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Difference between Demurrage and Detention

Hariesh Manaadiar
By Hariesh Manaadiar
134
demurrage, detention and port charges

Demurrage and detention are two terms that often confuses people in global trade, shipping, freight and logistics.. This has also lead to several financial losses many a time.. Is there a difference between demurrage and detention..

Demurrage and Detention in the context of container shipments..

  • Demurrage relates to cargo (while the cargo is in the container)
  • Detention relates to equipment (while the container is empty after unpacking or before packing)

  Image for demurrageLets see how it works..

Imports – A container is discharged off a ship on the 2nd July – Consignee approaches the shipping line to take delivery of the cargo around 12th July.. Working off a standard 7 free days from date of discharge, the line free days (different to port free days) expires on the 8th July.. So, the line will charge the consignee DEMURRAGE for 4 days from 9th to 12th July at the rate fixed by the line..

After the full container has been picked up by the client, for example if they take another 7 days to return the empty container, then it is known as DETENTION which again will be charged at the rate fixed by the line..

So basically before the full container is picked up, Demurrage is charged (after expiry of free days) and after the container has been picked up, till the time the empty is returned to the lines nominated depot, Detention is charged..

Image for detentionExports : In the case of exports, normally lines give about 5 free days within which the shipper has to pick up the empty, pack it and return it full to the port.. In case of delays more than 5 days, the line charges Detention (generally same tariff as import detention) for the days that the empty is kept with the client as empty or full..

Once the container is packed and say for example the shipper is unable to ship the same due to any reason, then the Demurrage will be charged at the rate fixed by the line till the full container is shipped out..

What I have mentioned above is the generic and most common form of use of these two terms.. There however is a difference in the usage of these terms by various shipping lines in various countries..

Some countries call it combined demurrage/detention in some countries, whereas in some countries it is shown separately.. In yet some other countries like Saudi Arabia and Japan, the term demurrage seems to be used to denote storage in the port/lines terminal..

Best option would be to check with the shipping line in your country how these terms are defined..

How are these terms handled and dealt in your country..?? Please do share for the benefit of all..

 

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134 COMMENTS

  1. While exporting, the empty container was hired out with 7 days free in mind when the vessel is suddenly delayed and port receival is consequently delayed as well. In this case, would the detention charges still be applicable if the full container can only be returned past the 7 free days awaiting port receival to open? Let say the port recieval was delayed for 2 weeks because of the vessel delay, would the shipper then be liable to pay for the two week detention?

  2. On a Stevedoring invoice for bulk material the line item reads: Demurrage/Despatch $6,223.

    The detail shows Time Used 4.8 days; Time Allowed 5.9 days; Time Saved 1.1 days. Then the Days and multiplied by the rate.

    Since time was Saved, shouldn’t the invoice amount be a Credit to our company for unloading in a timely manner?

    • No, the invoice amount is the cost of the demurrage/despatch services. Demurrage/despatch is the charge for any additional time that is used to load/unload a vessel. The amount is usually calculated based on the amount of time used minus the allowed time, multiplied by the rate. In this case, the time used was 4.8 days and the time allowed was 5.9 days, so the time saved was 1.1 days. Therefore, the cost of the demurrage/despatch services is $6,223.

  3. Good afternoon, I have a container that was selected for inspection in MX. I had 7 free days and it took 9 days all together to deliver empty and take the container back. They charge 2 extra days. Why if I have everything clear and is customs who stop the container the shipping line will charge me extra days?

  4. This is a good explanation. I understood it in this way:

    Demurrage is charged for the extra time you’re holding the container AND holding the port/ship storage area.
    Detainment is charged for the extra time you’re holding the container only. In transit, or unloading/loading at your warehouse

  6. Very Nice Article…. many Poeple here in Brazil that working in this sector (container) hasn´t difference knowledge between Demurrage and Detention…

    Many Thanks!

