Demurrage and detention are two terms that often confuses people in global trade, shipping, freight and logistics.. This has also lead to several financial losses many a time.. Is there a difference between demurrage and detention..
Demurrage and Detention in the context of container shipments..
- Demurrage relates to cargo (while the cargo is in the container)
- Detention relates to equipment (while the container is empty after unpacking or before packing)
What Are Demurrage Charges?
Demurrage is assessed on cargo that is left at the terminal beyond the allotted free time. Free time in contracts can vary, so be sure to check yours to ensure you understand exactly how much free time you get. Generally, the standard is 4-5 days. Once that free time expires, you will be charged a daily storage fee (demurrage) until you pull the cargo from the terminal. Demurrage amounts may differ based on terminal or carrier and often increase after an initial period of time. Daily demurrage charges can typically range from $75 to $150 per container per day or even higher, but that’s just for the first 5 days or so. Charges generally increase the longer the cargo stays on the terminal.
What are Detention or Per Diem Charges?
Detention is a tough one since you can hear it used in several contexts.
As with on-terminal storage, you also have a set amount of free time with the container itself. Keeping the container beyond that free time often results in a detention charge, frequently called a per diem (per day) fee. The amount of this charge can vary by carrier and port but usually ranges between $50 and $100 a day.
This is where it can get confusing. You may also see a detention charge from your inland carrier as a trucking-related fee based on driver waiting time. Typically, for imports, drivers will allow 1 to 2 hours free of charge to have the container unloaded so they can bring back the empty back to the port. For exports, drivers will normally wait the same to bring the loaded container to the terminal for onboarding onto the vessel. Anything beyond that waiting time will be charged as a driver detention charge. With the domestic trucking market in a bit of disarray, courtesy of driver and chassis shortages, new restrictions on hours of service, equipment issues, and port congestion, driver wait times appear to be at an all-time high.
IN summary, so basically before the full container is picked up, Demurrage is charged (after expiry of free days) and after the container has been picked up, till the time the empty is returned to the lines nominated depot, Detention is charged.