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:
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.
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.
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.
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.
|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|