Situations That Cause Demurrage Charges
Interlink編集部Situations Where Demurrage Occurs
Demurrage occurs in import FCL operations when a laden container remains at the CY or terminal beyond the allowed Free Time.
Even after the vessel arrives and the container is discharged, the container may not be immediately moved out from the CY. Only after completing D/O exchange or D/O-less processing, import customs clearance, customs inspection, compliance with other regulations, pickup reservation, drayage arrangements, and coordination with the delivery destination can the laden container be moved out of the CY.
If procedures or arrangements stall at any point in this sequence and the Free Time is exceeded, Demurrage charges may apply.
Demurrage should not be judged solely by the fact that a container remains at the port. It is necessary to examine where delays occurred—whether in D/O processing, customs clearance, documentation, cost settlement, pickup reservation, drayage, consignee acceptance, or port congestion—according to the import FCL operational flow.
Scope Covered in This Article
This article organizes the actual situations in which Demurrage arises, following the practical workflow of import FCL operations. Definitions of Demurrage, differences from Detention and Storage, and basic principles of cost allocation are covered in a separate article titled “Demurrage.” The verification documents, chronological organization, and cost allocation when Demurrage claims are actually received are addressed in another article, “Points to Check When Receiving a Demurrage Claim.”
| Item | Content Covered in This Article | Detailed Topics Covered Only in Outline Here |
|---|---|---|
| Basic Situations Where Demurrage Occurs | Organizes situations when loaded containers remain at the CY or terminal beyond Free Time. | Definitions of Demurrage, rate structures, billing entities, basic cost allocation. |
| Import FCL Practical Workflow | Organizes the flow from vessel arrival, discharge, D/O processing, import customs clearance, release reservation, drayage, to CY gate-out. | Overall import FCL procedures, D/O exchange, D/O-less, customs declaration, detailed CY gate-out procedures. |
| Delays in D/O Processing | Organizes issues related to Original B/L, surrender, Sea Waybill, D/O-less, and delays in cost settlement causing inability to gate out. | Details on B/L and D/O name, D/O-less processing, Arrival Notice, D/O fees. |
| Import Customs Clearance and Customs Inspection | Organizes import declaration, Import Permit, customs inspections, and delays in CY gate-out due to document checks. | Details on import clearance, customs inspection, Import Permit, taxable value, tariff classification checks. |
| Verification of Other Regulations | Organizes delays due to inspections related to foods, cosmetics, medical devices, electrical appliances, hazardous goods, etc. | Details on the Food Sanitation Act, Pharmaceuticals and Medical Devices Act (PMD Act), plant quarantine, animal quarantine, chemical substance regulations. |
| Document Deficiencies and Delays in Document Arrival | Organizes shortages or discrepancies in invoices, packing lists, B/Ls, certificates of origin, and permits. | Details on document corrections, customs document management, certificates of origin, and other regulatory documents. |
| Release Reservation and Drayage Arrangement | Organizes delays caused by insufficient release reservations, vehicle shortages, chassis shortages, and port congestion. | Details on drayage charges, standby fees, redelivery costs, special vehicles, delivery conditions. |
| Inability of Cargo Owner or Delivery Destination to Receive | Organizes delays due to warehouse full at the delivery destination, delivery date restrictions, shortage of workers or forklifts causing postponement of release. | Details on inland delivery, devanning, delivery destination acceptance, warehouse operational conditions, storage fees. |
| Port Congestion, Holidays, and Special Containers | Organizes restrictions on release caused by consecutive holidays, bad weather, terminal congestion, and handling of hazardous, reefer, or special containers. | Details on congestion conditions at each port, hazardous goods storage, reefer power management, special container arrangements. |
| Scope of Forwarder Involvement | Differentiates confirmations that freight forwarders can assist with and cost allocation judgments that should not be conclusively made by them. | Disputes after billing, negotiation for reduction, contractual responsibilities, and case-by-case damage compensation judgments. |
Why Demurrage Becomes an Issue in Import FCL
In import FCL shipments, laden containers are stored temporarily at the CY after vessel arrival. To pick up the cargo, multiple conditions must be met, including D/O processing, import customs clearance, gate-out clearance, gate-out reservation, drayage arrangement, and acceptance by the delivery destination.
