The party named as consignee on the bill of lading is usually the first one billed, but the question of who is responsible for demurrage charges rarely stops there. Nearly every ocean carrier’s bill of lading contains a “merchant” clause that defines liable parties broadly, so the carrier can pursue the shipper, the consignee, the cargo owner, a freight forwarder, or anyone else with a financial interest in the goods. Charges pile up daily once a loaded container overstays its free time at the terminal, and federal rules now give the billed party real grounds to push back on an invoice that is late, incomplete, or unreasonable.
Who the Ocean Carrier Can Legally Bill
The bill of lading is the contract between the carrier and the parties to the shipment, and its “merchant” clause is what makes liability so wide. That clause typically covers the shipper, the consignee, the receiver of the goods, the owner of the goods, and anyone with a beneficial interest in the cargo. It is written to cast a wide net so the carrier has multiple avenues for collecting.
By accepting the bill of lading, every party fitting the merchant definition agrees to joint and several liability. The carrier can demand the full invoice from any one of them. If the consignee refuses, the carrier turns to the shipper. If the shipper is unresponsive, the carrier pursues any other party with a stake in the goods. This structure keeps the carrier out of the middle of any dispute between buyer and seller.
Courts have upheld these clauses even when the billed party did not cause the delay. A consignee can end up liable for demurrage triggered by a shipper’s documentation error or a third party’s logistical failure. The merchant clause binds every party in the logistics chain to the carrier’s published tariff.
How Buyers and Sellers Split the Cost Between Themselves
The carrier collects from whichever merchant it can reach, but the underlying sales contract between buyer and seller decides who ultimately absorbs the cost. These contracts use International Commercial Terms (Incoterms) to fix the point where risk and cost shift from one side to the other.1International Trade Administration. Know Your Incoterms
Under Free on Board (FOB) terms, the buyer takes on all transportation costs and risks once the goods are loaded at the origin port, so destination-port demurrage is the buyer’s problem.2ICC Academy. Understanding the Place of Delivery and Risk Transfer in International Trade Contracts
Under Cost, Insurance, and Freight (CIF) or Cost and Freight (CFR), the seller pays for transportation to the destination port, but the risk of loss still shifts to the buyer once the goods are loaded at origin. If demurrage results from the seller’s failure to send required documentation on time, the buyer may pay the carrier to release the goods and then seek reimbursement from the seller under the sales contract.2ICC Academy. Understanding the Place of Delivery and Risk Transfer in International Trade Contracts
The Incoterm also dictates which side must monitor vessel arrival and arrange trucking. When those duties are not clearly assigned, containers sit and daily charges accumulate. Spelling out logistics responsibilities in the sales contract, including customs clearance and drayage booking, is the most reliable way to prevent a demurrage fight after the fact.
When Freight Forwarders and NVOCCs End Up Liable
Freight forwarders and non-vessel operating common carriers (NVOCCs) do not own the cargo, but they frequently get billed. The pivotal question is whether the intermediary acted as an agent disclosing its principal or as a principal in its own right.
A forwarder that acts purely as an agent, arranging transportation on behalf of a known and disclosed cargo owner, can generally avoid direct liability. Under basic agency principles, a disclosed agent drops out of the contract.
Liability changes when the forwarder issues its own house bill of lading or appears as shipper or consignee on the carrier’s master bill. In that case, the carrier treats the forwarder as the contractual merchant. If the actual cargo owner disappears or refuses to pay, the forwarder is on the hook for the full invoice. The master-bill and house-bill layering creates distinct tiers of liability that forwarders have to manage carefully.
When Trucking Companies Owe Under the UIIA
If you handle drayage, your exposure comes from a different contract. Most intermodal container exchanges in North America run under the Uniform Intermodal Interchange and Facilities Access Agreement (UIIA), administered by the Intermodal Association of North America. Under the UIIA, motor carriers are responsible for per diem, container use, chassis rental, and storage or ocean demurrage charges set out in each equipment provider’s addendum.3IANA. Uniform Intermodal Interchange and Facilities Access Agreement
Charges start accruing once the trucker holds the container past the provider’s free-time period. A company that picks up a loaded box and then fails to return the empty on time can rack up per diem charges that behave much like detention. The UIIA is binding independently of the bill of lading, so trucker liability under it exists whether or not the trucker is named anywhere in the ocean shipment contract.
Why the Carrier Has So Much Leverage
Ocean carriers have a possessory lien on the cargo itself. Under longstanding maritime law, a carrier can hold the goods as security for unpaid freight, demurrage, and related charges. The lien is waived only when the carrier unconditionally releases the cargo, so partial payments or promises to pay later do not remove the right to hold the shipment.
That is decisive leverage, because the value of the goods usually far exceeds the demurrage owed. A consignee facing a $5,000 demurrage bill on a $200,000 shipment has a strong reason to pay and argue about liability afterward.
If no one claims the merchandise, U.S. Customs and Border Protection treats it as abandoned. Entered or unentered merchandise sitting in customs custody for six months from the date of importation, without all estimated duties and charges paid, is considered unclaimed and abandoned. After that period, the goods may be sold at auction, retained for government use, or destroyed, and title can vest in the United States, wiping out the original owner’s claim.4eCFR. 19 CFR Part 127 – General Order, Unclaimed, and Abandoned Merchandise
Grounds to Challenge a Demurrage Invoice
Being contractually liable is not the same as owing the bill. Two independent grounds can knock out a charge: a defective invoice under the Ocean Shipping Reform Act of 2022 (OSRA 2022), or an unreasonable charge under the Federal Maritime Commission’s incentive principle.
