What Are Detention Charges?
Definition:
Detention charges are fees applied when a shipper or consignee keeps transportation equipment such as containers or trailers beyond the period allowed in the contract.
Free Time:
Most shipping lines grant a limited “free time” during which the equipment can be used without extra cost. The length of this period varies depending on the carrier and is stated in the shipping agreement.
Purpose:
These charges are intended to encourage the prompt return of equipment. When containers are held too long, they cannot be used for other shipments, causing operational delays.
Billing:
Any detention costs that arise are provided by the shipping line (carrier) according to their tariff and conditions.
What Are Demurrage Charges?
Definition:
Demurrage charges apply when containers or other transport equipment remain at the port or terminal beyond the agreed free time for loading or unloading.
Free Time:
Just like with detention, shipping lines offer a limited period of “free time.” Once this period expires, demurrage starts to apply. The duration of free time varies depending on the carrier and the specific port or terminal involved.
Purpose:
These charges are designed to ensure the quick flow of cargo through ports and terminals. They help avoid storage congestion and promote efficient use of port facilities.
Billing:
Any demurrage fees are provided by the seaport and/or Terminal according to their rates and contractual terms.
Incoterms
The international recognized rules that define the responsibilities of buyers and sellers in the transport of goods.
By using an Incoterm, both parties can clearly determine:
• Who is responsible for transport insurance, licenses, permits, and other formalities.
• Who arranges the transportation and up to which point.
• When the risks and costs transfer from the seller to the buyer.
“Incoterms” is a trademark of the International Chamber of Commerce (ICC).
Source: International Chamber of Commerce (ICC) Website
Looking for more info ?