How to Optimize Detention Demurrage in Shipping Operations

As a shipping manager or logistics manager, opening an invoice with detention and demurrage charges is a heartbreak. Here are some important D&D fees to optimize your shipping and management.

Ship managers and shipping companies are now dreading detention and demurrage invoices as rates continue to rise.

Shipping companies could save millions if they were able to strategically avoid these fees, but most lack D&D optimization processes in place.

The fact is that shippers are losing millions to huge D&D (Detention and Demurrage) charges every year, because they don’t understand how to optimize their D&D processes. Major carriers collected $15.4 billion in detention and demurrage charges between 2020 and 2025 alone.

The solution is to use best-in-class D&D optimization strategies that have worked for hundreds of shipping companies across the globe.

The result is significantly reduced D&D fees, freeing up budget to be used for other shipping expenses. Here’s how.

What you’ll discover:

• Understanding Detention Demurrage Fundamentals
• Why D&D Optimization is Critical for Shippers and Forwarders
• The Critical Steps to D&D Fee Optimization
• Building Your D&D Optimization Process

Understanding Detention Demurrage Fundamentals

D&D (Detention and Demurrage) is a form of additional storage and late charge in the shipping and supply chain industry. Demurrage charges are a certain number of days which the receiver is free to load the goods and take the container.

After these free days are over, late fee(Detention) is charged. Detention rate for delayed pickup from the port is charged and demurrage for late return of container after unloading at the port.

In simple words, Detention and demurrage fees are nothing but late charges for the shipment container.

Demurrage starts when a container is not loaded/unloaded during the free period at the terminal. Demurrage fee is usually for the container’s extra time at the port’s terminal.

Demurrage rate can increase if the container exceeds free time allocated by the shipping lines for the container to be loaded/unloaded

If a shipper takes longer than allocated free days to return a container to a shipping line, then the additional days that are taken to return the container is known as Detention days.

Detention fees range from $25 to $100 or more for the additional day.

Why D&D Optimization is Critical for Shippers and Forwarders

Customs deregulation has caused a significant rise in additional charges like detention and demurrage in the shipping industry.

D&D (Detention & Demurrage) is the additional fee charged by the shipping lines and forwarders, which is dependent on number of days a container has been used by the shipper after the standard number of days.

Shipping lines collected $6.9 billion in D&D costs from 2020 to 2022, according to recent reports.

Detention & Demurrage (D&D) optimization practices and procedures are essential to for shippers and forwarders as they provide them the ability to do the following:

• Save millions in detention and demurrage charges
• Accurate and proactive communication around shipping lines and storage facilities during the entire shipping process
• Gain greater transparency in freight process

The Critical Steps to D&D Fee Optimization

The following six strategies have been used successfully by many shipping companies to optimize their D&D and help reduce D&D rates.

1. Get Documentation Right

As simple as it sounds, this is the number one reason for long dwell times in detention and demurrage

Customs and port clearances tend to get held up with wrong paperwork which ultimately results in the shipment container to stay at the port for a longer time than expected.

Documentation is the king and make sure you get it right every single time. Hire the best customs brokers and freight forwarders if it means that you get better documentation.

2. Know your Free Days Limits

Do you know how many days you have for free pickup and return of your container from shipping lines?

If not, you are making it more difficult for your operations to be D&D optimized.

Shipping lines and freight forwarders are not consistent on the number of free days they offer, some provide 5, while some provide 7 and sometimes even less.

Each quote needs to be studied and the free days need to be identified. Once known, build your operations around those free days and not the other way around.

3. Technology for Real-Time Tracking

If you are still not on a digital platform that gives you real-time updates on your shipping processes, it is time to switch.

Automated and digitized freight tracking software and platforms are now widely available and shippers and forwarders are saving a lot on D&D by switching to a real-time container tracking platform.

Tools with real-time tracking capabilities along with proactive alerts as the free days are about to expire, work well. Some systems even offer automated d&d calculation features that help you predict costs and optimize pickup schedules. Look for something that provides end-to-end process visibility.

4. Coordinating with your Supply Chain Partners

Most of the D&D occurs when one link of the supply chain breaks the chain.

If your freight forwarder is not coordinating with the customs broker or your trucking is not coordinating with warehouse operations, your operations are not optimized.

Hold regular meetings and updates with your supply chain partners and make sure everyone is on the same page at all times.

Ensure you have a single tracking platform that all supply chain partners are aware of and are actively updating, in order to stay ahead and avoid D&D charges.

5. Plan for Busy Seasons

Peak seasons are when the port are especially congested and D&D charges are more likely to occur.

Find out when peak seasons are for your particular trade lanes and plan ahead in order to account for longer dwell times at ports.

One way is to negotiate better deals, such as special rates or more free days with your forwarders and shipping lines during busy seasons.

If you are shipping for the retail industry, it is important to understand seasonal ebb and flow in order to plan accordingly and optimize your D&D.

6. Choose the Right Partners

While this may sound a bit obvious, not all freight forwarders and customs brokers are alike.

Your D&D optimization will be as strong as the weakest link in your supply chain, which is why it is important to choose the right partners and team you up with.

If you don’t have a track record in identifying shipping partners, ask around or look for partners with experience and a proven track record in D&D.

Building Your D&D Optimization Process

Building your D&D optimization process can be done over a few months and by starting with simple strategies.

Begin with perfecting your documentation. Make sure your entire supply chain operations are coordinated and every link in the chain knows their role in avoiding detention and demurrage.

Know your free time limits and plan for the entire process to happen within the free time. Use a real-time shipment tracking tool to provide full end-to-end visibility.

Finally, switch to the most strategic partners that have the necessary experience and skill set in order to help your shipping and supply chain operations optimize their D&D.

Conclusion

Detention and demurrage optimization is as much about systems as it is about planning.

Shipping companies that are strategically organized to be proactive in avoiding D&D charges are the companies that are successful at it.

Detention and demurrage (D&D) fees optimization requires a systems approach as well as strategic planning and execution.

Shipping companies that are continuously vigilant in their pursuit to avoid unnecessary D&D fees, will be successful in avoiding D&D charges.

Building a process and strategy to optimize D&D charges is possible and can be started immediately, even with limited resources.

Start small and work your way through the list. One strategy at a time. Shipper’s that have these strategies in place are successfully avoiding detention and demurrage.