From the cargo owner’s perspective, the cargo has already arrived in Japan, but in actual logistics practice, "arrival" and "being able to gate out" are different. Even if the Import Permit has been issued, the container may not be released if the D/O processing is incomplete. Furthermore, even when both D/O processing and Import Permit are complete, the container cannot leave the CY without securing gate-out reservations and drayage vehicles.
Therefore, Demurrage is easier to understand as a cost related to "being unable to remove the container from the port" in import FCL logistics.
Positioning of Demurrage, Detention, and Storage
Costs often confused with Demurrage include Detention and Storage. All of these relate to the retention of containers or cargo, but they differ in where they occur, the applicable period, the billing party, and the documentation used for verification.
In simple terms, Demurrage can be defined as the cost incurred when the container cannot be taken out of the CY (Container Yard), Detention applies to the cost when an empty container cannot be returned after leaving the CY, and Storage relates to costs associated with cargo or containers being stored at terminals, CFS, warehouses, or similar facilities.
| Item | Demurrage | Detention | Storage | Practical Verification Points |
|---|---|---|---|---|
| Main Location of Occurrence | Within CY, inside terminal. | At delivery location after CY gate-out, warehouse, or storage location before return. | Terminal, CFS, warehouse, bonded area, storage facility. | Confirm where the cargo or container is being held. |
| Subject | Full (loaded) container. | Empty container after cargo has been unloaded. | Cargo, container, or storage space. | Differentiation between full and empty container, and what is subject to storage. |
| Typical Starting Point | After vessel discharge, following the free time period, etc. | May be based on CY gate-out date or container pick-up date. | Entry date, storage start date, or after free storage period expires. | Confirm from which date the charges start to be calculated. |
| Typical Ending Point | The date the full container is removed from the CY. | The date the empty container is returned to the designated return location. | The date cargo or container is removed from the storage location. | Confirm the date the charges stop accruing. |
| Main Causes | Delays in D/O processing, customs clearance delays, inspections, incomplete documents, insufficient pick-up reservation, delivery location not accepting. | Delays in devanning, insufficient return reservations, congestion at return depot, shortage of drayage for return. | Continued storage, delays in removal, warehouse circumstances, customs or delivery-related reasons. | Break down the causes in chronological order. |
| Verification Documents | Vessel arrival date, discharge date, free time, D/O processing date, Import Permit date, date of removal. | CY gate-out date, devanning date, return reservation, return deadline, empty container return date, EIR. | Entry date, storage start date, removal date, warehouse details, storage fee invoice. | Check not only the charge name but also the applicable period. |
| Points Likely to Cause Responsibility Disputes | Whether the reason the container could not be removed from the CY lies with the cargo owner, freight forwarder, customs broker, or shipping line/NVOCC. | Whether the delay in returning the empty container is due to the consignee or the return location/arrangement side. | Whose instruction or circumstances caused the continuation of storage. | Verify not only the outcome but also the causes and communication records. |
Common Misunderstandings
In situations where Demurrage occurs, misunderstandings such as "The cargo can be picked up as soon as the vessel arrives," "The cargo can definitely be moved out once the Import Permit is issued," and "If it is D/O-less, no procedures are necessary" tend to arise.