  7. Nicely explained but dem or detention calculation is also different in different countries. In some countries detention calculation start from the date container taken out from the port. By that time DEM will be applied . In India DEM and DET calculation process is different . DEM is basically a part of DET and both applied simultaneously.

  8. This depends on the situation – whether it is import or export. If this is a case of an import demurrage/detention, then generally, the liner will first go after the consignee (receiver) on the Master Bill of Lading. Failing which, they will then return the cargo to the shipper (sender) and claim all charges against them.

    If the consignee or the shipper on the bill of lading are freight forwarders, then the liners will pursue these companies. However, if the consignee or the shipper are the end manufacturer/purchaser, then these companies will be pursued by the shipping line.

    Hope this helps, and if this is different from what you have experienced, please do feel free to share.

  9. I work in Procurement for UN, and have been seeking guidance on Demurrage and detention charges.

    This study page has been very helpful to me and I have learnt something very useful for my career.

    Thanks to the writer.

  10. if the customer has absconded because the demmurage and detention is way too high – who is responsible for payment? Will the line chase the sender or is the FF/ Agent at fault?

  11. This is very helpful as most people in this field did not know the difference and how the terminologies work. Thnks for the educative information.

  12. Waving demurrage/detention charges for importers/exporters will have cost effect on the shipping line as it will attract more clients using that line; thereby increasing their volumes; therefore having comparative advantage over other lines and staying in business.

  13. Dear Hariesh, I am working in an insurance company. A shipping association approached me for insurance covers for container detention, demurrage and storage charges. This type of insurance is something new. If you have any guidance or policy samples that I could learn more would be very helpful. Thank you.
    From Sugu.

  14. Hello everyone I would like to ask if import cargo arrived and custom officials are not clear for clarification of goods then they drew samples on that case shipping line can agree more free days if they announced 14 free days if yes please suggest me the way ?

  15. Hey, I disagree.

    Detention is charge levied by SHIPPING LINE for not returning it back post free time. It is levied because containers are detained for long.

    Demurrage is levied by Port / CFS Authority for keeping containers in port’s/ CFS post free days. It is also called ground rent.

  16. Good article. Clear on detention and demurrage.
    However I am still confused about the Free time at the port.
    For imports, let’s say I have 15 days DET + DEM combined given by shipping line, but my port only has 5 days free storage, then if I take out the container out of the port in 7 days, do I have to pay storage charges to the port?

    • Thanks Victor.. Free time at the port is different from free time from the shipping line.. What the port offers is free time before they start charging you storage.. What the line offers is free time before they start charging you demurrage/detention.. So there is no connection between the two free times and one cannot be used in place of the other.. In any shipment – storage, demurrage and detention all three may be applicable..

      For example you could not clear the cargo from port because you didn’t get your shipping documents in time.. Say the clearance was delayed by 15 days and the delay overran the free days offered by the port (say 5 days) and the free days offered by the line (say 10 days).. You would then have to pay 10 days port storage to the port and 5 days demurrage to the line.. Now assume your unpacking was delayed and you returned the empty after 5 days.. So you will still be liable for 5 days detention from the line..

      So in this example you have paid storage, demurrage and detention..

      Trust this is clear.. Also read (https://www.shippingandfreightresource.com/difference-between-storage-and-demurrage/)

  18. What happen if a shipper is not able to pay demurrage costs due to highly charged and the shipper has no other choice to abandon the cargo

    • Such subject can only be negotiated and settled with shipping line and the customer. If container not cleared with in 90 days ( this may vary between countries / ports) the same can move for auction. In such cases, the shipping company seldom gets any money after deduction of port / customs expenses and charges from the auction proceeds. To avoid such situation, the shipping line try to negotiate with customer to settle in an amicable way rather than pushing it for long stay.

  20. Whenever any service is given to someone, some charges or amount is involve in it, to collect that amount debit note is prepared on behalf of it we will paid for that service. detention charges are those charges which can occurred to someone who who has picked the container & though the container is empty he has not returned it even after the free time is over.

