery appointment date, and actual CY gate-out date, to clearly identify at which stage and for how many days delays occurred.
Summary
Demurrage refers to the charges that arise when an import FCL container remains in the CY or terminal beyond the free time allowed. This cost becomes an issue when the loaded container cannot be moved out of the CY. Its applicable period differs from Detention charges, which apply when the return of an empty container is delayed after gate-out. Additionally, Demurrage differs from Storage charges in terms of the billing party and the nature of the storage fees.
In practice, it is important to identify where delays occurred—such as D/O exchange, D/O-less processing, import customs clearance, customs inspection, compliance checks with other regulations, gate-out booking, drayage arrangement, or consignee acceptance—and organize the causes in chronological order. Demurrage should not be settled by deciding "who pays" upfront; rather, the reason for the inability to gate out should be confirmed first before determining cost responsibility.
When receiving a Demurrage claim, you should not judge based solely on the invoiced amount. Instead, verify the free time, gate-out eligibility date, actual gate-out date, Arrival Notice, D/O records, customs clearance documents, gate-out bookings, drayage arrangements, and related instructions and records from involved parties to properly determine the allocation of costs.
