A cheap freight rate can stop being cheap within ten days. Demurrage and detention are charges for time, not for transport: they appear after the ship arrives and often after the quote has been accepted.
Two different charges
- Demurrage applies to a loaded container that stays at the terminal beyond the free time. It starts at discharge and ends when the container leaves the port.
- Detention applies after the container leaves the terminal, until it is returned empty to the carrier within the permitted period.
The same container can incur both. Some carriers offer combined free time, which pools the two periods into a single allowance of days, but this should be confirmed in writing.
How free time works
Free time is the number of grace days before charges begin. It usually ranges from a few days to about two weeks, depending on the carrier, port and route. After that the daily rate rises in steps, so the second week costs far more than the first. Tariffs vary widely and change, so the only reliable figure is the one in the quote and the bill of lading.
Other charges to ask for in writing
Beyond base freight, a complete quote should state:
- THC (terminal handling charge): handling at the terminal, per container, at origin and destination.
- BAF (bunker adjustment factor): fuel price adjustment. It can be fixed or floating.
- CAF (currency adjustment factor): exchange-rate adjustment.
- Documentation fees, seals, inspection and any congestion surcharge.
The Incoterm determines who pays what. Under terms such as FOB, origin charges are the seller's and destination charges the buyer's; under CIF or CFR, freight and origin charges are the seller's, but destination charges remain the buyer's.
What reduces the risk
- Ask for the free time in working or calendar days, by port and container type, before accepting.
- Prepare the documents and licence before the ship arrives. Licensing delays are the main cause of idle containers in Angola.
- Plan pick-up and empty return together with the haulier.
- Track the actual arrival date, not the scheduled one. If the ship is late, the time to clear shortens.
- If goods cannot be collected in time, discuss a free-time extension with the carrier before charges start. Afterwards it is harder.
Cover photo: Trougnouf, CC BY 4.0, Wikimedia Commons.