DEMURRAGE, DETENTION AND PER DIEM - WHAT IS THE DIFFERENCE AMONG THEM?

1. DEMURRAGE, DETENTION AND PER DIEM –
WHAT IS THE DIFFERENCE AMONG THEM?
LOGICAL MARITIME SERVICES LIMITED WWW.LOGICALMARITIMEGH.COM

2. Importers and Exporters can get confused by the
often interchangeably used terms demurrage,
detention, per diem and storage. These terms don’t all
necessary mean “storage”; such as per diem, as
mentioned below. Storage charges accumulate at
ports, inland rail ramps and rail yards, airline terminals,
and bonded warehouses when import or export cargo
or containers remain at the site beyond the allowed
free time provided by the shipping line, airline or
warehouse.

3. The fee is intended to compensate the facility for the
use of their space and/or their equipment. All carriers
and warehouses grant different amounts of free days
and storage charges per day. Depending on the carrier
or warehouse and your volume with them, you can get
more beneficial free time for these various charges.

4. If the service is through your freight forwarder, then it
depends on what volume they have with the carrier or
warehouse. Many times, especially during times of
congestion where pulling out import containers
becomes difficult, importers have to pay demurrage
charges even though it is out of their hands. This is an
unfortunate and frustrating part of international trade.

5. DEMURRAGE
Demurrage is charged by steamship lines and airlines
for the use of their shipping containers (some air
freight is containerized). A limited number of free
days, which varies depending on the carrier and
location is granted, after which demurrage charges
will be incurred for each additional day.

6. DEMURRAGE
This fee is intended to discourage the use of the
carrier’s equipment for storage purposes and to
compensate the carrier for the use of their
equipment. Demurrage charges generally increase
per day after a certain amount of days. The actual
charges vary considerably from carrier to carrier and
from port to port. Demurrage charges must be paid
in full before you can pick up your container.

7. DETENTION
Detention has two definitions –
1) In domestic trucking, detention is a charge invoiced by a
drayman/trucker for excess use of their time for loading or
unloading cargo. It is billed hourly by the trucker or
sometimes pro-rated, depending on the trucker. Normal
detention free time is 1-2 hours for loading or unloading a
container (depending on if it is a domestic, import or export
shipment). Truckers also charge detention while waiting to
pick up an import container at a port or when delivering an
export container back to the port, this is usually enforced
during times of extreme port congestion.

8. DETENTION
2) When you store the container at the terminal beyond the
set amount of free time, carriers can call this charge
“detention” charge – but it is more often known as per diem
which is described below.

9. PER DIEM
Per Diem is charged by the steamship lines and airlines for use
of their equipment, whether ocean containers, chassis or air unit
load devices (ULD’s). Carriers grant a certain amount of free
days with their equipment before charging per diem. Per diem
applies to cargo that leaves the arriving terminal (on an import)
or leaves the departing terminal (on an export) for loading and
is charged until the equipment is returned to the terminal
(whether it is a port, rail yard or airline). Many people use per
diem interchangeable with detention and demurrage which can
confuse the billed party.

10. TIPS ON HOW TO AVOID DEMURRAGE CHARGES
 Know in advance how many free days your freight
forwarder has been granted.
 Make sure to pre-clear your cargo as soon as possible.
Logical Maritime Services can clear your cargo at the
earliest possible time so long as all documents are
received in a timely manner.

11. TIPS ON HOW TO AVOID DEMURRAGE CHARGES
 If you have volume shipments, request for an extended
free time from your freight forwarder and/or carrier.
Volumes need to be close to a 1,000 containers/year to
warrant extended free time.
 Make sure your trucker can pick up the cargo within the
allotted free time and that a trucker has been assigned to
your shipment. Have a backup or alternate trucker in case
your initial trucker cannot pick up your cargo in time.

12. TIPS ON HOW TO AVOID DETENTION AND PER DIEM CHARGES
 Make sure your facility is prepared to load/unload cargo.
This allows the trucker to arrive and depart in a timely
manner and puts you in a good light so they provide you
service in the future. Truckers don’t like waiting!

13. TIPS ON HOW TO AVOID DETENTION AND PER DIEM CHARGES
 Setup the delivery schedule well in advance with your
trucker or freight forwarder. That way you aren’t
scrambling last minute to set up the trucker and not have
your facility ready to load or unload the cargo.