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KMR Blog : Demurrage & Detention

Demurrage is a daily storage fee assessed by the terminal when a container remains at the port after its contracted last free day.

Detention or per diem is the fee the ocean carrier charges for each day past the number of free days a shipper holds the carrier's container outside of the port/terminal after the agreed number of days provided.

In other words, Demurrage and Detention in the context of container shipments mean:

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)

Case Study: Imports

  1. A container is discharged off a ship on the 2nd of July.

  2. Consignee approaches the shipping line (example: MSC, Maersk) to take delivery of the cargo around 12th July.

  3. Working off a standard 7 free days from date of discharge, the shipping line free days (different to port free days) expires on the 8th July.

  4. So, the shipping line will charge the consignee DEMURRAGE for 4 days from 9th to 12th July at the rate fixed by the line.

  5. 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 shipping line.

  6. 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 shipping lines nominated depot, Detention is charged.

Case Study: Exports

  1. In the case of exports, normally shipping lines give about 5 free days within which the shipper must pick up the empty, pack it and return it full to the port.

  2. In case of delays of more than 5 days, the shipping line charges Detention (generally same tariff as import detention) for the days that the empty is kept with the client as empty or full.

  3. Once the container is packed and say 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 shipping line till the full container is shipped out.

How to Avoid or Reduce Demurrage or Detention Charges?

Given the congestion at many ports and warehouses recently, it pays to know how to minimize detention and demurrage charges. Following are a few of the areas where KMR Global Logistics can help.

  • Secure off-dock storage or additional warehouse capacity: as off-dock storage is less costly than storage in port, KMR Global may be able to support alternative storage solutions that will be less expensive.

  • Use slower ocean services or detention in-transit products if storage capacity is tight. Informing your freight forwarder two weeks prior to the estimated time of departure (ETD) will ease planning.

  • Explore alternative gateway ports that faceless congestion. For example, New York instead of Montreal for Chicago, or Rotterdam instead of Antwerp.

  • Track your demurrage and detention costs closely to avoid costly surprises. Little to no visibility into arrival times and container availability can lead to higher detention and demurrage costs. Look for technology and service models that make it easy to track inventory in motion.

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