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HomeSupply ChainsStorage, Demurrage, Per Diem, Detention - Do We Speak the Same Language?

Storage, Demurrage, Per Diem, Detention – Do We Speak the Same Language?

Importers/Exporters are often confused by charges from various clearance delays. The terms “storage”, “demurrage”, “detention”, and “per diem” are often used interchangeably, but when used correctly, they each refer to charges incurred under specific circumstances.

It’s time to clarify how to use this terminology correctly, and be sure we all speak the same “shipping” language.

In the USA, these terms are used, according to the below definitions:

DEMURRAGE

Definition:the charge applicable for the use of the space at the terminal, after the free time expires.”

In export, if the container is returned at the terminal within the receiving window as per carrier’s instruction (by the “cut off date” to use the common terminology), there is nothing to be worried about, because the carrier has already determined that the container, returned within the correct timing, will not incur in any demurrage charge. If, instead, for some reason imputable to the shipper/consignee, the container needs to “sit” at the terminal, then the shipper will be held responsible for the demurrage charges that the terminal will charge to the carrier, for the extended use of the space at the terminal.

In import, instead the container will have a determined amount of free days to “occupy” the space at the terminal, and if not picked up within the allowed free time, the shipper will have to pay the charges arising from the extended use of the space at the terminal.

STORAGE

Definition: “the charge applicable for the use of the land (rail depot, warehouse, etc.) after the free time expires.”

Basically this is the same concept of demurrage, but instead of occupying the space at the terminal, here we consider a rail depot or a warehouse.

PER DIEM

Definition: “the charge applicable for the use of the equipment (container, chassis, gen-set, etc.) after the free time expires.”

Very often this charge is confused with the word “demurrage”, but, as per the definition, we are considering only the use of the equipment, and not the space at the terminal.

DETENTION

Definition: “charge typically charged by truckers due to excess time taken by the consignee for loading or unloading cargo.”

Overseas (Outside of USA)

If we apply the same terminology Overseas, we find out that it becomes much easier to apply the above mentioned surcharges correctly.

DEMURRAGE becomes: “the charge applicable for the use of the Equipment (not space), after the free time expires.”

STORAGE becomes: “the charge applicable for the use of the space at the terminal (so now includes also terminals along with Rail Depot and warehouses), after the free time expires.”

No Per Diem is mentioned overseas, and the word Demurrage replace this concept, in total.

Terminology Recap

United States Overseas
Demurrage = space at the terminal Storage = space at the terminal
Storage = space at rail depot, warehouse Storage = space at rail depot, warehouse
Per Diem = use of the equipment Demurrage = use of the equipment
Detention = time for loading/unloading Detention = time for loading/unloading
Michele Marinelli
Michele Marinellihttp://www.mts-logistics.com
Michele was born and raised in Italy and spent most of his early years in Bologna, a nice and vibrant city in northern Italy. He graduated from the University of Bologna with a master’s degree in industrial Engineering with a specialization in Logistics and Production in 2007.  Michele worked for a French-based Corporation in Bologna for almost 6 years as Project Manager. In January 2014, Michele moved to the U.S. for a fresh start in New York, and worked for 3 years for one of the major Steam Ship Lines as an Export Commercial Liner, in North European trade. He started at MTS Logistics in January 2017 as Sales Executive. Michele is currently covering and developing several areas: Texas, New York/New Jersey, Georgia, South Carolina, and North Carolina. His first priority is to create strong relationships based on trust, competence, and honesty. Michele loves to travel and does so for at least twice monthly to meet his customers/prospects in person to hear face-to-face how he can help them by providing the best service possible. Fun Fact: Michele, despite being Italian, loves basketball (watching and playing) instead of soccer and the NBA is his secret passion.
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