Demurrage, detention and storage in transport – differences

In the world of transport, time is one of the most valuable resources. Any delay can lead to disruptions in the supply chain and generate significant charges levied by carriers or port terminals. Among the costs that can surprise even experienced companies are demurrage, detention and storage. These terms are often confused, although each refers to a different stage of container handling, mainly in maritime transport. Failure to understand them properly carries the risk of unnecessary expenses, organisational problems and loss of operational liquidity.

In this article, we explain what demurrage, detention and storage charges are, when they arise, what consequences they have for businesses and how to effectively reduce them.

What are demurrage, detention and storage in transport?

Demurrage, detention and storage are three separate charges in container transport. They are charged after the agreed free time period has been exceeded – the time during which the use of the container or terminal infrastructure is free of charge. Each of them applies to a different stage of container handling and is charged by different entities. Understanding the differences between them is crucial to managing costs consciously, avoiding misunderstandings and maintaining fluidity in the global supply chain.

What is demurrage?

Demurrage is a fee charged by the shipowner for the container’s stay at the port terminal after the agreed free time period has expired. In imports, it is charged from the moment the container is unloaded at the port until it is picked up by the recipient. In exports, it is charged from the moment the full container is placed at the terminal until it is loaded onto the ship. The amount of demurrage depends on the type of container, the port and the rates specified in the contract with the shipowner. It is intended to encourage the prompt collection of containers and prevent excessive congestion at the terminal.

Example: failure to provide correctly completed customs clearance documentation may delay the collection of the container and result in demurrage charges, which increase with each day after the free days have expired.

What is detention?

Detention is a charge levied by the shipowner for keeping a container outside the port for longer than the free period. For imports, it covers the time from the collection of a full container from the terminal to its return after unloading. For exports, it is charged from the moment an empty container is picked up until its return with cargo within the specified time limit. Detention encourages the timely return of equipment so that it is available for subsequent shipments.

What is storage?

Storage is a fee charged by the port terminal operator for storing a container or cargo on the terminal premises (yard, warehouse) after the free storage period has expired. It applies to both imported goods awaiting collection and exported goods delivered too early. The highest rates apply to refrigerated containers, which require special storage and power supply conditions. Storage is intended to enforce the efficient use of limited port space and the timely collection of full or return of empty containers.

Demurrage, detention and storage – comparison

Although all three charges apply to containers and exceeding the agreed free period, they are charged in different situations. The table below helps to understand the rules governing their operation:

Demurrage, detention and storage are therefore three different mechanisms that motivate the timely collection, return or storage of containers. A proper understanding of their definitions and calculation rules allows for better planning of operations, minimisation of unnecessary costs and avoidance of costly downtime in the supply chain.

Read also: What is cross-docking? The key to fast distribution >>>

Why are these charges crucial in the supply chain?

Charges such as demurrage, detention and storage directly affect the efficiency and costs of the entire supply chain. Their calculation means not only additional financial burdens, but also delays in the delivery of goods, the risk of losing contractors and disruptions in production and distribution planning.

Every day of delay means real financial losses – rising demurrage and detention costs can eat into the profit from a transaction, and failure to return a container on time limits the availability of equipment for shipowners. In the case of storage, charged by the terminal operator, additional delays in collection block storage space and generate further costs. Prolonged downtime means that both shipowners and terminals compensate for their losses with these charges, and the company loses its operational liquidity.

Control over demurrage, detention and storage is part of strategic transport management. Companies that effectively plan their free time and respond appropriately to threats gain a competitive advantage in global trade.

The most common mistakes leading to charges

The most common causes of demurrage, detention and storage charges are organisational oversights and a lack of proper planning. Awareness of these mistakes is the first step towards eliminating them.

The most common mistakes include:

• Incorrectly completed documentation – missing documentation or incorrectly issued documents required for customs clearance prolong the dwell time at the port terminal.
• Cargo mismatch – discrepancies between the actual goods and the information in the documents may trigger inspections and delays.
• Delivery of a full container too early – delivering cargo to the terminal before the appointed time may result in storage charges.
• Lack of deadline monitoring – failure to keep track of the days available for container collection or return leads to unnecessary costs.
• Poor coordination in the supply chain – lack of communication with carriers, freight forwarders or warehouses results in delays throughout the process.

Avoiding basic mistakes, such as missing or incorrectly completed documentation or inaccurate monitoring of deadlines, significantly reduces the risk of exceeding the time set by shipowners and terminal operators and incurring costly charges.

You may also be interested in: What types of containers are used in maritime transport? >>>

Storage, demurrage and detention – how to avoid additional charges?

Avoiding storage, demurrage and detention charges requires conscious management of the transport process. A few key actions are enough to effectively protect your budget and avoid unplanned downtime.

How to avoid demurrage?

• Ensure that your documentation is correctly completed and prepare for customs clearance before the ship arrives.
• Negotiate an appropriate free period with the shipowner and compare demurrage rates between different shipowners.
• Collect the full container from the port terminal immediately after its release to avoid downtime after the free days have expired.

How to avoid detention?

• Plan the unloading of goods so that the container is returned within the specified time.
• Set up a suitable schedule that will allow you to collect an empty container exactly when you need it.
• Monitor the dates for picking up empty containers and use system reminders.
• Consider using SOC (Shipper Owned Containers) to become independent of the shipowner’s equipment.

How to avoid storage?

• Do not deliver a full container to the terminal too early, and arrange for collection as soon as possible after its release.
• Monitor the situation at the port terminal – have a contingency plan in case of delays.
• Work with an experienced freight forwarder who will coordinate the handling of your shipment – from document preparation, through reservations and loading, to timely collection. This will help you avoid delays and additional costs.

Conscious planning, ongoing monitoring, timely preparation of all necessary documentation and partnership with experts are essential to reduce the risk of charges and maintain a competitive advantage.

Summary

Demurrage, detention and storage charges are one of the biggest challenges in the global supply chain, but with proper planning and effective control, they can be significantly reduced. They most often result from delays in container collection or return, failure to provide the necessary customs clearance documents, or failure to respond to container notification. Each day of delay means increased container downtime and the risk of charges being levied on the carrier or customer.

Ensuring that all stages are taken care of – from preparing containers for loading, through their timely return, to the efficient organisation of activities at the port terminal – is the basis for operational stability. If you want to ensure that the process runs smoothly and limit unforeseen transport costs, a good solution is to use the professional services of a freight forwarder who will take care of every detail and help you avoid unnecessary expenses.

Frequently asked questions (FAQ)

What is detention in transport?

Detention is a fee for keeping a container outside the terminal longer than the free period agreed with the shipowner. It is charged until the empty container is returned.

What is the difference between storage and demurrage?

Storage is a fee charged by the terminal operator for the use of space within the port terminal by a container, i.e. for its storage, beyond the agreed free period.Demurrage, on the other hand, refers to the fees charged by the shipowner for the container’s stay at the port terminal after the agreed free period has expired.

What is the cost of detention?

The cost of detention depends on the type of container, the shipowner and the port. Rates increase with each day of delay after delivery of the goods and can significantly increase the fees associated with the entire operation.

How much does storage cost?

The cost of storage is determined individually by the terminal operator and depends on the space occupied by the container, the storage time and the type of cargo. Higher rates apply, among others, to refrigerated containers, which require additional handling.

Who is responsible for demurrage charges?

In the case of demurrage, liability depends on the contract – charges may be transferred to the carrier or the customer. Therefore, it is essential to clearly define the rules in the individual terms and conditions of the contract.