  21. First to inform Carrier to void the original B/L. Then give Carrier a mortgage of about 1.5 or 2 times of cargo value. Also to announce (the loss of B/L) in the Paper with large calculation. Take this newspaper to Carrier to apply reissue MBL.

  25. it is very helpful to learn from the best the explanation and terminology are being explained easily I can also now have the insight of what is happening in the industry thanks for everything

  29. Thank you Mr. Hariesh manaadiar for your brief explanation on these two terms and i understand in good manner. some company use these terms interchangeably and the meaning from one to another is seems different. and also i like to appreciate your blog and it helped me in understanding many shipping and freight terms. i think that i know more in the future from your blog. Thank u very much!!!!

  31. I am from India. I have been handling import from Vietnam,China,Taiwan and so on. it took quite a long time for me to understand the difference between Demurrage and detention. finally negotiating with liner for free days extension from 14 to 21 days and even in container freight station free days extended from 3 to 14 days. Finally this circus helped in achieving “0” detention and Demmurage. Iit all depends on the volume and providing continuous business.

  32. Hello Hariesh Manaadiar,
    I am doing a training on foreign remittance in which i am working on demurrage and detention charges. I am read your blog and its very helpful for me to understand but i have a question that their is any thing like if our cartoon is not release from port with the given time so our free days are not given to us?? and they charge demurrage charges for full days??

  35. Very informative… by the way can anyone help me to understand the liability of a container damages… if consignee found some damages to the floor of container while destuffing at their door… is there any written rule governing liabilities when equipment is found damaged

  36. As per my experience, liner is debiting demurrage as per above but depending of countries, port terminal will debit its own storage tariff (working with similar concept). So generally, you will pay storage (if applicable) to terminal at container pick up time and detention / demurrage (if applicable) at empty container delivery back to liner’s equipment depot. Am i correct?

  38. Nice blog and congrats to blog owner of having this kind of wonderful blog like this.
    since I am still new in this field, can anyone teach/share how the demurrage is calculated and relates with lay time. I have read/study but still confuse on when demurrage is actually incurred and to who/whom and how the compensation takes place or how they pay?
    If someone can deeply describe/discuss with some sample of timing also good for better understanding especially for newbie like.

    Later on, if still in doubt maybe i will keep giving some situation which require more clarification from the expert if ok.

    Thanks all 🙂

    ~ops, sorry also for my bad english language.

  41. Hi Hariesh
    First of all, thank you for sharing your insightful and invaluable know-how about shipping. It is my first time in shipping and from your website, I understood more than I tried when listening to people around me. So, thanks!
    I have a couple quick questions please. My freight agent has told me that they will have to charge me £80 because Customs had stopped my container and took it for an x-ray. When I asked for the proof of this, they stated that they cannot provide. So, must I take their words for it?
    Lastly, who ensures the freight agent had taken the due responsibility to fill in the necessary forms correctly, to avoid Customs holding back our containers and causing extra rent charges, etc. etc.!!!

    Many thanks.

    Regards

    • Hello Caljon, thank you for your kind words.. I am not sure which country you are based in.. But whichever country it is, in general if customs stops a container for inspection, they will send a notification to the shipping line saying that the container needs to be moved for customs inspection and the line cannot release till it is done.. So your freight agent should be able to provide you with this proof or you can also ask the shipping line.. It is the responsibility of your freight agent to ensure that all info is submitted properly.. If you feel that it has not been done so, then you can also speak to Customs to find out the reason for the stoppage..

  43. If is says combined demurrage/detention 14 days, does it means 14 days for demurrage, 14 days for detention (which start together after discharge), or it actually means 7 days demurrage + continue with 7 days detention?

    • Hello Anis – 14 days combined dem/det means consignee has 14 days from the date of full pick up till the date of empty return and it is upto the client to choose whether it will be 10 days dem + 4 days det or 8/6, 6/8, 7/7 etc etc..

