What Demurrage, Detention, and Storage Fees in Ocean Freight Mean and How to Avoid Extra Costs

In the world of ocean freight, demurrage (DEM), detention (DET), and storage fees play a crucial role in managing the movement of containers efficiently. Each fee has a specific purpose and applies to different stages of the container’s journey. These charges are designed to promote timely handling of containers, prevent congestion at ports, and ensure that equipment is available for other shipments.

🔷Demurrage applies when a container overstays at the terminal before being picked up or loaded onto a vessel.
🔷 Detention applies when a container is outside the port but not returned to the depot on time.
🔷 Storage is charged by the port for containers physically occupying space.
🔷 Free Time is your window to avoid these charges; managing it wisely can save costs.

1. Demurrage and Detention: What’s the Difference?

⏩ Import Process
📌 Demurrage: This fee is charged when an imported container is not picked up from the port or terminal within the free time provided.
📍 Example: A shipment of furniture arrives at a port, but due to a delay in customs clearance, the container sits at the terminal for three extra days. The shipping line charges demurrage for these extra days.
📌 Detention: Once a container has been picked up from the port, detention is charged if it is not returned to the carrier’s designated depot within the agreed period.
📍 Example: A retailer picks up a container filled with goods but takes 10 days instead of the allotted 7 days to unload and return the empty container. The extra 3 days incur detention charges.

⏩ Export Process
📌 Detention: This applies when an empty container for export is picked up from the depot but does not reach the Container Yard (CY) at the port within the free time.
📍 Example: A company takes an empty container for exporting auto parts but delays sending it to the port for loading onto the vessel. Detention fees apply for each day of delay.
📌 Demurrage: During export, demurrage is charged if a loaded container arrives at the port but is not loaded onto a vessel within the specified free time.
📍 Example: A shipper sends a container of electronics to the terminal, but the booking is canceled, and the container sits at the port for an additional week. Demurrage fees accumulate for these days.

2. Storage: When the Port Gets Involved

Unlike demurrage or detention, storage fees are charged by the port authority for the physical space a container occupies at the terminal. These charges increase daily until the container is removed.
📍 Example: A shipment of perishable goods remains at the port because the consignee delays picking it up. In addition to demurrage fees charged by the carrier, the port adds storage fees for occupying space.

3. The Role of Free Time

Free time is the grace period provided by shipping lines or ports during which you can use a container without being charged additional fees like demurrage or detention. It varies depending on:
➡️ The port or terminal’s policies.
➡️ The carrier’s agreement.
➡️ Contracts negotiated by shippers or consignees.
Managing free time effectively is critical to avoid unnecessary costs.
📍 Example: If a container has 5 days of free time and you pick it up on the 6th day, demurrage fees apply for the extra day. Proper planning can help ensure that shipments are cleared or returned on time.

4. Practical Example in Action

Imagine a company importing raw materials:
🔹Step 1: The container arrives at the port, and the consignee has 7 days of free time to clear it. If customs clearance is delayed and the container stays for 10 days, demurrage fees apply for the extra 3 days.
🔹Step 2: The container is picked up, but the company takes 5 additional days (beyond the free time) to unload and return it. Detention fees are charged for these 5 days.
🔹Step 3: During this time, the port also charges storage fees for the days the container occupies space at the terminal.
By understanding these charges and planning accordingly, the company can avoid or minimize extra costs.

Demurrage, detention, and storage fees are more than just costs—they are tools to ensure efficiency in container management. For businesses, the key to avoiding these charges lies in careful planning, timely action, and understanding free time policies. By doing so, companies can maintain smooth logistics operations and keep costs under control.