Difference between Demurrage and Detention

Demurrage and detention are two terms that often confuses 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 and Detention in the context of container shipments..

  • 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)

  Image for demurrageLets see how it works..

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 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 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..

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Image for detentionExports : 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 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 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..

Best option would be to check with the shipping line in your country how these terms are defined..

How are these terms handled and dealt in your country..?? Please do share for the benefit of all..

 


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125 thoughts on “Difference between Demurrage and Detention”

  1. This depends on the situation – whether it is import or export. If this is a case of an import demurrage/detention, then generally, the liner will first go after the consignee (receiver) on the Master Bill of Lading. Failing which, they will then return the cargo to the shipper (sender) and claim all charges against them.

    If the consignee or the shipper on the bill of lading are freight forwarders, then the liners will pursue these companies. However, if the consignee or the shipper are the end manufacturer/purchaser, then these companies will be pursued by the shipping line.

    Hope this helps, and if this is different from what you have experienced, please do feel free to share.

  2. I work in Procurement for UN, and have been seeking guidance on Demurrage and detention charges.

    This study page has been very helpful to me and I have learnt something very useful for my career.

    Thanks to the writer.

  3. if the customer has absconded because the demmurage and detention is way too high – who is responsible for payment? Will the line chase the sender or is the FF/ Agent at fault?

  4. This is very helpful as most people in this field did not know the difference and how the terminologies work. Thnks for the educative information.

  5. Waving demurrage/detention charges for importers/exporters will have cost effect on the shipping line as it will attract more clients using that line; thereby increasing their volumes; therefore having comparative advantage over other lines and staying in business.

  6. Dear Hariesh, I am working in an insurance company. A shipping association approached me for insurance covers for container detention, demurrage and storage charges. This type of insurance is something new. If you have any guidance or policy samples that I could learn more would be very helpful. Thank you.
    From Sugu.

  7. Hello everyone I would like to ask if import cargo arrived and custom officials are not clear for clarification of goods then they drew samples on that case shipping line can agree more free days if they announced 14 free days if yes please suggest me the way ?

  8. Hey, I disagree.

    Detention is charge levied by SHIPPING LINE for not returning it back post free time. It is levied because containers are detained for long.

    Demurrage is levied by Port / CFS Authority for keeping containers in port’s/ CFS post free days. It is also called ground rent.

  9. Good article. Clear on detention and demurrage.
    However I am still confused about the Free time at the port.
    For imports, let’s say I have 15 days DET + DEM combined given by shipping line, but my port only has 5 days free storage, then if I take out the container out of the port in 7 days, do I have to pay storage charges to the port?

    • Thanks Victor.. Free time at the port is different from free time from the shipping line.. What the port offers is free time before they start charging you storage.. What the line offers is free time before they start charging you demurrage/detention.. So there is no connection between the two free times and one cannot be used in place of the other.. In any shipment – storage, demurrage and detention all three may be applicable..

      For example you could not clear the cargo from port because you didn’t get your shipping documents in time.. Say the clearance was delayed by 15 days and the delay overran the free days offered by the port (say 5 days) and the free days offered by the line (say 10 days).. You would then have to pay 10 days port storage to the port and 5 days demurrage to the line.. Now assume your unpacking was delayed and you returned the empty after 5 days.. So you will still be liable for 5 days detention from the line..

      So in this example you have paid storage, demurrage and detention..

      Trust this is clear.. Also read (https://shippingandfreightresource.com/difference-between-storage-and-demurrage/)

  10. What happen if a shipper is not able to pay demurrage costs due to highly charged and the shipper has no other choice to abandon the cargo

    • Such subject can only be negotiated and settled with shipping line and the customer. If container not cleared with in 90 days ( this may vary between countries / ports) the same can move for auction. In such cases, the shipping company seldom gets any money after deduction of port / customs expenses and charges from the auction proceeds. To avoid such situation, the shipping line try to negotiate with customer to settle in an amicable way rather than pushing it for long stay.

  11. Whenever any service is given to someone, some charges or amount is involve in it, to collect that amount debit note is prepared on behalf of it we will paid for that service. detention charges are those charges which can occurred to someone who who has picked the container & though the container is empty he has not returned it even after the free time is over.

  12. First to inform Carrier to void the original B/L. Then give Carrier a mortgage of about 1.5 or 2 times of cargo value. Also to announce (the loss of B/L) in the Paper with large calculation. Take this newspaper to Carrier to apply reissue MBL.

  13. it is very helpful to learn from the best the explanation and terminology are being explained easily I can also now have the insight of what is happening in the industry thanks for everything

  14. Thank you Mr. Hariesh manaadiar for your brief explanation on these two terms and i understand in good manner. some company use these terms interchangeably and the meaning from one to another is seems different. and also i like to appreciate your blog and it helped me in understanding many shipping and freight terms. i think that i know more in the future from your blog. Thank u very much!!!!

  15. I am from India. I have been handling import from Vietnam,China,Taiwan and so on. it took quite a long time for me to understand the difference between Demurrage and detention. finally negotiating with liner for free days extension from 14 to 21 days and even in container freight station free days extended from 3 to 14 days. Finally this circus helped in achieving “0” detention and Demmurage. Iit all depends on the volume and providing continuous business.

  16. Hello Hariesh Manaadiar,
    I am doing a training on foreign remittance in which i am working on demurrage and detention charges. I am read your blog and its very helpful for me to understand but i have a question that their is any thing like if our cartoon is not release from port with the given time so our free days are not given to us?? and they charge demurrage charges for full days??

  17. This is really helpful as many people in the Maritime industry are yet to understand the fact of this

  18. Very informative… by the way can anyone help me to understand the liability of a container damages… if consignee found some damages to the floor of container while destuffing at their door… is there any written rule governing liabilities when equipment is found damaged

  19. As per my experience, liner is debiting demurrage as per above but depending of countries, port terminal will debit its own storage tariff (working with similar concept). So generally, you will pay storage (if applicable) to terminal at container pick up time and detention / demurrage (if applicable) at empty container delivery back to liner’s equipment depot. Am i correct?

  20. Nice blog and congrats to blog owner of having this kind of wonderful blog like this.
    since I am still new in this field, can anyone teach/share how the demurrage is calculated and relates with lay time. I have read/study but still confuse on when demurrage is actually incurred and to who/whom and how the compensation takes place or how they pay?
    If someone can deeply describe/discuss with some sample of timing also good for better understanding especially for newbie like.

    Later on, if still in doubt maybe i will keep giving some situation which require more clarification from the expert if ok.

    Thanks all 🙂

    ~ops, sorry also for my bad english language.

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