Demurrage and Detention: A Complete Comparison
People often get confused by these two words Demurrage and Detention. Well then, what is the difference? When dealt with in the context of containerised cargo, simply put,
- Demurrage relates to container storage at terminal (charged by the port)
- Detention relates to container usage (charged by the shipping line)
How does it work for Imports?
The port authorities charge the consignee directly on a pay per day basis. All New Zealand ports have unique free time period and cost calculation, hence, please check the port website to obtain the exact number of free time Normally it is 3-5 calendar days (including weekends but excluding public holidays). Free days commence from midnight on the day of discharge from vessel. Standard rate is $50 per 20′ or $100 per 40′ for each day.
Import container detention:
In an attempt to improve the turn around time of containers shipping lines will apply detention charges for import containers returned after the expiry of the free time. Free time allowed is 7 -10 calendar days (weekends and public holidays are included). Free days commence from midnight on the day of discharge from vessel.
Example: A container is discharged off a ship on 2-July. Consignee approaches the shipping line to take delivery of the cargo around 9-July. Working off a standard 3 free days from date of discharge, the port free days (different to shipping line free days) expire on 5-July. So, the port will charge the consignee Demurrage for 4 days from 6-July to 9-July at the rate fixed by the port.
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.
So basically before the full container is picked up, Demurrage is charged and after the container has been picked up, till the time the empty is returned to the shipping line’s nominated depot, Detention is charged.
How does it work for Exports?
In the case of exports, normally shipping lines give 10 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 10 days, the shipping line charges Detention (generally same tariff as import detention) for the days that the container is kept with the client as empty or full.
Demurrage will be charged from date it is delivered at port until the start of the free period which comprises of 7 days prior to the expected date of arrival (ETA) of the vessel. Therefore if the vessel arrives on 12-April then free days start on 6-April. If the shipper delivers full container on 2-April then the shipper has to pay Demurrage for 4 days from 2-April to 5-April.
Also, if the container is delivered to the port but the shipper is unable to export it due to any reason, then the Demurrage will be charged at the rate fixed by the port till the full container is shipped out.
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