Why Do International Shipping Companies Charge Demurrage and Detention? Who Bears the Costs?

Why Do International Shipping Companies Charge Demurrage and Detention Fees? Who Pays Them?

In international trade, ocean freight is one of the main ways to transport goods. However, when the cargo owner or charterer fails to complete loading and unloading operations within the agreed time, additional fees such as demurrage and detention charges will arise. These fees are not set arbitrarily but are established based on industry standards, contract terms, and market operational logic.

First, let's understand what demurrage and detention fees are. Demurrage refers to the extra port stay costs incurred by a vessel due to delays in loading and unloading goods caused by reasons other than the carrier. Detention, on the other hand, refers to the fees charged for exceeding the allowed time for using containers or other equipment at the terminal. Essentially, these two fees are meant to compensate shipping companies for economic losses due to delays. For instance, if a cargo ship is delayed in departing due to port congestion or low unloading efficiency, the shipping company may face increased fuel costs, disrupted route schedules, and other issues, which could affect its overall operational performance.

From a business perspective, charging demurrage and detention fees helps maintain fairness and stability in the shipping market. On one hand, it encourages cargo owners to improve loading and unloading efficiency and avoid unnecessary resource waste; on the other hand, it also reminds carriers to plan their routes reasonably to reduce rising costs due to waiting. When signing a charter party, both parties usually specify relevant terms in advance, including demurrage rate standards and calculation methods, ensuring there is evidence to rely on in case of disputes.

So who ultimately bears these costs? Generally speaking, demurrage is mainly borne by the charterer, specifically importers, exporters, or third-party logistics service providers. As for detention fees, they are typically the responsibility of the party holding the equipment, such as the consignor or freight forwarder. It should be noted that in some cases, shipping companies may adjusts according to actual circumstances, or even waive part of the fees, but this usually requires negotiation and mutual agreement.

In recent years, with the continuous expansion of global trade volumes and increasing complexity of supply chains, issues related to demurrage and detention fees have attracted more attention. For example, at the beginning of 2025, due to large-scale strikes at ports in Europe and America, many ships were forced to wait for long periods, putting enormous pressure on shipowners and prompting related enterprises to reassess their risk management strategies. At the same time, an increasing number of companies have begun seeking ways to reduce the probability of such fees by optimizing operational processes and enhancing communication and coordination.

In summary, international shipping companies charge demurrage and detention fees primarily to protect their own interests and promote the healthy development of the entire industry. Of course, as cargo owners or charterers, when facing these issues, they need to remain rational, actively seek solutions, and jointly create a more harmonious and win-win cooperative environment. In the future, with technological advancements and improved management levels, we believe these problems will be effectively alleviated, creating more convenient conditions for global trade.