| Misunderstanding | Actual Considerations | Possible Issues |
|---|---|---|
| The cargo can be moved out from CY as soon as the vessel arrives | Even after unloading, D/O processing, import customs clearance, gate-out reservation, and drayage arrangements are required. | Delays in preparing for pickup may cause Free Time to be exceeded. |
| The cargo can definitely be moved out once the Import Permit is issued | Even if the Import Permit is granted, if D/O processing, payment settlement, or gate-out reservation have not been completed, the cargo may not be moved out. | Containers may remain in the CY after customs clearance is completed, potentially incurring Demurrage. |
| If it is D/O-less, no delivery procedures are necessary | D/O-less means no paper D/O is used, but move-out authorization and payment settlement are still required. | The system may not show move-out authorization, possibly preventing gate-out. |
| Documents can be checked after the vessel arrives | Document discrepancies or deficiencies should be confirmed before vessel arrival. | Corrections may be required after arrival, delaying customs clearance and D/O processing. |
| Customs inspections are force majeure, so no need to consider cost responsibility | While inspections themselves are standard procedures, if prolonged due to deficient documents or unclear product descriptions, the cause should be identified. | Disputes may arise over who bears the cost of delays caused by inspections. |
| Other regulatory checks will be handled automatically by the customs broker | Information from the importer side may be needed, such as ingredient lists, usage explanations, permit documents, and manufacturer data. | If cargo owner-side documents are incomplete, Import Permit issuance and gate-out may be delayed. |
| Gate-out reservations and drayage can be arranged after customs clearance | During port congestion or vehicle shortages, gate-out on the desired date may not be possible if arranged only after customs clearance. | Even if gate-out is allowed, lack of vehicles may prolong container dwell time at the CY. |
| Demurrage is unrelated if the consignee’s delivery location simply cannot accept the cargo yet | Even if gate-out is not possible due to consignee reasons, the fully loaded container remains at the port. | Demurrage may arise due to the cargo owner’s circumstances, resulting in disputes over cost responsibility. |
Typical Process Where Demurrage Occurs
A typical scenario where Demurrage occurs is when a loaded import FCL container is discharged from the vessel and stored in the CY, but cannot be picked up within the free time.
After the vessel arrives, if the D/O processing, import customs clearance, pickup reservation, drayage arrangement, and consignee acceptance coordination are not completed within a set period, the container remains in the CY.
The causes are often multiple. Delays in document arrival, B/L processing delays, incomplete D/O, customs clearance delays, customs inspections, other regulatory checks, unpaid charges, insufficient pickup reservations, shortage of drayage vehicles, or consignee’s refusal to accept the delivery may overlap and cause demurrage.
| Process | Normal Flow | Issues Leading to Demurrage | Practical Measures |
|---|---|---|---|
| Vessel Arrival & Discharge | Loaded containers are discharged from the vessel and stored in the CY. | Free time tracking starts from this point. | Check vessel ETA, discharge date, and free time expiration date. |
| Document Verification | Check Invoice, Packing List, B/L, Arrival Notice, etc. | Document shortages or discrepancies halt customs clearance and D/O processing. | Confirm any shortages or discrepancies before vessel arrival. |
| D/O Processing | Issue D/O or perform D/O-less processing to enable container pickup. | Delays occur due to B/L issues, surrender, charges settlement, or name mismatches. | Confirm completion date of processing and readiness for pickup. |
| Import Customs Clearance | Submit import declaration and obtain Import Permit. | Delays due to tariff number, value, quantity, origin, or use verification. | Prepare customs documents early and conduct pre-check if doubts arise. |
| Other Regulatory Checks | Review requirements under food regulations, Pharmaceuticals and Medical Devices Act (PMD Act), plant quarantine, chemical substance control, etc. | Delays caused by filing, inspections, permits, or missing ingredient information. | Check applicable requirements from before vessel arrival. |
| Pickup Reservation | Make pickup reservations with terminal or CY. | No available slots or port congestion prevent pickup on requested dates. | Confirm pickup slots in parallel with customs clearance schedule. |
| Drayage Arrangement | Secure trucks, chassis, and drivers. | Shortages, holidays, or post-storm congestion delay pickup. | Arrange drayage early, coordinating with consignee’s acceptance date. |
| Consignee Acceptance | Consignee accepts container and readies for devanning. | Full warehouses, acceptance date restrictions, or labor shortages prevent CY pickup. | Confirm acceptance date and operational readiness in advance. |
| CY Gate-Out | Pick up the loaded container from the CY. | Demurrage may continue until actual gate-out is completed. | Confirm actual pickup date with gate-out records. |
Common Practical Issues
Situations where Demurrage arises can be categorized into delays related to D/O processing, customs clearance, other regulations, documentation, cost settlements, gate-out booking, drayage arrangements, consignee acceptance, port conditions, and special cargo.
