Demurrage vs Detention
What is Demurrage..??
Demurrage, is a charge levied by the shipping line to the importer in cases where they have not taken delivery of the full container and move it out of the port/terminal area for unpacking within the allowed free days..
A container is discharged off a ship on the 2nd July.. Consignee approaches the shipping line to take delivery of the cargo around 12th July..
If we consider the standard free days offered by the shipping line (different to port free days) as 7 days from date of discharge, the free days will expire on the 8th of July..
As of the 12th July, the box would have been sitting in the port/terminal for a total of 11 days..
11 days dwell time – 7 free days = 4 days that the box has overstayed its welcome in the port/terminal..
So, the line will be eligible to charge the consignee DEMURRAGE for 4 days from 9th to 12th July at a rate fixed by the line..
So what is Detention then..!!
Detention is a charge levied by the shipping line to the importer in cases where they have taken the full container for unpacking (let’s say within the free days) but have not returned the empty container to the nominated empty depot before the expiry of the free days allowed..
So in the above example, the customer took the full box out of the port/terminal on the 7th of July which is within the free days (expiring on the 8th of July), but returned the empty container to the line’s nominated depot only on the 19th of July..
So the line will be eligible to charge the consignee DETENTION for 11 days from the 9th July (after expiry of free days) till the 19th July at the rate fixed by the line..
If you request additional free days from the shipping line they would usually ask if it is for demurrage or detention which means they want to ascertain whether the customer is going to be keeping the container with them before or after moving it out of the port/terminal.. Also in various destination ports, the definition of demurrage and detention varies and hence the line needs to know where their exposure lies..
Shipping lines very rarely offer free days for either demurrage only or detention only.. If the free days is shown as just “free days” it usually refers to “combined demurrage/detention” which is what most of the shipping lines apply..
If “x” free days offered for demurrage only, then that means that the client has “x” free days to pick up the full container after which the empty has to be returned the same day to avoid costs..
If “x” free days offered for detention only, then that means that the client can use the “x” free days to unpack the container and take it back to the depot.. They might have some unpacking problems at their warehouse which necessitates such requests..