Customs Referrals, Detention and Demurrage

Customs Referrals, Detention and Demurrage

Many importers wonder why their shipment may have been referred by Customs for examination. Additionally, importers who import via a seaport may be presented with charges such as demurrage and detention and not be clear on what these charges relate to. Let’s take a closer look at these terms to gain some understanding. 

Customs Referrals

Canada Border Services Agency (CBSA) referrals can occur at any point in the commercial process, and for a variety of reasons.

High risk referrals for examination based on health, safety and security reasons are always performed at the First Port of Arrival (FPOA). Commercial Compliance examinations are generally performed to confirm the data provided by the importer and verify the customs declaration. Commercial compliance referrals can be moved to a sufferance warehouse from the FPOA for examination. 

  • Pre-arrival referrals for examination on commercial goods are usually made by the CBSA National Targeting Centre (NTC) and are based on risk assessments for health, safety and security reasons. The NTC identifies goods or shipments that may pose a threat to the security and safety of Canada and they use their IT systems to screen the shipment information through a number of information and intelligence databases to identify potential risks or threats. A risk assessment is performed in advance of the arrival of the goods and a target may or may not be placed on the shipment or goods.
  • Targets can also be placed on items by the National Targeting Centre for Participating Government Agencies (PGAs). PGA concerns can also be health and safety related. 
  • National Targeting Centre targets are referrals for exams which will take place at the First Port of Arrival. These exams are considered high risk hence the reason why they are performed at the First Port of Arrival and the Border Services Officers (BSO) are generally looking for contraband. 
  • The Border Services Officer at the First Port of Arrival can refer shipments for examination for a number of reasons: health, safety and security or compliance verification. This referral is known as a BSO Referral. 
  • The CBSA commercial system (currently ACROSS) can also present examination referrals randomly. This referral is known as a Random Referral. The Border Services Officer can heed the random examination recommendation or override it. 

When a shipment has been referred by CBSA to be examined it can carry a number of charges which the importer will be responsible to pay. 

The Cost of CBSA Examinations

Demurrage And Detention

Demurrage and Detention charges are related to the costs an ocean shipping line will charge for the use of their container.

Shipping lines will generally offer a number of “free days” wherein the importer has the use of the container to move their goods for free. Demurrage and Detention charges are applied by carriers or shipping lines to importers for possession of a container outside the free days allotted. 

Global Container Crisis Wreaking Havoc On All Modes of Freight

The importer is to use the free days to move the container from dockside and unpack the container and then return it empty to the shipping line. The free days generally range anywhere from 3 to 7 days. These days can be negotiated with the shipping line by the importer. 

When the free time expires, the user or importer will be subject to demurrage and detention charges. The charges are generally calculated per diem (daily).

Demurrage relates to the amount of the time the loaded contained is within the terminal grounds. Detention relates to the extended use of the container outside the terminal and ends when the empty container is returned to the shipping line. 

As an example, a container is discharged from the ship on September 1st. The importer takes delivery of the cargo and returns the container on September 15th. 

  • Free Days: The importer is given 5 free days from the shipping line. With the 5 free days from the date of discharge the free days expire at the end of day September 5th. 
  • Demurrage: The container was picked up from the terminal on September 10th. The shipping line will charge the importer demurrage for the number of days the container remained at the terminal outside the free days. The container was removed off the terminal September 10th so demurrage will apply to 5 days. 
  • Detention: The container was returned to the Shipping Line on September 15th so detention charges will apply on a per diem (daily) basis for those 5 days the container was outside the terminal which was from September 10th to September 15th.
At the Mercy of Customs, Referral, Detention and Demerge: What You Can Do

Sometimes the invoice that shipping lines present to the importer do not differentiate between demurrage and detention charges. Generally the per diem rate is the same for both and applies to the time the importer had the use of the container outside of the ‘free days”. Be sure to check the timeframes or dates you are being charged are correct. Importers can also try to negotiate the rates set by the shipping line. 

If you are having trouble determining the reason for a Customs Referral or why you are being invoiced for demurrage or detention please give our trade advisors a call to assist you with your shipment. Better yet, let PCB manage the processing of your shipments at the FPOAFirst Port of Arrival. We can assist with the efficient movement of your shipment.

Disclaimer: While reading, kindly note the date of this blog. At PCB we do our due diligence to write on the most relevant topic every week and naturally content may become dated as developments in a certain program/topic occur. For this reason, we greatly appreciate your readership and hope you continue reading with the posting date in mind. For the latest information on this topic please use our website's search function, or better yet, subscribe to our "Trading Post" newsletter to receive these updates directly to your inbox.
Share this post
About the Author
Jan Brock

Jan Brock joined PCB Customs Brokers in 2015 as a Senior Trade Advisor. She retired from Canada Border Services Agency (CBSA) in 2015 after serving more than 37 years. Jan started her career with CBSA as a summer student in 1976 and worked part-time until she graduated from U.B.C. with a Bachelor of Education Degree in 1980 . Shortly after graduating from U.B.C. Jan worked full time as an inspector with CBSA and within three years was promoted to Superintendent. She served some time in the Regional Operations office as an Operations Review Officer before she was promoted to Chief of Operations first at the Customs Mail Centre, then in the Metro District as the Commercial Chief and ending her career as a Chief at Pacific Highway Commercial Operations where she served as Chief from 1992 to 2015. During her career she was a member of the Customs Drug Team and a trainer in the National Enforcement Program. Jan also served as the Regional Coordinator Officer Powers and Use of Force for the Pacific Region. Jan served on many Commercial Program Reviews and committees both national and regional during her career and possesses an expansive knowledge of importing and exporting into and from Canada.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.