| Case | Common Issues | Documents to Check | Practical Measures |
|---|---|---|---|
| Delay in D/O Procedures | D/O exchange or D/O-less handling is not completed, preventing CY gate-out. | B/L, Arrival Notice, D/O instructions, cost settlement records, gate-out confirmation. | Confirm D/O terms and required procedures before vessel arrival. |
| Unreflected D/O-less Processing | Surrender confirmation or system update is incomplete, and terminal cannot release cargo. | Surrender confirmation, B/L number, container number, responses from the shipping line or NVOCC. | For D/O-less, confirm the processing completion date and gate-out permission display. |
| Delay in Import Customs Clearance | Import Permit delays due to verification of tariff classification, price, quantity, weight, origin, or use. | Invoice, packing list, B/L, declaration documents, inquiry records. | Prepare customs clearance documents before vessel arrival. |
| Delays Due to Customs Inspections | Inspection orders, relocation to inspection sites, unpacking, witnessing, and restoration take time. | Inspection notices, inspection records, witnessing records, photos, customs broker communications. | Confirm inspection schedule and remaining free time. |
| Delays Due to Other Regulatory Checks | Delays caused by checks under food, PMD Act, plant quarantine, animal quarantine, electrical appliance, and chemical regulations. | Ingredient lists, usage explanations, manufacturer documents, permits, filing documents, test reports. | Confirm applicability of other regulations for target items before import. |
| Delayed or Incomplete Documentation | Processing halts due to missing invoice, packing list, B/L, or certificate of origin. | Shipping documents, correction requests, replacement documents, email records. | Verify discrepancies or missing documents before vessel arrival and request corrections. |
| Delays Due to Unsettled Charges | Handover processing stops due to unsettled marine freight, THC, D/O fees, or advanced payments. | Invoices, payment records, receipt confirmations, gate-out permission communications. | Confirm not only payment but also receipt and completion of processing by the other party. |
| Delays in Gate-out Booking and Drayage Arrangement | Gate-out booking slots, vehicles, chassis, or drivers are not secured. | Gate-out booking records, vehicle dispatch records, drayage company responses, terminal booking screens. | Coordinate gate-out booking and dispatch in parallel with customs clearance schedule. |
| Cargo Owner or Delivery Destination Unable to Accept Delivery | Warehouse is full, delivery date is restricted, inspection staff absent, or insufficient devanning space prevents CY gate-out. | Delivery bookings, warehouse feedback, acceptance conditions, work arrangements, delivery instructions. | Confirm consignee acceptance dates as early as possible. |
| Port Congestion, Holidays, or Severe Weather | Port congestion, holidays, typhoons, system failures, or cargo handling delays reduce available gate-out slots. | Port notices, terminal communications, weather records, booking status, business calendars. | Advance scheduling and adjusting booking, dispatch, and delivery during congested periods. |
| Dangerous Goods, Reefers, and Special Containers | Storage conditions, power supply management, gate-out vehicles, chassis, and consignee facilities are limited. | Dangerous goods information, reefer settings, special container conditions, gate-out requirements. | Do not proceed under the same assumptions as normal containers; confirm dedicated conditions. |
Delay in D/O Procedures
One cause of Demurrage is a delay in the D/O procedures. D/O refers to the process related to the instruction for the release of imported cargo. Even if the Import Permit has been granted, if the shipping line or NVOCC has not completed the D/O exchange or D/O-less handling, the cargo may not be able to be released from the CY.
If there are delays in the arrival of the Original B/L, unprocessed surrender procedures, insufficient verification on the Sea Waybill, unpaid freight or other charges, or overlooked confirmation of the Arrival Notice, the D/O process will not progress.
Meanwhile, the loaded containers remain in the CY, and if the free time is exceeded during this period, they may become subject to Demurrage charges.
Unreflected D/O-less Processing
In recent import practices, cargo delivery may be conducted without a Delivery Order (D/O-less). However, even in D/O-less cases, if processing by the shipping line or NVOCC is not completed, the terminal may not allow gate-out.
If surrender confirmation is not reflected on the discharge side, cost settlement is not finalized, there are discrepancies in the B/L number or container number, or the system does not display gate-out eligibility, CY gate-out may be stopped.
D/O-less means not using a paper D/O, but it does not eliminate the need to confirm the delivery conditions. It is important to verify the processing completion date and the authorized gate-out date.
Delays in Import Customs Clearance
Delays in import customs clearance are also a major cause of Demurrage. If the necessary documents for import declaration, such as invoice, packing list, B/L, certificate of origin, and other regulatory compliance documents, are incomplete, the declaration and permit issuance may be delayed.
