What Is Demurrage?

Demurrage is the charge a carrier or terminal applies when its space or equipment is held past the time allowed: the Federal Highway Administration's freight glossary defines it as the carrier charges and fees applied when rail freight cars and ships are retained beyond a specific loading or unloading time.

For ocean containers, the FMC's rule at 46 CFR 545.5 sets out how it judges whether demurrage and detention practices are reasonable. It applies to containerized cargo, and the terms cover any charges, including "per diem," that ocean common carriers, marine terminal operators or ocean transportation intermediaries assess for the use of marine terminal space or shipping containers, not including freight charges.

• Purpose: the FMC considers the extent to which demurrage and detention serve their intended primary purpose as financial incentives to promote freight fluidity.
• Cargo availability: it may consider whether demurrage or free time is tied to when cargo is available for retrieval, and whether and how the cargo interest was told the cargo was available.
• Empty returns: absent extenuating circumstances, charging detention when it does not serve its incentivizing purpose, such as when empty containers cannot be returned, is likely to be found unreasonable.

The FMC draws the line this way: detention is charged for extended use of intermodal equipment, and demurrage accrues when a container exceeds free time on a marine terminal.

FMC billing rules at 46 CFR part 541, published in February 2024, govern any demurrage or detention invoice issued by an ocean common carrier, marine terminal operator or non-vessel-operating common carrier. Among the minimum information it requires, the invoice must show:

• The bill of lading number, the container number and, for imports, the port of discharge
• Why the billed party is the proper party and liable for the charge
• The invoice date and due date, the allowed free time in days, and the start and end dates of free time
• For imports, the container availability date, and the specific dates charged
• The total amount due, the tariff rule, terminal schedule or service contract the daily rate is based on, and the rate
• A contact for questions, and a digital link, such as a URL or QR code, to the process for requesting fee mitigation, refund or waiver

Timing matters too. The invoice must be issued within 30 calendar days from the date the charge was last incurred (for a non-vessel-operating common carrier, 30 days from the issuance date of the invoice it received), or the billed party is not required to pay. Leaving out required information also eliminates the obligation to pay. The billed party gets at least 30 calendar days to request mitigation, refund or waiver, and the billing party must attempt to resolve the request within 30 calendar days, or later if both parties agree. This is general information, not legal advice.

An import container's free time ends on day 5. The importer's trucker collects it on day 8, so demurrage runs for days 6, 7 and 8: 3 days. At an illustrative tariff rate of $175 a day, the charge is 3 x $175 = $525. The invoice has to list those three dates, the free time start and end dates, and the tariff rule the $175 rate comes from.

In Shopify, the purchase order records the commercial agreement, and the linked inventory transfer handles shipments, receiving and cost adjustments. Shipping costs, customs duties and other fees often aren't known when you create a purchase order, so you can add them as cost adjustments to individual shipments, and the cost summary compares the agreed cost on the purchase order with the actual cost to receive the goods.

Uncap's outdoor patio furniture page describes the stretch where these charges land: between a dealer's order at market and delivery "sit months of production, container arrivals and dealer second thoughts."

• Drayage
• Bill of lading
• Freight forwarder
• Landed cost
• Accessorial charges

• eCFR: 46 CFR 545.5, demurrage and detention practices
• eCFR: 46 CFR part 541, demurrage and detention billing
• Federal Maritime Commission: Detention and Demurrage