  44. Thanks for the post Hariesh, very informative. Just thought of pointing out for all the readers that the terms Demurrage and Damages for Detention may also have other meanings in other business areas such as in Bulk Chartering as you have rightly pointed out elsewhere.

  45. Dear Hariesh,
    Thanks for the explanation. However another basic clarification how does Detention/Demuurage apply in case of LCL shipment?
    Appreciate your inputs.
    Ajit

  46. Dear Hariesh,
    I have got simple & clear explanation about Demurrage & detention from your note. Some times peoples & mixing demurrage with storage & detention with truck payment for not loading/unloading on agreed time. Thank you for sharing this.

  47. nice note. really useful for beginner. Malaysia they separate detention and demurrage.

    If u dont mind, I’ll use it as a reference for my junior.

  48. Hariesh is correct and the Supplier isn’t wrong except when he said Hariesh was wrong – because he only knows what is true for his industry; some of these terms/terminologies are used differently by different folks in different businesses and, by the way, lawyers get it wrong in the contracts at times. Big distinction is between bulk carrier terms vs. container industry terms in the community reading this blog. But as an ex grain trader there is also detention on barges and rail cars if you do not unload them into your grain terminal fast enough. You pay demmurrage I think to the vessel owners if you do not load them fast enough but sometimes, by the way, it pays to slow load them because in 2-4 days the discount on the price of the grain in barges/rail cars arriving is that much cheaper than the price today – here is where a little knowledge by ship owners of the local market conditions pays. Container markets different obviously. “SUPPLIER” post could also note that detention can be charged by and paid to the container trucker if pick up facility takes too long to load him, etc. We also pay detention to truckers of domestic USA shipments if the shipper takes too long to load them, or the Receiver takes too long to unload them.

  49. Hariesh,
    Must say this is a great platform for knowledge sharing, simple language, lucid illustrations…its a praise deserving effort! Keep at it!!!!..Priya

  50. I have seen a contract saying: “Discharging; CQD basis, no demurrage/no detention”. How can a shipping line give “no demurrage, no detention” contract?

    • Hi TSN, these terms you have seen “Discharging; CQD basis, no demurrage/no detention” are used in bulk shipments and is completely different from the demurrage/detention that is covered in this post which is mainly for containerised shipments..

      However, to answer your question, in bulk shipments, a charterer is required to advise the load/discharge rates (time it will take to load or discharge the cargo) to the ship owner based on which they will agree for a freight rate.. If the charterer doesn’t know the rate of load/discharge, but is confident that this activity will take place as normal, they would advise the load/discharge rate as Customary Quick Despatch (CQD).. CQD means that the load/discharge operation will be done as fast as can be possible under the prevailing circumstances..

      If the charterers fail to load or discharge as per the load/discharge rates they have given and allowed in the contract, the owner will hold them liable for “demurrage” @ a rate which is pre-agreed between the owners and the charterers..

      At the other end of the spectrum, if the charterers finish the load/discharge operations before the time frame indicated, then they can claim “despatch” from the owners @ a rate which is pre-agreed between the owners and the charterers since they were able to despatch the ship quicker than anticipated..

      In the case of CQD, there is no provision for demurrage or despatch and this could sometimes work to the detriment of the shipowner..

      Trust this assists..

  51. I think last answer is very misguided. Both detention and demurrage start from discharge of containers.

    Detention is time allotment given by the SHIPPING LINE to the customer to return the empty container back to depot.

    Demurrage is time allotment given by the PORT OR TERMINAL to REMOVE empty container from their premises.

    The two are not related, rarely get paid to the same entity, and cover completely different situations.

    Example: Free time: Demurrage: 5 days / Detention 15 days. You must remove full container from the port storage within 5 days of discharge, but you have an additional 10 days before you have to return the empty back to the shipping line.

  52. when exactly does free detention time start? from the date the container is picked up form the port of from the time the vessel arrives at discharge port?

