Demurrage Detention and Per Diem- Do You Know the Difference

Demurrage, Detention, and Per Diem: Do You Know the Difference?

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a penalty is a penalty is a penalty is a penalty….right?

Well, while they are all financial fines for similar shipping violations, demurrage, detention, and per diem are all slightly different. The differences between them are key to note, as there are different ways through which you can be proactive to avoid each one. So without further ado, here are the primary differences between each of these shipping fines:

What is Demurrage?

Demurrage is a financial penalty associated with cargo sitting at the port. With every shipment, the shipper is allotted a certain amount of “free days”. This is a number of days that the shipper is allowed to have their cargo sit at the destination port after arrival without incurring charges. If cargo has not been picked up by the end of it’s free days, it begins to accrue “demurrage”.

Demurrage charges aren’t cheap either – they are often around $100-$150 per day, but depending on the port and time of year, charges can be as heavy as $300 per day or more. It is common for per-day demurrage charges to rise the longer cargo sits at the port.

Long story short – be proactive when finding truckers and draymen to get your cargo out of the destination port as soon as possible.

What is Detention?

If you are shipping FCL cargo, it’s rare that you are ever using your own container. Generally, the consignee will rent a shipping container from the ocean carrier, load their goods in, transport their goods, unload, and return the rented container to the ocean carrier. In the same way that demurrage is racked up by overstaying your welcome at a port, “detention” fees are incurred when hanging onto a container beyond your rental period.

The ocean carrier will charge the consignee for their failure to return the rented container on a daily basis until it is returned.

What is Per Diem?

Per Diem is a frequently used term that, as the name implies, simply means “per day”. Broadly speaking, this term could apply to anything charged on a “per day” basis, but in the shipping world, it has a specific meaning.

Almost always, when shippers refer to “per diem” charges, they are talking about detention. The two terms are used interchangeably to both refer to containers which have been kept in the possession of a shipper beyond their allotted “free days” for container rentals. Every day that the shipper holds onto the container is another added penalty.

If you have any questions, our experienced team at Interlog USA would be happy to help. Feel free to reach out to us!

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