Additionally, it may take time to verify details such as product description, tariff classification, declared price, discrepancies in quantity or weight, origin confirmation, and intended use.
If cargo cannot be released until the Import Permit is issued, loaded containers will remain at the CY. As a result, Demurrage may incur once free time is exceeded.
Delays Due to Customs Inspection
When customs inspection is required, Demurrage is more likely to occur. Once designated for inspection, it may be necessary to move the cargo to the inspection site, unpack, attend the inspection, restore the cargo condition afterward, and re-gate out.
Although the inspection itself may be completed quickly, the schedule, port congestion, volume of cargo, unpacking work, and document verification can cause delays.
Customs inspection is generally part of the normal procedures, but the inspection process may make it difficult to gate out within the Free Time. Especially if the inspection or verification is prolonged due to incomplete or unclear documentation or cargo descriptions, insufficient prior confirmation could be a contributing issue.
Delays Due to Confirmation under Other Laws and Regulations
For food, cosmetics, medical devices, electrical appliances, hazardous materials, plants, and animal products, verification under laws and regulations other than customs procedures may be required.
Delays in confirmation, notification, approval, or inspection under the Food Sanitation Act, plant quarantine, animal quarantine, Pharmaceuticals and Medical Devices Act (PMD Act), Electrical Appliance and Material Safety Act, chemical substance-related regulations, and others could affect the timing of Import Permit issuance and cargo release.
Even when a freight forwarder arranges integrated transportation, verification under these other laws may require information from the importer, such as ingredient lists, usage explanations, manufacturer documentation, and test reports.
If verification is halted due to insufficient preparation by the cargo owner, the container may not be able to be gate-out within the free time, potentially causing Demurrage.
Delays or Deficiencies in Document Arrival
In import FCL shipments, delays in receiving documents from overseas or deficiencies in documentation can also cause Demurrage. Import clearance and D/O processing cannot proceed without all necessary documents such as invoices, packing lists, B/L, insurance certificates, certificates of origin, and various permits.
In particular, discrepancies in details such as product description, quantity, weight, price, consignee name, B/L number, container number, or seal number may require time for verification and correction.
During this time, cargo-loaded containers remain at the CY, which carries the risk of exceeding free time. For import FCL, it is crucial to check for missing or inconsistent documents before the vessel’s arrival rather than after arrival to avoid delays.
Delays Due to Unsettled Charges
If ocean freight, THC, D/O fees, CFS charges, advance payments, or other import-related costs have not been fully settled, cargo release procedures may be delayed.
From the importer’s perspective, the situation may appear as “customs clearance is complete, but the cargo cannot be released,” whereas the shipping line or NVOCC may still have restricted release due to unsettled charges.
Moreover, even if payment has been made, it may take time for the payment to be confirmed or reflected in the system. When the free time expiration date is approaching, it is necessary to confirm not only the payment date but also whether the processing has been completed on the other party’s side.
Delays in Gate-Out Reservation and Drayage Arrangement
Even if the Import Permit and D/O processing are completed, the container cannot be gate-out from the CY without securing a gate-out reservation and drayage vehicle.
During port congestion, vehicle shortages, chassis shortages, periods around consecutive holidays, after typhoons or severe weather, and peak seasons, it may not be possible to gate out on the desired date.
If drayage arrangements are rushed only after vessel arrival, there is a risk that gate-out will not be completed within the free time. Early dispatch coordination is especially necessary for multiple containers, heavy cargo, special containers, or cargo with specified delivery times.
The freight forwarder needs to plan gate-out arrangements early while monitoring the ETA, customs clearance schedule, expected gate-out availability, and the consignee's acceptance date.
Refusal of Acceptance by the Cargo Owner or Delivery Destination
Demurrage may also occur when the container cannot be gate-out from the CY due to circumstances on the cargo owner’s or delivery destination’s side. Examples include situations where the consignee’s warehouse is full, acceptance dates are restricted, inspection personnel are unavailable, no devanning space is secured, or forklifts and labor cannot be arranged.
In such cases, even if there are no issues with documents or customs clearance, the container cannot be taken out of the CY. From the cargo owner’s perspective, it may be seen as "simply not yet receivable," but since the container remains at the port, demurrage could be incurred once free time is exceeded.