    • Hi Baseerat, the answer to this question depends on the shipping line, what they define as detention and also the country as demurrage and detention varies in definition, in quantum and in time from country to country and shipping line to shipping line.. There is no global or universal definition to it.. Generally demurrage commences from expiry of free days set by the shipping line.. Once container is empty, detention will start till the empty is delivered back to the lines nominated depot..

  53. Hariesh, with reference to the contents above and the definition in terms of the clarity, then I have one question. if demurrage relates to the cargo, which belongs to the owner, then why would the line charge demurrage on the cargo to the client, whereas they can only raise the detention for the equipment its being transported in. My reasoning is that the cargo does not belong to the line and the customer has leased the container to transport his cargo so I would say detention would be the cost and not both.

    • Kerwin, demurrage as a term has been in existence before containers.. Demurrage as an expression was originally used and continues to be used in the bulk trade where it refers to the amount of money that a charterer should pay a shipowner in case the operations of the vessel is delayed more than the period agreed and such delay is normally due to cargo operation..

      The demurrage is charged because the presence of the cargo in the ship is preventing the shipowner from using the ship for other business.. The quicker the cargo is loaded and discharged, the quicker the shipowner can do the next fixture..

      So demurrage has been linked to cargo from the beginning and the link continued when containerisation happened..

      While the cargo is inside the container, the cargo and container is under the lines custody (not ownership, just custody) and the line is unable to use the container due to customer not clearing it in time, therefore demurrage applies.. Once the cargo has been unpacked but the empty container is still with the customer, the customer is now “detaining” the container, therefore detention applies.. Much like you intermodal operators charge for truck detention.. 🙂

      But of course every shipping line has their own definition and methods of calculation, so there will be variations in terminology, but what I have described above, is a technical explanation..
      Trust this clarifies..

    • Your contents noted but again I say that the lines murder the customers with these costs. Cant compare to us Intermodal operators to the carriers mate cos we are flexible with standing time….lol

  55. Hi,

    As i was going through i came across one question that is
    as an exporter i am ready with ma goods in container sealed and kept inside the port on 5th free day which is ready to export , but the vessel is full ,so will the liner charge me detention/demurrage for that
    if yes what it would be called as

    Thanks.

    • Hi Rakesh, under usual terms of contract with the shipping line, the shippers responsibility is to deliver the container to the port of loading at the nominated stack area..

      Once this is done, it is the shipping lines responsibility to ensure that the containers are loaded on the nominated ship..

      If such loading is delayed beyond the nominated ship/date due to any issues of the shipping line, they cannot charge you the port storage, demurrage, detention etc, unless they can prove that the loading didn’t take place due to some documentary issues created by the shipper or their agent..

  57. Pls following are my queries on this issue:

    what is the difference b/w container deposit and detention ??
    is detention a refundable fee or how like ??

    • Container deposit was guarantee (refundable), just in case container missing or some damage condition, liner will deduct from it directly.

      Detention will bill you if the time of empty container return longer than the free time given. (as per above explanation)

  60. Justo: The difference can be summed up as follows
    Demurrage is charged while the container is still at the port past the allowable free time
    Detention is charged while the container is out of the port past allowable free time. This applies to both import and export containers.

  61. I still don’t understand can somebody pls explain to me clearly
    1. what container detention is and
    2.what container demurrage/ rent is

  62. I need to recieve the shipment. That arive 19 of july how ever i was told that nd to pay tax..

    My problem is has deffecut to acces.. It is becouse of some reason..nw its already over 1 week in ther posesion.. Do
    i have to pay the pay the
    demurrage that start
    on the 1st of aug.

  63. Why do I have to pay detention fee when I return the empty containers long before expiry of demurrage free time? We heve 14 days demurrage free time but only 2 days detention free time. I pick up containers and return them empty within 7 days from arriving at port. Seems completely unfair to me.

    • Hi Uli,

      You were given 14 days demurrage free time, means you were given 14 days to pull out the container from port.
      Once the container outside the port, the detention time is running, and at this time you only have 2 days free time to return the empty container back.

