Demurrage and Detention
Demurrage and detention charges are critical components in freight forwarding operations, representing fees for the extended use of equipment or containers beyond agreed free time periods. This functionality helps manage and track these charges throughout the shipment lifecycle.
Overview
In freight forwarding, demurrage refers to charges from a carrier for the use of equipment within the port or terminal beyond the free time allowed. Essentially, it's the fee for overstaying in the port. The importer needs to clear and move the cargo within the free time to avoid these charges.
Detention refers to charges from a carrier when the importer holds onto the carrier's equipment outside the port or terminal beyond the agreed free period. This fee is for using the container for longer than permitted. It encourages the timely return of the container to ensure it can be reused for other shipments.
The demurrage and detention functionality in Forwarding Management System (FMS) automates the calculation and tracking of these charges based on equipment and cargo events, contract agreements, and configured free days.
Setup
Forwarding Setup
Before using demurrage and detention functionality, configure the Demurr./Detent. Contr. Strat. field in the Forwarding Setup page. This field specifies the contract strategy header that contains the agreed demurrage and detention rates for customers.
Contract Strategy
A contract strategy links document types and source customers to specific agreements. For demurrage and detention, the contract strategy defines:
- Which customers or customer price groups the rates apply to
- The valid date range for the contract strategy
- The priority order when multiple contract strategies exist
- The associated agreement that contains the detailed rates
The contract strategy must reference a Forwarding (FMS) Contract agreement type and specify an area type code that corresponds to the demurrage/detention event milestone.
Equipment Cargo Event Template
The equipment cargo event template determines when demurrage or detention charges should be triggered. On each event template line, specify:
- Event Code: The equipment or cargo event that triggers the calculation
- Demurrage/Detention Service No.: The service number that identifies whether the event is related to demurrage or detention
- Event/Milestone: The milestone type, such as Pickup Empty Equipment, Arrival, Pickup Full Equipment, or Equipment Full Return
The system uses these event templates to identify the start and end events for calculating the period during which charges apply.
Agreed Demurrage Detention Lines
Agreed demurrage detention lines are stored in the 3PL FMS Agreed Dem. Det. Line table and define the agreed terms between your company and customers. These lines specify:
- Source Type and Source No.: Customer, Customer Price Group, or All Customers
- Service No.: The service that identifies demurrage or detention type
- Port Code: The port where the charges apply
- Terminal Code: Optional terminal specification
- No. of Free Days: The number of free days before charges begin
- No. of Extra Free Days: Additional free days that can be granted
- Discount %: Percentage discount applied to the charges
- Equipment Criteria Code: Criteria for matching equipment sizes
- Priority: Used when multiple lines match the same criteria
- Valid From Date and Valid To Date: Date range when the agreement is valid
Service Configuration
Services used for demurrage and detention must have the Demurrage/Detention Type field configured to identify whether the service represents demurrage or detention charges. This classification helps in reporting and analysis.
Demurrage/Detention Lines
Demurrage/Detention lines are created automatically when equipment or cargo events are executed. These lines track the calculation of charges based on actual event dates and the agreed terms from contracts.
Line Creation
Demurrage/Detention lines are created when:
- An equipment or cargo event is executed that has a corresponding event template line with a Demurrage/Detention Service No. specified
- The system identifies a matching "To" event that defines the end of the chargeable period
- No existing open demurrage/detention line exists for the same event pair
The system automatically creates a revenue line linked to the demurrage/detention service, which will accumulate the total charges as demurrage/detention lines are closed.
