Difference between Demurrage and Detention
Demurrage and detention are two terms that often confuse 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 relates to cargo (while the cargo is in the container)
- Detention relates to equipment (while the container is empty after unpacking or before packing)
- Imports – 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. Working off a standard 7 free days from date of discharge, the line-free days (different to port free days) expires on the 8th of July. So, the line will charge the consignee DEMURRAGE for 4 days from 9th to 12th July at the rate fixed by the line.
- After the full container has been picked up by the client, for example, if they take another 7 days to return the empty container, then it is known as DETENTION which again will be charged at the rate fixed by the line...
So basically before the full container is picked up, Demurrage is charged (after the 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.
- Exports: In the case of exports, normally lines give about 5 free days within which the shipper has to pick up the empty, pack it and return it full to the port. In case of delays more than 5 days, the line charges Detention (generally same tariff as import detention) for the days that the empty is kept with the client as empty or full.
Once the container is packed and says, for example, the shipper is unable to ship the same due to any reason, then the Demurrage will be charged at the rate fixed by the line till the full container is shipped out.
What I have mentioned above is the generic and most common form of use of these two terms. There however is a difference in the usage of these terms by various shipping lines in various countries.
Some countries call it combined demurrage/detention in some countries, whereas in some countries it is shown separately. In yet some other countries like Saudi Arabia and Japan, the term demurrage seems to be used to denote storage in the port/lines terminal.
The best option would be to check with the shipping line in your country how these terms are defined.