Demurrage vs. Detention: What Every Shipper Needs to Know
Demurrage and detention are two of the most common — and most confused — charges in international freight. Both are penalties for delay, but they apply to different things, at different points in the shipping journey, and often payable to different parties. Getting them mixed up can mean an unpleasant surprise on your next carrier invoice.
Here's a clear breakdown of both, how they connect to your Incoterms® 2020 agreement, and what to watch out for.
- Definition: A fee charged for storage space occupied by goods or containers within a port/terminal when they stay beyond the agreed "free time."
- Payable To: Depending on where the delay occurs and who owns/manages the terminal space, these charges may be paid to the port authority or directly to mainline shipping companies.
- Free Time Variations: Free time varies by entity — a port might allow 7 free days, while a shipping line might offer 10. (Confirm with the Port/Mainline Shipping Companies).
- Responsibility: Who ultimately pays demurrage — buyer or seller — comes down to the Incoterms® 2020 rule agreed in the sales contract (more on this below).
- Definition: A charge applied when an importer keeps the shipping equipment (like an empty container) outside the port or terminal beyond the allotted free window.
- Common Scenario: After the Delivery Order (DO) is released and the container moves to the importer's warehouse, the shipping line typically requires the empty container back within a set period — often 72 hours. (Confirm with Mainline Shipping Companies).
- Penalty: Miss that window, and the shipping company levies detention charges.
Summary Comparison
| Features | Demurrage | Detention |
| Applies To | Full container stored inside the port/terminal | Container held outside the port (enroute / at warehouse) |
| Trigger | Exceeding terminal/port free storage days | Delay returning the empty container to the shipping line |
| Payable To | Port authorities or shipping lines | Mainline shipping companies |
How Incoterms® 2020 Decide Who Pays
Here's a nuance worth knowing: the words "demurrage" and "detention" don't actually appear anywhere in the ICC Incoterms® 2020 rulebook. That's because Incoterms is a sales-contract framework — it governs the deal between buyer and seller — while demurrage and detention are charges set by the contract of carriage, i.e., the shipping line's or terminal's own tariff.
So how does your Incoterm still end up deciding who pays? Indirectly, through cost and risk allocation:
- Every rule (FOB, CFR, CIF, FCA, DAP, and so on) fixes a delivery point where risk — and most costs — pass from seller to buyer.
- Each rule also includes a buyer-side clause making the buyer responsible for any additional costs incurred if the buyer fails to take delivery on time or fails to give the seller timely notice.
- In practice, this is the clause that pulls demurrage or detention liability onto whichever party actually caused the delay — not a standalone "demurrage clause," since none exists.
That also means the Incoterm you choose sets the default cost split, but a delay-driven charge like demurrage or detention generally follows whoever caused it, regardless of the rule. Even under a seller-friendly rule like DAP or DDP, a buyer's slow customs clearance or late pickup can still land the bill back on the buyer.
Key Takeaways
- Demurrage = inside the port. It's a storage charge for containers or cargo left in the port/terminal beyond free time.
- Detention = outside the port. It's a charge for holding onto the shipping line's equipment (like an empty container) beyond the free return window.
- Free time is negotiable and varies. Ports and shipping lines set their own allowances — confirm both before you ship.
- Incoterms® 2020 doesn't name these charges, but it decides who pays. The chosen rule fixes the risk-transfer point, and its buyer-side clause makes the buyer liable for extra costs caused by its own delay.
- These are carrier/terminal charges, not sales-contract terms. Check the bill of lading and the terminal/line tariff — not just the Incoterm — for exact free-time allowances and penalty rates.
- Avoiding both comes down to timing. Fast customs clearance, prompt cargo pickup, and quick empty-container returns are your main levers.
Frequently Asked Questions
Q: Are demurrage and detention defined in the Incoterms® 2020 rulebook?
A: No. These terms don't appear in the ICC Incoterms® 2020 text. They're industry/carrier terms governed by the contract of carriage and terminal tariffs, not the sales contract that Incoterms rules cover.
Q: So how does the Incoterm I choose affect who pays these charges?
A: Indirectly, through risk and cost allocation. Each Incoterms® rule fixes a delivery point where risk passes from seller to buyer, and each rule's buyer-side clause makes the buyer responsible for additional costs caused by its own delay in taking delivery or giving notice. If the buyer's delay causes the container to overstay, that liability typically falls on the buyer — regardless of which Incoterm is used.
Q: Can demurrage and detention both apply to the same shipment?
A: Yes. They cover different stages — demurrage while the container sits in the port/terminal, detention once it's left the port but hasn't been returned empty — so both can be charged back-to-back on one shipment if delays occur at each stage.
Q: Who's better placed to negotiate free time — the port or the shipping line?
A: Both are negotiated separately. Shippers with regular volumes often negotiate extended free time with their shipping line as part of a service contract, in addition to whatever the port terminal allows.
Q: Does choosing DAP or DDP shift all demurrage/detention risk to the seller?
A: Not automatically. Even under seller-heavy rules like DAP or DDP, a buyer's own delay in customs clearance, documentation, or cargo pickup can still trigger the "additional costs on delay" clause, shifting that specific charge back to the buyer.
Q: Where should I check for the exact free time and charge rates?
A: The carrier's bill of lading terms and the terminal's tariff schedule — not the Incoterms rulebook, since Incoterms doesn't set these figures.