Demurrage Charges: How They Impact Your Shipping Costs

Published on October 22, 2025

• 8 min read

India’s major ports, including Nhava Sheva and Mundra, serve as crucial gateways for exporters dealing in textiles, spices, electronics, and various other goods. However, unforeseen costs such as demurrage charges can significantly affect profitability if not properly managed. Understanding the concept of demurrage is vital for businesses involved in international trade, as these fees are typically linked to delays in container movement and can substantially increase overall shipping costs.

This blog aims to clearly explain the meaning of demurrage, how these charges are applied, and their implications for Indian importers and exporters. Whether you are a small trader in Chennai or a large-scale manufacturer in Delhi, understanding and managing demurrage and related charges such as detention can help you control expenses and enhance logistics efficiency.

Table Of Contents

What Are Demurrage Charges?
How Do Demurrage Charges Work?
Demurrage Compared to Other Charges
How Are Demurrage Charges Calculated?
Strategies to Avoid Demurrage Charges
Who Is Responsible for Paying Demurrage and Detention Charges?
Empower Your Logistics with WareIQ’s Expertise
Final Words
Frequently Asked Questions

What Are Demurrage Charges?

Demurrage charges are fees imposed by shipping lines when containers remain at a port or terminal beyond the agreed-upon free time. This period usually ranges from three to seven days depending on the terms outlined in the port or carrier agreement. These charges are intended to encourage importers to collect their cargo promptly and to deter exporters from delivering containers to the port too early. This helps maintain the efficiency of port operations.

For example, if an electronics importer based in Bangalore leaves a container at Nhava Sheva port for ten days when only five days of free time are allowed, demurrage charges will be applied for the five additional days. According to a 2023 report by Container xChange, global demurrage and detention fees rose by 104% between 2020 and 2021. Indian ports such as Mundra have experienced similar trends due to increased congestion.

Understanding the difference between demurrage and other related fees is essential for effective logistics and cost planning.

How Do Demurrage Charges Work?

Demurrage is directly related to how long a container stays within the port premises. The process typically involves the following steps:

Step 1: Container Arrives at the Port

For importers, containers arrive at the port after being offloaded from a vessel. For exporters, containers are delivered to the port for future loading. From this point, the free time starts, which usually ranges between three to seven days, as specified in the shipping contract.

Step 2: Free Time Expires

If the importer fails to clear and remove the container within the free time, or if an exporter delivers the container too early, demurrage charges begin to accrue. For instance, if an importer in Delhi has a container at Chennai port and does not clear it within the five-day free window, charges will be applied from the sixth day onwards.

Step 3: Charges Are Imposed

Shipping lines charge demurrage on a per-container, per-day basis. These rates typically range between ₹5000 and ₹20000, depending on the port, shipping line, and terms of the contract. For example, if an exporter in Kolkata leaves two containers at Mundra port for three additional days, and the charge is ₹10000 per container per day, the total payable amount would be ₹60000.

Step 4: Charges Must Be Paid to Release Cargo

Importers are required to pay demurrage charges before they can retrieve their cargo. Exporters also need to settle any applicable fees to avoid further penalties. Delays in payment can escalate the charges even more.

Demurrage and Detention: Understanding the Difference

Understanding the distinction between demurrage and detention charges is vital for efficient logistics management. Although both are related to delays, they apply under different circumstances. The following table outlines the key differences:

Factor	Demurrage	Detention
Definition	Fees for containers left at the port beyond the free period	Fees for holding containers outside the port beyond the free period
Location	Inside the port or terminal, such as Nhava Sheva	Outside the port, for example at a warehouse in Pune
Free Time	Generally three to seven days, depending on the port	Typically three to five days, depending on the shipping carrier
Applies To	Importers (for delay in clearing cargo) or exporters (for early delivery)	Importers (during unloading) or exporters (during container loading)
Typical Cost	₹5000 to ₹20000 per day per container	₹3000 to ₹10000 per day per container
Example	An importer in Chennai pays for containers left at the port after free time	An importer in Bangalore pays for keeping an empty container too long at a warehouse

This comparison helps businesses make informed decisions to avoid unnecessary expenses from either charge type.

Demurrage Compared to Other Charges

It is also important to differentiate demurrage from other types of charges:

Demurrage vs Damages: Demurrage refers to a fee for delay, not for physical damage to goods. Damages, on the other hand, relate to compensation for cargo that is lost or harmed.
Demurrage vs Port Storage: Demurrage is charged by shipping lines for containers that belong to the carrier. Port storage charges are levied by the terminal and apply to all cargo, with different rules regarding free time.

How Are Demurrage Charges Calculated?

Demurrage charges are based on two main factors: the daily rate and the number of days the container exceeds the free period. The rates differ based on location, shipping carrier, and the type of container involved.

