Detention charges
What are detention charges?
Detention charges are fees incurred when a carrier's equipment, such as containers or trailers, is held beyond the agreed-upon free time at a facility, such as a port, terminal, or warehouse. These charges compensate the carrier for the additional time their equipment is detained and unavailable for other use.
How are detention charges calculated?
Detention charges are typically calculated based on a predetermined rate per unit of time, such as per hour or per day, after the expiration of the free time allotted for loading or unloading. The charges may vary depending on factors such as the type of equipment, location, and carrier terms and conditions.
What is free time?
Free time (also called free days) refers to the period during which shippers or consignees are allowed to use carrier equipment, such as containers, without incurring detention charges. It is typically provided by carriers as part of their service agreements and varies depending on factors such as transportation mode, carrier policies, and the type of facility.
Detention vs. demurrage
While detention charges apply to the carrier's equipment, demurrage charges apply to the cargo itself. Demurrage charges are incurred when cargo is not picked up or delivered within the agreed-upon time frame, often at a port or terminal.
How to avoid demurrage and detention charges
To avoid detention and demurrage charges, supply chain professionals can:
Optimize operations: Streamline loading and unloading processes to minimize detention time.
Plan ahead: Use supply chain visibility software to anticipate potential delays and plan accordingly to avoid exceeding free time limits.
Communicate effectively: Maintain clear communication with carriers, terminals, and other stakeholders to coordinate pickup and delivery schedules.
Negotiate terms: Negotiate favorable terms in contracts with carriers and terminals, including sufficient free time allowances and reasonable detention charges.
Related terms