Does a shipping line charge demurrage and detention for LCL shipments the same way they charge for FCL shipments..?? This question was raised by a reader of this resource..
As explained in my article about the difference between demurrage and detention
- Demurrage relates to cargo (while the cargo is in the container)
- Detention relates to equipment (while the container is empty after unpacking or before packing)
As you can see, both Demurrage and Detention relates to containers or equipment that is owned or operated by the shipping line but used by the customer on a temporary basis after which they have to return it..
Till such time as the container remains in the hands of the customer, it will incur either Demurrage or Detention depending on whether the cargo is still inside or not respectively..
However, in the case of LCL shipments, the shipping line operates the container and therefore, is responsible to off load the contents of the container at their CFS..
So they cannot charge anyone for the demurrage or detention as the container is under their control and not in the hands of a 3rd party client like in the case of FCL cargo..
But if the cargo is lying uncleared in the CFS under the control of the shipping line, the shipping line may charge storage charges on the volume of space occupied by the cargo..
If the container is however operated or under the control of a Groupage operator, it maybe possible that the shipping line can charge demurrage or detention to the Groupage operator because they kept the box more than the allowed free time..
Yes there is a difference between LCL and Groupage..
In many cases there may be situations where shippers don’t have enough cargo to fill a full container and they have only small parcels.. They deliver these small parcels to the shipping line’s Container Freight Station..
These small parcels are known as LCL which stands for Less than Container Load..
The shipping line collects these small parcels and make up a Full Container Load..
In these cases, although there is a full container load, as the shippers are many, the shipping line would issue their individual bills of lading to the various shippers..
These bills will be the direct line bills of lading and will have a term CFS/CFS mentioned.. This means that the shipping lines responsibility begins at the CFS (Container Freight Station) in port of load and ends at the CFS in port of discharge..
The freight charges for these are charged by the line directly to the shippers in proportion to the amount of cargo they have received from the shipper..
In some countries however, the shipping lines do not offer LCL shipping services and these services are handled by Groupage Operators..
In these countries, the LCL cargo is delivered by the client to a warehouse for packing into a container.. The act of collecting the LCL cargo from the various shippers and packing into a container is known as Consolidation.. The entity that handles such operations are known as Consolidators (Groupage Operators).. The box consolidators handle is called a Consol Box..
In the case of consolidation cargo, the consolidators issue their House Bill of Lading to the shippers and secure a Master Bill of Lading from the shipping line for the container which is booked with the line as an FCL and which will show them as a shipper on the lines bill of lading..
Depending on the contract with their customers the House Bill of Lading maybe termed as CFS/CFS or Door to Door.. The consolidators responsibility and delivery terms will depend on these terms mentioned on the bill of lading..
The freight charges for these are charged by the Consolidator to the shippers in proportion to the amount of cargo they have received from the shipper..
Which model is popular in your country – LCL or Groupage..??
Article republished after critical updates
25 thoughts on “Does demurrage and detention apply to LCL shipments”
Normally, demurrage charge is incurred simultaneously when storage charge incurred.
Because the free time for storage and demurrage charges are the same period allowed by shipping line and port for the full container when it stay in port.
The different is , demurrage charge is collected by shipping line while storage charge will be collected by port.
But in Cambodia, port collects demurrage charge on behalf of shipping line but the fund will be transferred to shipping line afterward. In the contrary, detention charge is incurred only for M.T container after it leave the port and it take longer time for the those M.T container to be returned back to the location or port where nominated by shipping line when they released the FCL to consignee to drop the M.T container after usage.
and shipping line has limited the period of time for those M.T container to be returned to port or any dry port after the goods moving out from the container after the container leave the port in 3 -5 days depends on each location regulation.
Normally, the cost of detention charge is the same to the demurrage. For example one day = 6$ for 20′ and 12$ for 40′
Hello Tith, thanks for your comments and thank you for sharing information regarding the practices in Cambodia..
Each country has its different regulations with regards to free days and demurrage and storage free period is not same in all countries..
Interesting.let me check with my agent.I remember seeing a ton of invoices to the port with no carrier mentioned.now I’m curious on the process.
When we nego the contact, we request for more freetime on dt and dm.At least some cost is covered.It’s known that carrier will say port storage is not under their control and subject to port tariff.
LCL should not be held responsible for any demurrage fees.
Those responsible are either the shipper or consignee depending on the cause leading to the demurrage situation
Thank you Hariesh!
I have learned something new today.
The article is very clear and easy to understand.
You are welcome Julie, glad that you found it useful..
revenue made by shipping lines on storage and detention is huge and they will make it their will to ensure full recovery etc
shipping lines will collect both demurrage and detention after their allocated free time ends . storage/demurrage is cost recovery and lines will either incur port or depot storage . the lines rates for storage/demurrage is not necessarily the same rate so port or depot and is a profit making making item ( their advertised tariff dictates) .
detention is a charge based on the lines losing revenue on their equipment due to late clearance/turn in of empty units . detention is raised when the detention free time ends and can be implemented whilst container is still full and uncleared . lines negotiates with valued customers for extended free time or rebated/reduced rates etc .
in South Africa demurrage and detention is only raised on FCL containers . since the inception of groupages the lcl shipments no longer exists . groupage operators should not allow their units to incur storage/detention as shipping lines allow them to move to depots immediately after units are discharged .
trust above is useful
Hello Alan, thanks for your input.. Appreciated..
