Demurrage and Detention in Ocean Freight – and How Cargoo Delivers 360° Control

In This Article:

  • explore how Demurrage and Detention (DND) works in ocean freight logistics,
  • highlight the common pain points faced by importers and exporters. 
  • discuss what features to look for in Demurrage and Detention software and how key features like visibility, tracking, and reporting, and how managing DND effectively with Cargoo can directly impact your bottom line.
  • Discuss how Cargoo offers a unique solution with its unique integration of procurement, planning, and execution tools.

Demurrage and Detention

What is Demurrage and Detention?

Demurrage
This cost is incurred when containers remain at the port or terminal beyond the free time allowed. The period starts either with the arrival of the vessel (Vessel Arrival) or with the discharge (Container Discharge) of the container until the container is moved off the port/terminal premises (Gate out Full). During this period the shipping line allows for a certain free time, after which charges are incurred. These charges are typically incremental over time, urging you to remove the container from the terminal.
Detention
This charge is incurred when a container is picked up from the terminal but not returned within the agreed-upon free time. The period starts with the container being picked up from the terminal (Gate Out Full) until the empty return of the container to the terminal or depot (Gate In Empty). During this period the shipping line allows for a certain free time, after which charges are incurred. These charges are typically incremental over time, urging you to return the empty container to the terminal.

Are Demurrage and Detention the only Origin or Destination
charges?

No, although Demurrage and Detention are the most common.  Other charges include:

Combined

This is a combination of Demurrage and Detention. The period starts either with the arrival of the vessel (Vessel Arrival) or with the discharge (Container Discharge) of the container until the container is returned to the terminal or depot (Gate In Empty). During this period the shipping line allows for a certain free time, after which charges are incurred. These charges are typically incremental over time, urging you to return the empty container to the terminal.

Storage

This charge is similar to the Demurrage charge, but is levied by the terminal instead of by the shipping line.

Plugging

This charge is also similar to the Demurrage charge, but is additional in the case of Reefer containers where these containers need to ‘Plugged’ into the electricity net to cool or heat the cargo.
Charges can apply in parallel, each following its own free time, cost and currency. These Origin and Destination costs can be applied with a high granularity depending on the underlying contracts, shipping lines, port pairs, container types, etc…
Demurrage and Detention   Demurrage and detention costs are unavoidable but paying more than necessary is not.   Take control of your shipments and cut unnecessary costs with Cargoo.   

Common DND Pain Points

Lack of Visibility

Limited insight into container location and status across the supply chain can lead to delayed actions on customs clearance, on carriage and port delays.

Missed Interventions

Without visibility into key moments for intervention, companies often miss the chance to act proactively and avoid demurrage or detention charges.

Poor Contract Management

Tracking free time and detention terms across multiple shipments and contracts is difficult. This can result in preventable charges due to oversight.

Delayed Container Returns

Inefficient coordination of trucking schedules, terminal operations, and customs processes leads to late returns of empty containers, driving up detention fees.

Demurrage and Detention Software

What to Look for in DND Software

To effectively manage DND charges, companies need software solutions that provide the following features:

Visibility and Tracking

Track containers from booking to delivery. Know exactly where containers are and see actual free time status. Estimated and predictive timestamps will allow you to plan proactively and avoid extra demurrage and detention charges due to seamless connection to your on carriage and warehouse planning.

Exception Management

The system must provide specific visibility over demurrage and detention exceptions, for example when free time is about to run out or has been exceeded. Customizable notifications like e.g. ‘Last Free Day’ and alerts can be very helpful in enabling early intervention and as a result cost avoidance or reductions.

Contract Management

Managing multiple contracts is complex. A good DND solution shows free time allowances and terms tied to each shipment and improves your Total Cost of Ownership. Contract management puts you in the driving seat of freight, and demurrage and detention negotiations. Choosing the right Incoterm here is paramount to you taking control over the demurrage and detention conditions.

Reporting and Analysis

Detailed reports show where demurrage and detention fees are coming from. Customers need to analyze patterns, share reports, and integrate data into broader supply chain analytics. Demurrage and detention monitoring delivers actionable insights to your next round of tendering to tailor your specific demurrage and detention conditions to your actual operational needs. These reports can also be used by your financial departments to make provisions for demurrage and detention costs in the right bookkeeping period, and to match the incoming shipping line invoices on demurrage and detention.

Multimodal Integration

The best demurrage and detention software works across both ocean and land transport systems. This provides a full view of logistics operations, not just ocean freight. Free time conditions can also be used to drive your choice of on carriage depending on free time and costs within a Total Cost of Ownership approach, leveraging your free time to the maximum.

How Demurrage and Detention works in Cargoo

Cargoo stands out in the market by offering a solution for demurrage and detention management that combines contract management with high-fidelity contextual visibility and reporting insights.

Cargoo video

Managing DEMDET costs in ocean freight.

Effective management of DEMDET is crucial for BCOs in maintaining profitability and operational efficiency in ocean freight logistics. When handled properly, DEMDET management can unlock significant benefits, especially when supported by a robust platform like Cargoo.