Formula to Calculate Demurrage Charges:

Demurrage Charges = Daily Rate × Extra Days × Number of Containers

Example:
An importer in Hyderabad leaves three containers at Chennai port for four days beyond the permitted five-day period. If the daily rate is ₹10000, the total demurrage charge will be:

₹10000 × 4 days × 3 containers = ₹120000

Some ports may apply escalating rates. For instance, ₹5000 per day for the first three days, and ₹10000 per day thereafter. It is essential to review contracts carefully to avoid unexpected costs.

Strategies to Avoid Demurrage Charges

Indian businesses can reduce demurrage charges by adopting the following strategies:

Pre-Clear Customs: Ensure all documentation is accurate and submitted in advance. According to FICCI 2023, 70% of shipping delays are related to documentation.
Negotiate Additional Free Days: Especially at busy ports such as Mundra, request extended free time in the shipping agreement, as suggested by Maersk.
Use Reliable Transportation Partners: Work with dependable ground transport providers to ensure timely pickup and return of containers. This accounts for approximately 80% of logistics efficiency.
Utilise Shipper-Owned Containers (SOCs): Investing in SOCs can eliminate carrier-related demurrage fees and result in long-term savings of up to 20%, as per Container xChange 2023.
Monitor Port Activity: Use digital platforms like FourKites to track weather conditions and congestion, which can help avoid delays in about 60% of cases.

Who Is Responsible for Paying Demurrage and Detention Charges?

Responsibility for demurrage and detention charges typically depends on the shipping agreement and the applicable Incoterms. Importers generally pay demurrage for delays in collecting imported goods, while exporters may be responsible when containers are delivered too early. Detention charges are often borne by the party that holds the container outside the port.

For example, under the CIF (Cost, Insurance, and Freight) term, the exporter might be responsible for demurrage at the port of origin, while the importer would cover such charges at the destination port. These terms are clearly outlined in contracts and shipping guidelines.

Empower Your Logistics with WareIQ’s Expertise
Efficient logistics are essential to avoid demurrage charges and to ensure cost-effective shipping operations. WareIQ, a Y Combinator-backed e-commerce fulfilment platform, helps Indian exporters streamline their supply chain and reduce logistics-related expenses. Whether you are a spice exporter in Kochi or a textile manufacturer in Tirupur, WareIQ can support your business with comprehensive logistics solutions.
WareIQ Offers:
Nationwide Storage Network: Warehouses in over 12 cities help align inventory management with port operations, reducing demurrage risks.
AI-Based Forecasting: Inventory LogIQ predicts demand accurately, helping prevent early container deliveries.
Customs Support Services: Guidance on compliance and documentation cuts clearance delays by up to 50%.
Real-Time Shipment Tracking: Integrated tracking tools help monitor cargo movement and avoid detention costs.
Contractual Compliance Expertise: Ensure that all shipping terms, including Incoterms, are well-managed to avoid unnecessary charges.

Partnering with WareIQ allows businesses to avoid demurrage charges, improve logistics efficiency, and expand globally with confidence.

Final Words

Understanding and managing demurrage charges is essential for Indian businesses involved in global trade. These fees, linked to delays at ports, can have a considerable impact on shipping costs. By learning the differences between demurrage and detention, knowing how charges are calculated, and addressing causes such as customs delays, importers and exporters can achieve significant savings. Whether shipping from Mundra to Dubai or from Chennai to Singapore, proactive planning and the right logistics partner can ensure cost-effective and efficient operations.

Frequently Asked Questions

Is demurrage a penalty?

Demurrage is not a penalty in the legal sense. It is a fee charged to encourage timely movement of containers and maintain port efficiency. However, due to the high costs involved, it often feels punitive.

How much are demurrage charges per day?

In India, demurrage charges typically range from ₹5000 to ₹20000 per container per day. The actual amount depends on factors such as the port, shipping line, and contract terms, based on Maersk’s 2023 data.

What is 14 days of free detention and demurrage?

Some shipping lines may offer a combined free time of 14 days that includes both demurrage and detention. This is uncommon in India, where the standard free time is usually three to seven days, according to Hapag-Lloyd’s 2023 guidelines.

Supercharge your fulfilment with WareIQ now, contact our team.

Author

Mariyam Jameela

Mariyam Jameela works as a content writer at WareIQ. With a proven track record of working with renowned brands such as GO Digit, Urban Ladder, Juspay, Hong's Kitchen, and many more. She actively contributes to the creation of blog posts centered on eCommerce operations, fulfillment, and shipping, in addition to providing insights on various strategies and techniques tailored for eCommerce sellers

Read all of Mariyam Jameela's Posts

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