Line Types
Demurrage/Detention lines can have different line types:
- First: The initial line for a demurrage/detention period
- Subsequent: Additional lines created when graduated pricing applies or when periods span multiple price tiers
- Closed Period: A line that has been closed with a specific end date
- New Period: A line that represents a new billing period (e.g., a new month)
- Last: The final line for a demurrage/detention period
Key Fields
- Event Start Date/Time and Event End Date/Time: The actual dates and times from the equipment/cargo events
- Period Start Date/Time and Period End Date/Time: The chargeable period after accounting for free days
- No. of Free Days: Number of free days from the agreed terms
- No. of Extra Free Days: Additional free days (can be adjusted on the first line only)
- Quantity: Number of days charged (calculated based on period dates)
- Unit Price: Price per day (from contract agreement)
- Line Amount: Calculated as Quantity × Unit Price × (1 - Discount %)
- Closed: Indicates whether the line has been finalized
Period Calculation
The period start date is calculated as:
Period Start Date = Event Start Date + No. of Free Days + No. of Extra Free Days
The period end date is determined by:
- The event end date (if the "To" event has been executed)
- The closing date when closing demurrage/detention lines from a revenue line
- The end of a graduated pricing tier when using sub-detail lines
Graduated Pricing
When contracts have sub-detail lines with graduated pricing (different rates for different day ranges), the system automatically creates multiple demurrage/detention lines:
- Each line represents a pricing tier from the contract
- The From Day and To Day fields indicate the day range for each tier
- The Days field specifies the number of days in the tier
- Multiple lines ensure accurate pricing as the detention period extends into higher rate tiers
Status Functions
Several status functions are available for managing demurrage and detention through equipment/cargo events:
Generate Revenue Line Demurrage/Detention
Creates a revenue line and associated demurrage/detention lines when an equipment/cargo event is executed. This function:
- Verifies that the event template line has a demurrage/detention service specified
- Finds the corresponding "To" event
- Creates the revenue line if it doesn't exist
- Creates the initial demurrage/detention line with event dates and contract terms
Close Demurrage/Detention Line from Equipment/Cargo Event
Closes open demurrage/detention lines when the "To" equipment/cargo event is executed. This function:
- Finds all open demurrage/detention lines linked to the event
- Calculates the quantity based on the event end date
- Marks the lines as closed
- Updates the revenue line with the total amount
Close Demurrage/Detention Lines from Revenue Line
Closes all open demurrage/detention lines associated with a revenue line. This function:
- Calculates quantities for all open lines based on the closing date
- Handles graduated pricing across multiple lines
- Continues calculations into subsequent billing periods if configured
- Updates the revenue line with the total chargeable amount
When using end-of-month closing, the system:
- Creates a new revenue line for the next billing period
- Creates new demurrage/detention lines for the new period starting the day after the closing date
- Maintains the link between periods
Working with Demurrage/Detention Lines
Viewing Demurrage/Detention Lines
Access demurrage/detention lines from:
- Equipment/Cargo Events: Use the Demurrage/Detention Lines action on the equipment/cargo events page or card
- Revenue Lines: Use the Demurrage/Detention Lines action on revenue lines in the shipment document
The demurrage/detention lines page displays:
- Line type
- Equipment identification number and size
- Event dates and times
- Period dates and times
- Free days and extra free days
- Quantity (chargeable days)
- Unit price and line amount
- Agreement reference information
Adjusting Extra Free Days
On the first demurrage/detention line of a period, you can adjust the No. of Extra Free Days field. When changed:
- The period start date is recalculated
- Existing lines are updated if contract terms change
- Closed lines are recalculated to reflect the new period start
Extra free days can only be changed if:
- The line is the first line (Line Type = First)
- The line has not been invoiced (no pro forma or posted amount on the revenue line)
Closing Lines
Demurrage/detention lines are typically closed automatically when:
- The "To" equipment/cargo event is executed
- The Close Demurrage/Detention Lines from Revenue Line status function is executed
You can also manually close individual lines using the Close Demurrage/Detention Line status function.
When closing, the system:
- Calculates the quantity based on the period dates
- Accounts for already invoiced quantities (prevents double-charging)
- Updates the line amount
- Marks the line as closed
- Updates the linked revenue line with the total amount
Contract Updates
When contract details change or are refreshed, use the status function or manual process to update demurrage/detention lines from the contract. This ensures:
- Free days are updated from agreed terms
- Prices are recalculated based on current contract rates
- New graduated pricing tiers are applied
- Discounts are updated
Best Practices
Configuration
- Plan Event Templates: Carefully configure equipment cargo event templates to ensure demurrage/detention triggers occur at the right events for your operations
- Set Up Contract Strategy: Link contract strategies to customer groups appropriately, considering priority order when multiple strategies apply
- Define Agreed Terms: Ensure agreed demurrage/detention lines are comprehensive, covering all ports, terminals, and equipment types
- Use Equipment Criteria: Leverage equipment criteria codes to differentiate rates by container size or type
Integration with Revenue Lines
Demurrage/detention lines are always linked to a revenue line. The revenue line:
- Uses the demurrage/detention service specified in the event template
- Accumulates the total amount from all linked demurrage/detention lines
- Shows quantity as 1 (representing the line itself, not the days)
- Shows unit price as the total line amount from all demurrage/detention lines
When closing demurrage/detention lines, the revenue line is automatically updated with the sum of all closed line amounts. This ensures accurate invoicing and reporting.