Difference between Demurrage and Detention

demurrage and detention
demurrage and detention

In the movement of containerised cargo, there are several implicit charges that one needs to be cognizant about. And, as analogous/homogeneous they might seem, they are not. Two such charges that regularly apply are demurrage and detention. Before the vessel reaches the destination, it is necessary to understand and plan well in advance to avoid these charges. Before defining either demurrage or detention, let’s first understand the concept of free days.

Free days or Free time is the agreed time period during which an importer may move out the container out of the port or bring back the empty container to the port within the allotted time. The free time period starts when the container is unloading from the vessel onto the port terminal and the amount of free period days vary depending upon the carrier and port terminal. It is necessary to be aware of the free days at the terminal to avoid charges.

Demurrage: Demurrage charge is levied when the importer has not picked up the full container from the port or unpacked the container within the allotted free days. After the free time, demurrage fee is incurred, which keeps increasing for the additional days.

Detention: The container can be taken from the port terminal for unpacking or for loading, depending upon the import or export. Either way, if the container is not returned to port terminal within the allotted free time then detention charge/fee is applicable.

Basically, Demurrage occurs for the cargo that stays at port terminal after the given free days/time and Detention occurs for the container that stays outside port terminal beyond the agreed free time. Charges would be applied to every additional day after the free day time period for both, demurrage and detention. Usually, shippers are responsible for the  fees, unless stated otherwise in the terms and conditions of Bill of Lading.

Even though, most of the time, the delays cannot be anticipated, the risk can be averted by proper planning and scheduling. The customer must be familiar and aware of the charges and free days at the port and  hiring a competent Customs Agent with proper knowledge would eliminate paperwork errors. Most carriers publish both the detention and demurrage charges on their website. If you anticipate that you will need more free days at the destination (because cross country rail/road movement) then you can request for additional free days at the time of container booking at origin itself. Usually a carrier will not entertain additional free days once the cargo has arrived at the destination. In any case, you have been hit by a high detention/demurrage bill by the carrier or their agent, you should discuss and negotiate with them. In majority cases the carrier will waive off the charge completely or significantly reduce it.

At Shiplyst, we automatically notify you about important shipment events as they occur (onboard, arrival etc) so that you can plan better and avoid detention and demurrage charges.

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