The acceptance conditions at the delivery destination need to be confirmed separately from customs clearance and D/O procedures. For import FCL shipments, it is important to manage not only the expected cargo arrival date but also the possible delivery date and planned CY gate-out date in coordination.
Delays Due to Port Congestion, Consecutive Holidays, and Severe Weather
Port congestion, consecutive holidays, typhoons, severe weather, vessel delays, cargo handling delays, and terminal system failures can also be causes for Demurrage charges.
While these are external factors often beyond the control of the cargo owner or freight forwarder, early gate-out booking, drayage arrangement, and delivery destination adjustment are necessary during periods expected to be congested.
Especially around year-end and New Year holidays, Golden Week, Obon holidays, and before and after consecutive holidays, operating days of ports, customs, inland delivery, and delivery destinations tend to shift. It is also necessary to confirm in advance whether weekends and public holidays are included in the Free Time calculation.
In the Case of Dangerous Goods, Reefers, and Special Containers
For dangerous goods, reefers, flat racks, open tops, tank containers, and the like, the risk of Demurrage may be higher than with standard dry containers.
With dangerous goods, special attention is required regarding storage locations, hazard classifications, quantity limits, and storage conditions imposed by the terminal. For reefers, issues such as power supply management, temperature control, plugin fees, and permitted gate-out times can arise.
For special containers, restrictions may apply to gate-out vehicles, chassis, cargo handling equipment, and the receiving facilities at the delivery destination. Because these cargoes often have shorter Free Time periods, stricter gate-out conditions, and difficulty in securing gate-out appointments, proceeding with the same assumptions as regular cargo could result in substantial Demurrage charges even within a short period.
4-Column Checklist
To prevent Demurrage, it is important to manage the process by working backward from the vessel’s arrival to CY gate-out. Confirm the ETA, free time, D/O processing, customs clearance, gate-out reservation, drayage, and consignee acceptance simultaneously.
| Checkpoint | Counterpart to Confirm With | Items to Confirm | Actions if Issues Arise |
|---|---|---|---|
| Before Vessel Arrival | shipping line, NVOCC, Freight Forwarder | Port arrival schedule, discharge schedule, free time, D/O conditions, cost conditions. | If terms are unclear, confirm via Arrival Notice or shipping line/NVOCC announcements. |
| At Document Verification | Exporter, Importer, Freight Forwarder, Customs Broker | Invoice, packing list, B/L, certificate of origin, various permits. | If documents are missing or inconsistent, request corrections or replacements before vessel arrival. |
| During D/O Processing | shipping line, NVOCC, Freight Forwarder | D/O exchange, D/O-less process, surrender endorsement, cost settlement, gate-out authorization. | If processing is incomplete, identify which conditions remain pending. |
| Preparing for Import Customs Clearance | Importer, Customs Broker, Freight Forwarder | HS code, price, quantity, origin, usage, import declaration documents. | If there are uncertainties, obtain additional documents and conduct pre-checks as needed. |
| Legal Regulations Check | Importer, Customs Broker, Relevant Authorities, Specialists | Applicability of food, PMD Act, plant quarantine, animal quarantine, electrical appliance regulations, chemical substance control. | If applicable, promptly confirm notifications, permits, inspections, and required documents. |
| At Gate-Out Reservation | Terminal, Drayage Company, Freight Forwarder | Gate-out time slot, permissible CY gate-out date, gate hours, reservation conditions. | If gate-out on the desired date is not possible, arrange alternative dates or coordinate with consignee. |
| Drayage Arrangement | Drayage Company, Freight Forwarder, Cargo Owner | Vehicle, chassis, driver, delivery time request, need for special vehicles. | If vehicle shortage is anticipated, consider early dispatch or changing the delivery date. |
| Consignee Acceptance Confirmation | Cargo Owner, Consignee, Warehouse, Drayage Company | Acceptance date, acceptance time, devanning location, workers, forklifts, inspection schedule. | If acceptance is not possible, reschedule gate-out and share Demurrage risk information. |
| Port Congestion and Holiday Confirmation | Freight Forwarder, Customs Broker, Drayage Company, Cargo Owner | Port operating days, consecutive holidays, severe weather, reservation congestion, free time calculation. | Consider moving gate-out earlier, early reservations, or coordinating with consignee. |
| When Claim Risk Arises | Cargo Owner, Freight Forwarder, Customs Broker, Drayage Company, shipping line, NVOCC | Which process was delayed and who knew what and when. | Prepare a chronological timeline and follow the claim response procedure article. |
Scope of Freight Forwarder Involvement
When a freight forwarder arranges import FCL shipments comprehensively, Demurrage management is a critical task on the import side. The forwarder manages the entire process flow including vessel arrival, D/O processing, import customs clearance, confirmation of cargo release availability, release booking, drayage, and consignee acceptance at the delivery point.