WE HAVE A SHIPMENT OF 4 FCL CNTRS WITH D&D INCURRING AT KENYA POD .SHIPPED ON CNF BASIS. PENDING CFS CLEARANCE BY CONSIGNEE. Who is liable for the D&D charges?
Hi i move tons of containers for my company. to keep it simple, Dm is inside port.DT is out side port.Dt/dm is charged by shipping line.Strictly related to container retention either in or out of port.Storage charges is what one has to pay when container is inside port and it’s charged by the port. And it’s not called Dm.
Hi Ken, the buyer is liable for the D&D charges. CNF is no longer an Incoterms rule. It is now CPT for containerized cargo. Breakbulk will be CFR. In both instances the buyer is liable for the costs of discharge from the carrier and all charges thereafter.
Being currently based in Kenya let me updated readers about LCL imports into this country.
Before the LCL container arrives at the port we need to inform the shipping line that the said container is a consolidated container and should be manifested accordingly. We need to also inform the shipping line at which CFS the container will be De-stuffed.
Mostly it is the CFS company which manages the container movement from the port to the CFS.
The container is stripped at the CFS in presence of a surveyor. At most CFS the free days is counted from the last sling and not from the time the container is stripped. The storage charges are charged by the CFS.
Hello Suresh, thanks for sharing this information.. 🙂
As per my understanding in FCl shipment Port storage charges are called Demurrage and for container it called detention. Port storage charges are not in control of shipping line but detention charges comes under shipping line control..
Hello Amol, interesting information, would you also pls confirm which country you are based in and where this practice is followed..
In the general commercial shipping prcatice of the carriage of goods by sea – under contractual conditions of say a charter party ( C/P) – by demurrage it´s to be understood as that sum payabale in lieu of delays beyond allowed/agreed time ( lay days or time) to carry out an operation -service (load/unload) a vessel or container (” box”) . However, when this time expires and a further delay ensues , this latter one is termed ” detention “. When the opposite occurs ie. time is saved , a contract provides for ” despatch money ” to be granted/allowed for in favour of the Charterer and usually set at a 50% of ” demurrage ” (Prize money ? ) . Clearly , both concepts or practice tend to reflect that the earning capacity/productivity of the ” equipment ” – ship/ “box ” – depends on its continuous employementor to incentivate minimum delays.
Hello Stewart, thanks for your comment.. Just to clarify though the discussion in this article relates to LCL cargo in containers..
If the shipment is CNF terms ; is the “Shipper” liable for Demurrage& Detention(DnD) Charges while the consignee still negotiating clearance of FCL from destination customs.We have 4 FCL shipment containers at an Africa POD with this problem.
Forwarder(as shipper on MasterBL) is claiming the DnD from their Csutomer which is shipper on forwarder’s HouseBL.
Thanks for the clarification.
But in my case, I have incurred LCL Demurrage Charges for my LCL Cargo. In our Country, the Procedure is, once the LCL container reached Port, the Particular Shipping Line has to move the Container to some 3rd Party’s ICD. From ICD only we can collect the Cargo. I don’t know how much free days for the consolidated LCL Container and for my Cargo, the Shipping Line collected some Demurrage Charges due to overdue of Container Movement to ICD.
Pls advise, the way which the Shipping Company has collected the Demurrage Charges is correct or not.
We, as a Consignee cannot argue more with the Shipping Line, as ultimately we are loosing our free days and whatever the loses, comes to our head only.
Hello Francis, not sure which country you are from, but maybe the terminology Demurrage is used incorrectly (in comparison to most countries) instead of using the word storage.. I don’t see how demurrage can apply to LCL cargo when LCL cargo doesn’t use any equipment of the shipping line..
I wish to ask you about this question.
Cargo loaded in container and shipped in vessel giving a stated ETA in shipping documents. After taking sea and shipped but the carriers did not fulfill the date mentioned in ETA. The cargo delayed arrived over a considerable time to the destination. The cargo owners experienced severe loss to his cargo on arrival. Is carriers still liable?
Hi Sadek, the ETA means “estimated time of arrival” carrier cannot be successfully sued over delayed ETA.. Whether cargo was damaged or not due to the delay, carrier liability is covered and limited under the carrier regime mentioned on the bill of lading.. Best option would be to claim from shipper/consignee insurance as it usually is quite difficult to prove carrier liability..
Hi, very useful information. My message herewith has nothing to do with the topic discussed but I wonder if someone can direct me or advise on what course can I do online that can teach me stuff about transporting containers internationally including refrigerated containers. Much appreciate your guidance.
In The Maldives, liners charge 30$ for a 20′ container and 60$ for a 40′ container as detention/demurrage. Even for LCL cargo, we have to pay the same amount if the cargo is in the container after the expiry of the free detention period.
Really it is very interesting and useful article
Thank you so much for clear explanation
Dr. Essam Salih