Demurrage

Demurrage is a daily penalty fee charged by ocean carriers to shippers or consignees when an import container is not picked up and returned to the carrier's terminal within the contracted "free time" period. It is one of the most contentious and often misunderstood charges in ocean freight — and during periods of port congestion or supply chain disruption, demurrage costs can reach tens of thousands of dollars on a single container.

How Demurrage Works

When an ocean carrier delivers a container to a terminal, they grant the importer a "free time" window — typically 3–7 business days — to pick up the container, unpack it, and return the empty box to the terminal or depot. This free time is defined in the carrier's tariff.

If the container is not returned within free time, demurrage begins accruing — typically $75 to $150 per day per container initially, escalating to $300–$500+ per day after additional thresholds (often structured as tiered "brackets").

Example — 40-foot container, 5 days free time, tiered rate:

• Days 1–5: Free
• Days 6–9: $100/day = $400
• Days 10–15: $200/day = $1,200
• Days 16+: $400/day (escalating)

A container detained for 30 days could accumulate $5,000–$10,000 in demurrage charges.

Demurrage vs. Detention

These two terms are often confused but refer to different fee types:

• Demurrage: Charged by the ocean carrier for excess time the container spends at the port terminal before being picked up (equipment is at the terminal)
• Detention: Charged when the container is off-terminal — picked up by the consignee but not returned within the free time (equipment is at the importer's facility or in transit)

Both relate to the carrier's need to keep their equipment moving. Combined demurrage and detention ("D&D") charges became notorious during the 2020–2022 supply chain crisis, when port congestion meant containers sat for weeks beyond free time through no fault of importers — generating billions in fees that became the subject of regulatory investigations in the US and EU.

The FMC and Demurrage Regulation

In the United States, the Federal Maritime Commission (FMC) issued rules in 2022 requiring ocean carriers to ensure that demurrage and detention charges are "reasonable" and that billings only occur when the shipper actually had the ability to pick up or return equipment. The Shipping Act reform pushed carriers to provide more transparent fee justifications and credit back charges when port congestion was the cause.