However, the forwarder cannot fully control all aspects such as importer's document preparation, materials for other legal regulations, customs inspections, consignee’s acceptance capacity, port congestion, and the vehicle availability of drayage companies. It is essential to clearly separate what the forwarder can support from what should not be definitively asserted.
| Category | Tasks Easier to Support | Things Not to Definitively Assert | Practical Measures |
|---|---|---|---|
| Free Time Confirmation | Confirm free time, start date, and end date with shipping line or NVOCC. | Guarantee that all Demurrage charges will be waived. | Share confirmed deadlines with the cargo owner promptly. |
| D/O Processing | Verify D/O exchange, D/O-less processing, cost settlement, and cargo release indication. | Unilaterally judge responsibility for B/L ownership or unresolved charges. | Clarify outstanding conditions and share them with involved parties. |
| Customs & Other Regulations | Prompt customs broker and importer to check required documents. | Assert that customs inspections or other regulatory checks will always be completed within deadlines. | Share early information on document shortages or inspection risks. |
| Release Booking & Drayage | Coordinate release bookings, vehicle dispatching, and delivery scheduling. | Guarantee complete avoidance of port congestion or vehicle shortages. | Adjust planned cargo release dates with consignee acceptance dates. |
| Consignee Acceptance | Encourage cargo owner to confirm readiness date, unstuffing arrangements, and delivery requirements. | Guarantee warehouse capacity or manpower at the delivery point. | If acceptance is impossible, inform early about potential cost risks. |
| Claim Risk Sharing | Share the possibility of Demurrage charges with the cargo owner early. | Unilaterally decide the final party responsible for costs. | Discuss based on cause, communication records, and contract terms. |
Application Scenarios
Here, we organize scenarios where Demurrage is likely to occur along the flow of import FCL shipments.
Scenario 1: Unable to Gate Out Due to Uncompleted D/O-less Processing
Even if cargo is planned to be picked up under D/O-less arrangements, if the shipping line’s or NVOCC’s system processing, surrender confirmation, cost settlement, or B/L number and container number verification are not completed, the terminal may not authorize gate-out.
Although the Import Permit has been issued, if the D/O-less processing is not reflected, the full container load remains in the CY. If free time is exceeded in this condition, Demurrage may be incurred.
In practice, it is necessary not only to confirm that it is D/O-less, but also to verify gate-out availability, completion of cost settlement, surrender reflection, and consistency between B/L number and container number.
Scenario 2: Delays in Import Permit Due to Customs Inspection or Other Regulatory Confirmations
After import declaration, if designated for customs inspection or if confirmation related to the Food Sanitation Act, Pharmaceuticals and Medical Devices Act (PMD Act), plant quarantine, animal quarantine, Electrical Appliance and Material Safety Law, chemical substance regulations, or others become necessary, the Import Permit and cargo gate-out may be delayed.
These inspections and regulatory confirmations are part of normal import procedures, but if documents are incomplete, product names unclear, ingredient lists missing, or usage explanations insufficient, the confirmation process may be prolonged, making it difficult to gate out within free time.
In practice, the applicability of other regulations, required documents, and materials the importer should prepare are confirmed ahead of vessel arrival. If designated for inspection, the inspection schedule, restoration work, gate-out booking, and remaining free time days are checked simultaneously.
Scenario 3: Unable to Gate Out Due to Combined Document Deficiencies and Unsettled Charges
If discrepancies exist in the invoice or packing list received from overseas regarding product name, quantity, weight, price, B/L number, or container number, and settlement of ocean freight or D/O fees remains incomplete, both customs clearance and D/O processing may be halted.
In this case, resolving only one issue does not necessarily enable immediate gate-out. Document corrections, customs confirmation, cost settlement, payment reflection, and completion of D/O processing must all be completed before gating out from CY becomes possible.