Defective Invoices Under OSRA 2022
OSRA 2022, codified in 46 CFR Part 541, sets mandatory content and timing requirements for demurrage and detention invoices. If a carrier’s invoice is missing any of the required information, the billed party has no obligation to pay the charge.5eCFR. 46 CFR Part 541 – Demurrage and Detention
Every demurrage or detention invoice must include, at a minimum:
- Identifying information: bill of lading number, container number, port of discharge for imports, and an explanation of why the billed party is the proper party liable.
- Timing information: invoice date, due date, allowed free time in days, start and end dates of free time, the container availability date for imports or earliest return date for exports, and the specific dates for which charges were assessed.
- Rate information: total amount due, the applicable tariff rule or service contract on which the daily rate is based, and the specific rate or rates used to calculate the charge.
- Dispute information: contact details for questions or fee mitigation requests, a link to a publicly accessible website describing the documentation needed to submit a dispute, and defined timeframes for requesting and resolving disputes.
- Certifications: a statement that the charges comply with FMC rules and a statement that the billing party’s own performance did not cause or contribute to the charges.
The invoice due date cannot be earlier than 30 calendar days after issuance.5eCFR. 46 CFR Part 541 – Demurrage and Detention The carrier also has to issue the invoice within 30 calendar days from the date the charge was last incurred, and a miss on that deadline eliminates the payment obligation.6eCFR. 46 CFR 541.7 – Issuance of Demurrage and Detention Invoices An NVOCC passing along a carrier’s charge must issue its own invoice within 30 days of receiving the carrier’s.
The billing party then has to give at least 30 calendar days from the invoice date to request fee mitigation, refund, or waiver, and once a request is received, it must be resolved within 30 calendar days or a later date the parties agree to.7eCFR. 46 CFR 541.8 – Requests for Fee Mitigation, Refund, or Waiver Check every invoice against this list before paying.
Unreasonable Charges Under the Incentive Principle
Separately, the FMC evaluates whether a demurrage or detention charge is reasonable under the “incentive principle.” The idea is that these charges exist to encourage the efficient movement of cargo, not to generate revenue when the importer or exporter has no ability to act.8eCFR. 46 CFR 545.5 – Interpretation of Shipping Act of 1984 – Unjust and Unreasonable Practices With Respect to Demurrage and Detention
The Commission looks at factors like whether the container was actually available for pickup when demurrage accrued, whether empty containers could be returned, whether the cargo interest received proper notice that the shipment was available, and whether cargo was on a government inspection hold. Port congestion is a recurring flashpoint. When terminals are so backed up that truckers cannot physically access containers, charging demurrage arguably serves no incentive purpose, and the FMC’s guidance supports suspending charges or extending free time in those situations.8eCFR. 46 CFR 545.5 – Interpretation of Shipping Act of 1984 – Unjust and Unreasonable Practices With Respect to Demurrage and Detention
How to Dispute a Charge at the FMC
Federal law provides a clear path to challenge an unjust demurrage or detention charge. You can file a charge complaint with the FMC under 46 U.S.C. § 41310, which requires the Commission to investigate charges it believes may violate the Shipping Act’s prohibitions against unjust and unreasonable practices.9US Code. Guidance on Charge Complaint Interim Procedure
One of the strongest protections under OSRA 2022 is the burden shift. Under 46 U.S.C. § 41310(b), when the FMC investigates a charge complaint, the common carrier must demonstrate that the charge complies with the law. The billed party does not have to prove the charge is wrong; the carrier has to prove it is right.10Federal Maritime Commission. Guidance on Charge Complaint Interim Procedure
To file a charge complaint, submit the following to the FMC by email at chargecomplaints@fmc.gov:11Federal Maritime Commission. Industry Advisory – Interim Procedures for Submitting Charge Complaints Under 46 USC 41310
- The name of the common carrier that assessed the charge.
- The specific provisions of 46 U.S.C. §§ 41102 or 41104(a) you believe were violated.
- Invoices, bill of lading numbers, and evidence of whether the charges have been paid.
- Confirmation that the disputed charge was incurred on or after OSRA 2022’s enactment date of June 16, 2022.
You can also file a formal or informal complaint under 46 U.S.C. § 41301(a) if you want to control your own case, and the FMC’s Office of Consumer Affairs and Dispute Resolution offers alternative dispute resolution.11Federal Maritime Commission. Industry Advisory – Interim Procedures for Submitting Charge Complaints Under 46 USC 41310
If the FMC finds that a charge violated the Shipping Act, it can order a refund or waiver and impose civil penalties. A formal complaint filed within the statute of limitations can bring reparations for actual injury, which includes lost interest at commercial rates compounded from the date of injury. If the violation involved unjust or unreasonable practices under 46 U.S.C. § 41102(b) or (c), the FMC may order additional damages up to twice the actual injury, and the prevailing party may be awarded reasonable attorney fees.12Office of the Law Revision Counsel. 46 USC 41305 – Award of Reparations
A complaint seeking reparations must be filed within three years after the claim accrues.13Office of the Law Revision Counsel. 46 USC 41301 – Complaints Notifying the FMC that you plan to file does not stop the clock. If charges are accumulating right now and you believe they are unreasonable, start documenting from day one: terminal screenshots showing container unavailability, appointment cancellations, government hold notices, and every email exchange with the carrier and terminal.