What Is Demurrage?
Demurrage is a charge for keeping a vessel, railcar or truck past the free time allowed to load or unload it. In fuel trucking the same charge is usually called wait time, and elsewhere in trucking it is usually called detention.
The word comes from shipping and rail, where it has a precise meaning. For a vessel, EIA defines demurrage as the charge paid to the vessel owner or operator for holding the vessel at port beyond the time allowed for loading and unloading. For rail, federal rules define it as a charge that compensates rail carriers when cars are held beyond free time, and that also works as a penalty for undue car detention.
Demurrage vs detention vs wait time
All three are charges for time past an allowance. What differs is what is being held and where the word is used.
| Term | What is held | Where the free time comes from |
|---|---|---|
| Demurrage | A vessel at port, or rail cars held by the person loading or unloading them. The word is also used for trucks. | For a vessel, the time allowed for loading and unloading, which EIA says is usually 72 hours. For rail cars, the governing demurrage tariff. |
| Detention | A truck and its driver at a shipper’s or receiver’s facility. | The limit set in the shipping contract. |
| Wait time | A fuel truck and its driver, at the rack or at the drop. | The free time agreed for the load. |
For a fuel truck, the three words usually name the same charge. If a quote or a contract says “demurrage”, “detention” or “wait time” for a truck, read the terms behind it: how much free time, and what rate applies after it.
Free time
Every one of these charges starts where free time ends. Free time is the period allowed to load or unload before the charge begins, and it is set by an agreement or a tariff.
- Rail cars. Free time is set in the governing demurrage tariff. Under 49 CFR 1333.3, a person receiving rail cars can be held liable for demurrage only if the rail carrier gave them actual notice of that tariff, in written or electronic form, before placing the cars.
- Vessels. EIA’s glossary gives the time allowed for loading and unloading as usually 72 hours.
- Trucks. The U.S. DOT Office of Inspector General found that most industry stakeholders measure detention only as time spent at a shipper’s or receiver’s facility beyond the limit established in shipping contracts.
Who bills whom along the chain
The charge follows the contract for whatever is being held. A vessel owner or operator bills for its vessel. A rail carrier bills for its cars; under 49 CFR 1333.3(b), when a third-party intermediary and a shipper or consignee jointly notify a Class I carrier that the shipper or consignee has agreed to be billed for demurrage, the carrier bills that shipper or consignee directly.
A fuel carrier bills wait time to the party that hired the truck, under the terms agreed for the load. Detention pay at the fuel rack walks through how to price it and who can bill whom.
Sources
- EIA glossary: Demurrage: the charge paid to a vessel owner or operator for holding a vessel at port beyond the time allowed, usually 72 hours
- 49 CFR 1333.1: the federal definition of rail demurrage
- 49 CFR 1333.3: who is subject to rail demurrage, the notice requirement, and direct billing of the shipper or consignee
- U.S. DOT Office of Inspector General, driver detention report: how the trucking industry measures detention