Demurrage & Detention charges: Know the difference
For a common person, the words Demurrage and Detention charges are kind of similar, but in the shipping industry, logistics and supply chain one cannot use them interchangeably. They are widely different from each other.
Demurrage charges: Relates to cargo while it is still in the container
Detention charges: Relates to equipment while the container is empty either before packing or after unpacking
The best way to find the difference between the two is to put in the context of import and export:
Demurrage: Demurrage charges are levied when the containers are stocked and under the control of the shipping line and have not been picked up by the consignee yet from the terminal even though the free period is over. (free period commences when the container is unloaded from the vessel and set on the terminal). The demurrage period starts when the containers are still lying on the terminal after the free period until they are picked up and out gated from the terminal.
Detention: This detention charge is just the opposite of demurrage. Demurrage is when the container is full and on the terminal after the free period is over while Detention charge is levied when the consignee retains the carrier’s container outside the port, terminal, or depot beyond the allotted free time. Detention fee is charged when the container is still in the possession of the consignee (whether it’s full or empty) and has not been returned.
Let’s understand this using an example: A container is discharged from the ship on 10th October and is under the control of the shipping line. The consignee picks up the delivery of the cargo by 20th October. The shipping line allows 7 free days from the day of discharge. Based on it, the shipping line will charge the consignee demurrage for 4 days (from 17th to 20th) at the rate fixed by the shipping line. Now the consignee de-stuffs the container taking around 7 days to do it and then returns it to the shipping line which is beyond the specified timeline, then it is known as Detention, charged by the shipping line.
The no of days a fully loaded container stays on the terminal after the free days, till the consignee picks it is charged with demurrage and after the pick-up of the container, the consignee retains it beyond the free date, the detention is charged.
Demurrage: It is levied when the loaded export container has been returned to the shipping line, however, it cannot be moved out due to unforeseen circumstances, even though the free time allotted has expired. In such circumstances, demurrage will be included for the upkeep of container till it’s boarded on to the next vessel.
Detention: This charge is levied on export containers. Generally, shipping lines give the consigner 5 days to pick-up the empty container, load it and return it back to the port. In case, it gets delayed, the shipping line charges Detention for the extras days the container was kept with the consigner beyond the said timeline.
Hope this article would have helped you find the difference between Detention and Demurrage charges which have two completely different meanings. To know about logistics, logon to 20cube.com.