In practice, it is important to list which conditions remain unresolved and identify at which party—exporter, importer, freight forwarder, customs broker, or shipping line/NVOCC—the process is stopped.
Scenario 4: Customs Clearance Completed but Unable to Secure Gate-Out Booking or Drayage
Even if the Import Permit and D/O processing have been completed, gate-out may be impossible due to factors such as inability to secure a terminal gate-out booking, lack of drayage trucks or chassis, or misalignment with delivery destination’s acceptance dates.
In such instances, the cargo owner may question why charges arise despite completed customs clearance. However, since the full container load remains in the CY, if free time is exceeded, Demurrage may be incurred.
In practice, gate-out bookings, drayage arrangements, and delivery destination acceptance are coordinated in parallel with customs clearance scheduling. It is essential to start arrangement based on expected gate-out availability rather than waiting until after Import Permit issuance.
Scenario 5: Delivery Destination Cannot Accept Cargo, Delaying CY Gate-Out
Even when all documents, D/O processing, and import customs clearance are completed, the CY gate-out may be delayed due to circumstances such as the delivery warehouse being full, restricted acceptance dates, shortage of personnel or forklifts, or absence of inspection staff.
In these cases, the cause may be on the cargo owner’s or delivery destination’s side rather than at the port or customs. As long as the full container load remains in CY, Demurrage may occur after free time is exceeded.
In practice, management integrates not only the vessel’s expected arrival date but also the delivery destination’s acceptance dates, devanning arrangements, delivery time restrictions, and gate-out availability. When gate-out is delayed due to delivery destination reasons, it is important to share the Demurrage risk in advance.
Operational Practices to Avoid Demurrage
To prevent Demurrage, it is crucial to begin preparations before the vessel's arrival. Upon receiving the Arrival Notice, verify the scheduled vessel arrival, B/L number, container number, Free Time, D/O conditions, cost terms, and expected gate-out date.
Simultaneously, proceed with obtaining import documents, customs clearance preparations, confirmation of compliance with other regulations, exchanging or processing D/O-less documents, settling costs, booking gate-out, arranging drayage, and confirming acceptance at the delivery destination.
In particular, document preparation by the importer and acceptance conditions at the delivery site may not be resolved by the freight forwarder alone. It is important for the cargo owner and the freight forwarder to share information early, ensuring that gate-out can be completed within the Free Time.
Points for Cargo Owners to Note
Cargo owners need to understand that even after cargo arrives at the port in an import FCL shipment, it is not always possible to pick it up immediately.
CY gate-out can only be completed once D/O processing, import customs clearance, compliance checks with other relevant laws, gate-out booking, drayage arrangement, and acceptance by the delivery destination are all in place.
Also, if the delivery destination delays acceptance for their own reasons, Demurrage may still be incurred. When gate-out cannot be completed due to reasons on the cargo owner’s side, it often leads to cost liability issues, so it is important to confirm the earliest possible acceptance date as soon as possible.
For import FCL shipments, it is necessary to confirm not only the estimated cargo arrival date but also the Free Time expiration date, gate-out availability date, planned CY gate-out date, and planned delivery date.
Summary
Demurrage is an additional charge incurred when an import FCL container remains at the CY or terminal beyond the free time allowed for in-gate container storage.
Common causes include delays in D/O procedures, unreconciled D/O-less processing, import customs clearance delays, customs inspections, checks under other laws and regulations, incomplete documentation, unpaid charges, insufficient gate-out booking, delayed drayage arrangement, refusal of acceptance by the cargo owner or consignee, port congestion, and restrictions on gate-out of dangerous goods, reefers, or special containers.
To prevent Demurrage, it is important to simultaneously confirm documentation, D/O processing, customs clearance, compliance with other regulations, gate-out booking, drayage, and consignee acceptance starting before vessel arrival, to ensure the container can be moved out of the CY within the free time.
This article organizes the situations where Demurrage occurs. For the definition of Demurrage, the difference from Detention and Storage, and basic cost responsibility, please refer to the article Demurrage. For reviewing documents, arranging the timeline, and separating cost responsibility after receiving a claim, see Points to Check When Receiving a Demurrage Claim.
