Simplify Demurrage and Detention Charges with MyFinance

17 January 2024

Demurrage and detention costs eating up your profits? Need to manage these overhead charges and reduce demurrage? MyFinance is here for you.

A web-based finance management tool, MyFinance simplifies the process of tracking, calculating, and managing demurrage and detention charges.

Up ahead, we discuss what is demurrage and how these charges are calculated for imports and exports. We'll also explore how MyFinance helps manage them more effectively.

Demurrage and detention charges: Know the difference

Demurrage and detention may mean the same for a common person, mainly because they’re used as pairs. But, they have distinct meanings in the shipping industry and cannot be used interchangeably. To define briefly,

Demurrage: Charges applied to the cargo while it remains on a terminal after the allocated freetime is over.
Detention: Charges applied to the container if not returned within the stipulated free days, regardless of whether it’s loaded or empty.

Freetime refers to a period of time in which a shipping container can remain at a port or terminal without incurring additional charges.

This period is usually granted by the shipping line or the terminal operator and varies as per the type of cargo and location.
Freetime is generally between 3-7 days after the container is discharged from the vessel, before demurrage fees start adding up.
During these free days, the consignee should complete the required documentation processes, customs clearance, take the delivery of the container, and return it back to the container owner.

When shipping with Maersk, you can also purchase a freetime extension.

Beyond these free days, shipping companies levy demurrage and detention charges. Now, let’s understand these charges in detail.

A significant concern for importers and exporters, these additional shipping charges are sometimes difficult to understand. Here's how they differ:

Demurrage	Detention
Demurrage Demurrage charges relate to cargo while it is still in the container.	Detention Detention charges relate to containers away from a terminal, either before packing or after unpacking.
Demurrage Demurrage is charged if the fully loaded container stays on the terminal after the free days are over until the consignee picks it up.	Detention Detention is charged when the consignee retains the carrier's container outside the port, terminal, or depot beyond the allotted freetime.
Demurrage The demurrage period starts when the containers are still on the terminal after the free period and continues until they are picked up and out-gated from the terminal.	Detention This fee is charged when the container is still in the consignee's possession, whether full/empty, and has not been returned to the carrier.

To put it into context, here’s an example:

Let's say a container is discharged from a ship on April 10th, and the consignee picks up the cargo by April 20th. The shipping line allows 7 free days from the day of discharge.
Based on this, the shipping line will charge the consignee a demurrage fee for 4 days (from April 17th to April 20th) as per the pre-decided rates.
Now, if the consignee takes 7 more days to de-stuff the container and return it to the shipping line (beyond the specified timeline), they will also charge a detention fee for the container usage.

Here’s another scenario when detention or demurrage fees might be charged:

For demurrage: Let's say your cargo has arrived at the discharge port, but something unexpected happens, and it can't be moved out before the allotted freetime expires. Here, demurrage charges will apply to cover the costs of keeping the container in the terminal until it can be retrieved and delivered.
For detention: Outgated containers also come with a time limit — usually four working days for the consignee to pick up the container, empty it, and return it to the terminal. If there are delays, the shipping line charges detention fees for the extra days the container stays with the consignee beyond the given timeline.

Understanding the difference between these charges is crucial, so you can manage your logistics operations better and avoid costly fees.

Tips to reduce detention and demurrage charges

Overhead charges, like D&D, can add significant costs to your logistics operations. Avoiding demurrage and detention costs isn't possible in many situations, like labor shortages and natural disasters.

But, efficiently managing container usage and avoiding unnecessary delays can help reduce demurrage charges and keep your logistics expenses in check. Here are some tips:

Plan your shipments to ensure the necessary arrangements are in place, such as scheduling pick-up, delivery, and warehousing space.
Familiarize yourself with policies and carrier terms. Understand the allocated freetime for container pick-up, packaging, return, and other overhead costs.
If you predict any issues preventing your carrier from picking up the container on time, request extended freetime from the shipping line or logistics service provider.
Optimize container loading and unloading to avoid delays in unpacking or returning empty containers to the port by optimizing your cargo handling processes.
Ensure all necessary documentation and procedures are completed promptly to prevent any delays in customs clearance.
Utilize tracking systems and technologies to monitor the movement of containers and proactively address any potential delays.

But, sometimes, it’s not possible to avoid paying demurrage fees. Here’s how MyFinance can help you calculate and pay these charges quickly and easily.

How to use MyFinance for calculating demurrage and detention charges?

Maersk’s MyFinance offers a new D&D tool that allows you to enter your bill of lading number and view demurrage and detention details for each individual container. You can also make demurrage payments or secure extra free days using a credit card on the portal itself.

Demurrage and detention tool in Maersk’s MyFinance dashboard

Here are the step-by-step instructions on how to calculate demurrage and detention charges using MyFinance:

Step 1: Open the Maersk website.
Step 2: Go to the Accounts button in the top right-hand corner.
Step 3: Log in using your username and password.
Step 4: Navigate to the Hub and find the Import Demurrage & Detention card on the page.
Step 5: Enter your bill of lading number.
Step 6: Click on the View Details button.
- The tool will generate a breakdown of your booking on a container level, showing each container on the booking, the number of free days each container receives, and each container's last free day.
- It will also show the same information for detention, indicating how many free days of detention the containers are receiving and their last free day for detention.
Step 7: If you need to extend your free days, you can purchase them on the portal itself and pay directly using a credit card.
- After the payment, the last free day will be updated at the terminal where your booking is located, and you will see the update within an hour.

Summing up

Gone are the days when you had to get on multiple phone calls to manage your detention and demurrage payments. With MyFinance, you can view and pay your demurrage online in just a few simple and easy steps.

We provide a centralized platform for managing detention and demurrage fees. Additionally, we help streamline the shipping process, reduce errors, and save resources in the long run.

With MyFinance, you can easily monitor and manage your shipment activities, track cargo, and access invoicing information — in an integrated platform anytime, anywhere!

Extend your Last Free Day (LFD) by paying your Import Demurrage via credit card.
Receive a payment confirmation email upon submission.
Get cargo release updates at the terminal within 2 business hours after payment.
Allow brokers and truckers to pay on your behalf on Maersk.

Save time and gain greater visibility into your supply chain with Maersk’s web tools. Experience the benefits of our online demurrage payment tool.

Our customers are our priority, and we aim to make shipping easy for them. For you. Start shipping faster, smoother, and easier — with Maersk!