When transporting by FCL, we often care about “Free Time”.
This term refers to the length of the time, a container can be stored free of charge at the port. You can store a container for an agreed length of “Free Time”, for example 7days to 14days.
There are additional terms to remember in combination with “Free Time”, These are “Demurrage” and “Detention”.
Let’s take a closer look after we explain “Free Time”.
Explaination about Free Time/Demurrage/Detention on Video
What is Free Time?
“Free Time” refers to the length of time, a container can be stored free of charge at the port.
It is generally a period of 7-14 days for dry container. The length of the time can be extended upon request from a freight forwarder.
Our company can extend for period of up to 21 days of “Free Time” for Japanese main ports. The length of “Free Time” varies depending on the Shipping Lines.
Free Time for special containers
The length of “Free Time” is shorter- usually less than 7 days for reefer container, open top container, and flat rack container.
Situation to use Free Time
You might think you should collect a container as soon as it arrives at the port.
・Time taken to clear customs.
・ When there is no space available to store the cargo at the factory.
・ The time taken to arrange drayage. *especially in Japan
The port is not a warehouse. therefore cargo should be collected immediately, when there is no issue. However, in general, “Free Time” is used when there is an issue.
What is Demurrage?
Now, let’s take a look at the term “Demurrage”.
“Demurrage” is a storage fee, that occurs after the length of “Free Time” has been exceeded.
As previously mentioned, the port is not a warehouse, and the container yard has limited space.
“Demurrage” is used to prevent containers being stored at the port for a long time.
Actually, “Demurrage” is not cheap.
Example of Demurrage in Japan
・Day 1 to day 3 – JPY 13,000/Day/Container
・ Day 4 to day 6 – JPY 25,000/Day/Container
・ From day 7 – JPY 40,000/Day/Container
The longer the containers are stored at the port after free time,
the higher the Demurrage cost will be.
Understandably, a shipment of 10 containers will cost you a lot of money.
What is Detention?
Now, let’s take a look at the term “Detention”.
“Detention” is a length of the time allocated for collecting a container from a port, unloading the cargo and returning the empty container to the port.
You will incur additional cost if you exceed this time. Containers belong to Shipping Lines. This system requires all containers to be returned correctly, once finished delivering the cargo.
How to Calculate Free Time and Detention
Here is an example of “Free Time” and “Detention” calculation method.
Free Time: 14 days
Detention： 7 days
ETA: 1st May
in CY： 3rd May
Free Time: till 17th May
Detention: till 24th May *if you pick up container on 17th May
We usually do not have the case that the customer use full “Detention” period, but I hope the description enable you to understand.
Free Time Problems
Finally, let’s take a look at some of the common problems with “Free Time”.
Customs may be unable to complete their checks during “Free Time”.
Especially, when importing new products of which you do not have past import experience, there is a potential for essential documentation to be missed.
Certain food and chemical products cannot be imported without a specific import permission or license.
This can take time to register. Also, if there are any mistakes on the B/L, it can take time to amend and “Demurrage” costs may occur.
Before exporting a new product, you need to discuss and make arrangements with a freight forwarder to avoid these problems.
By now you understand the terms “Free Time”, “Detention”, and “Demurrage”. The most important thing is to utilize “Free Time” and prevent “Demurrage” occuring.
I have been working as a freight forwarder for a long time, and I have seen cases which incurred “Demurrage”. Because of problems on product register and documentation.
Payment issues between a buyer and a seller. Congestion at a port after a long holiday season. “Free Time” is very important factor within international logistics.
Please ensure you check details in advance and are prepared.