Avoid or Reduce Cost Through Proactive Management

  • Cargoo offers:
    1. Shipment visibility with estimated and predictive timestamps
    2. High-fidelity visibility over shipment free time conditions and incurred/potential costs  
  • Cargoo offers:
    1. allows users to intervene and make necessary adjustments before fees start piling up thanks to the seamless integration of tendering, visibility and demurrage and detention monitoring. 
    2. avoiding these fees = bottom line improvements both in costs and operational flow of cargo 

Improved Decision-Making with Contract and Free Time Management

  • Keeping track of free time across multiple shipments and contracts is a challenge for large BCOs. 
  • With Cargoo users can see free time allowances and detention terms tied to specific shipments. 
  • This allows BCOs to make informed, timely decisions to prevent overtime and avoid disputes with carriers over demurrage or detention fees.

Improved Decision-Making with Contract and Free Time Management

  • Cargoo’s reporting and analytics tools provide large BCOs with detailed insights into their Demurrage and Detention costs.
  • Cargoo’s exception handling allows users to capture reasons for exceeding free time when delays happen. This record enables root cause analysis of recurrent issues and charges and dispute resolution.
  • By analyzing these reports, BCOs can identify patterns, uncover the root causes of recurring fees, and implement long-term solutions. This will finally result in a higher speed to market and reduced inventory carrying costs.
  • This data-driven approach supports continuous improvement initiatives to manage demurrage and detention, helping BCOs identify and addre

Optimized Container Utilization

  • Underutilized containers are more than a waste of space (paying for empty/unused space), the more containers’ customers use, the more likely they are to incur in additional or inflated fees.
  • Cargoo’s container utilization optimization tools ensure that BCOs can efficiently plan, load, and track container usage. 
  • By maximizing every container’s capacity, BCOs reduce the need for additional containers and prevent delays in container returns, which are key drivers of detention costs.

Why Cargoo stands out among Demurrage and Detention software solutions

Cargoo stands out in the market by offering an in-depth solution for demurrage and detention management. Many competitors may offer some level of visibility or tracking, but Cargoo goes further by visibility over free time conditions with 
Contextual Visibility Over DnD Conditions:
  • Contextual visibility gives you the actual information at the right time and place.
  • It connects contracts, shipments, containers, and timelines to provide a complete picture.
  • Unlike generic visibility, it helps you act before problems arise.
Cargoo’s Contextual Visibility:
  • Cargoo shows not only a container’s location but also how much free time is left.
  • It includes contract terms, upcoming deadlines, and charges all in one shipment view.
  • This lets users make timely, informed decisions and avoid delays or fees.
Extensive Reporting and Analytics:
  • Cargoo provides detailed reports on past, current, and forecasted Demurrage and Detention costs.
  • exception handling allows users to capture reasons for exceeding free time and perform root cause analysis of recurrent issues.
  • Users can identify patterns, spot root causes of fees, and implement long-term solutions.
  • Data-driven insights help optimize logistics and negotiate better terms with carriers.
Take a tour of product
Cargoo demo

Integrated Carrier Contract Management:

  • Cargoo’s contextual visibility and reporting are made possible by Cargoo’s integrated carrier contract management capabilities
  • Cargoo allows users to upload all contract data into the platform.
  • Users capture ocean freight charges, free time conditions, and allocations per contract.
  • Contracts are the basis for bookings and cost calculations, including demurrage and detention costs.
  • With contracts uploaded Cargoo has a complete data background = Cargoo ties contract and shipment journey data together to deliver contextual visibility and powerful reports.
Integrated Container Capacity Utilization Tools
  • Cargoo’s CCU features optimize goods flow and minimize the risk of costly demurrage and detention fees.
  • Accurate forecasting of container space ensures the BCOs book the space they need, avoids last-minute rushes and extended container use.
  • Efficient packing and smart loading plans help reduce maximize container use, minimize delays and prevent containers from sitting idle, cutting the risk of extra charges.
  • Insightful CCU focused reports help BCOs identify performance, track space needs and take action to avoid suboptimal space management.

End-to-end control of your ocean freight logistics

The Cargoo platform delivers a unique integrated 360° solution to your Demurrage and Detention Management.
  • The Cargoo Tendering module allows you to tender your freight, including origin and destination costs like Demurrage and Detention
  • The Cargoo Integrated Carrier Contract Management module allows you to administer your negotiated contracts and Demurrage and Detention conditions
  • The Cargoo Visibility module provides you with actual data on your shipments and feeds the data into the Demurrage and Detention module
  • The Cargoo Demurrage and Detention module allows you to monitor your free time, avoid or limit costs and identify bottlenecks
  • The Cargoo extensive Reporting and Analysis module will allow you to identify your actual needs on Demurrage and Detention Free time. It will give you the opportunity to address or avoid bottlenecks and feed this into the Cargoo Tendering module to finetune your next Tendering round. 

This will lead to better Demurrage and Detention conditions tailored to your needs, improving on costs and lead time.  Identifying certain ports or terminals as bottlenecks might also drive your choice of routing, carrier or associated terminal impacting directly your freight negotiations.

Cargoo’s Demurrage and Detention Management Solution.  

Cargoo supports large and mid-sized BCOs that rely heavily on ocean freight to manage their supply chains. By seamlessly integrating planning, execution, and reporting, Cargoo provides a comprehensive, 360° end-to-end solution for ocean freight management.

Cargoo offers one of the most detailed and integrated solutions for maritime logistics and is trusted by leading global supply chains to reduce costs and enhance operational control.

Demurrage and Detention   Demurrage and detention costs are unavoidable but paying more than necessary is not.   Take control of your shipments and cut unnecessary costs with Cargoo.   
Ready to take your ocean freight management to the next level ?