      Your info was not complete, but I assume you took more than 2 days to return the empty container right?

  67. I realy enjoyed reading this article, its so rich!.

    I never new the term Detention is the the best term to use when refering to the payments made due to the delays on the client’s side when unpacking the containers, i or rather should i say we(with my workmates) refered everything as Demurrage. Now i know.

    Thanks very much, i will not stop vissiting this blog.

  68. Dear Hariesh,

    My name is Hossam and I am working as a Senior of shipping accounts for NYK Line in Egypt.

    I would like to thank you for these usefull details as well as your efforts.

    May I give a brief about above mentioned article,

    Demurrage

    Demurrage fees are charged when import containers are still full and under the control of the shipping line. In this situation, the container has not yet been picked up by the consignee, and the free time for pick up set by the ocean line has expired for the container. The free period starts when the container has been discharged from the vessel to the terminal. Demurrage charges are applied for storage of containers while in the steamship lines terminal, rail terminal, inland depot, or container yard. Demurrage is applied after the free time has expired, and ends the day when the container has been picked up and out gated from the terminal.

    Detention

    Detention occurs when the consignee holds onto the carrier’s container outside of the port, terminal, or depot beyond the free time that is allotted. Detention is charged when import containers have been picked up, but the container (regardless if it’s full or empty) is still in the possession of the consignee and has not been returned within the allotted time. For example, let’s assume a period of 5 free days is provided to return an empty import container to the steamship line after pick up. If the consignee takes 7 days to return this container, the steamship likely will charge for 2 days of Detention.

    In short, demurrage is related to cargo and detention is related to equipment.

    Thanks!!

  71. The article is not correct. Demurrage is for the excess days that we acquire space to store our cargo/cntr at the port’s premises. Detention is for the excess days of possession of the liner’s cntrs.
    If we use more than alloted days we have to bear these.

  73. Unfortunately Dean717 got it backwards and the article is not precise either.

    Demurage – charges for storing containers at the port (beyond free days. Of course the containers are full as you wouldn’t be responsible for anythign after returning an empty container).

    Detention – not returning the container back to terminal within alloted time.

    The stress is not on full / empty, but rather Demurrage is akeen to storage charges on port’s premises, while detention is for keeping container too long on CUSTOMER’s premises. Whether you keep it full or empty on your own premises makes no difference. Its like not returning a movie you rented – wether you watch it or not, you are still paying DETENTION. Demurage is pure storage on port’s premises – they need space and want you out of there as quickly as possible.

  74. Thanks bunches. May I please have your view on this. Many days are lost during discharge of a ship due to the concurrence of the following events (not kidding): national holidays, rain, (allegedly) unproper loading of the cargo, strike due to accident occurring to the longshoremen for the said alleged unproper loading. Discharge condtions being SSHEX. Can the owners successfully maintain the ship was under detention ?

  76. What Waqar quote is the best understanding between detention & demurrage. Detention charges are charges for not clearing or an act of detaining the laden in any port/authority premises where there is charges after a certain due days/times by the premises authority. As for demurrage, it is a charges due to loss of equipment usage/time. Detention is act of detaining & demurrage is the lost of owner utilizing the equipment for others.

  77. The distinction is very helpful; I hope I can get to know also:
    – if my client needs 10 free demurrage days at import, who can negotiate – me (the exporter) or the client? And with whom: with the shipping line or with the port authority?
    Thanks!

    • Hi Magda, glad to be of help.. If you are talking purely of demurrage/detention free days at destination, this is usually negotiated with the shipping line by the shipper/exporter if they know in advance that the consignee requires the free days at destination.. If they dont, they can still negotiate this or this can be negotiated by the consignee whoever has a better relationship with the line.. There is no hard and fast rule on who should negotiate.. Demurrage and Detention has nothing to do with the port.. The ports equivalent charge for demurrage/detention would the Port Storage for which generally ports around the world do not give any additional free days..

      Trust this helps..

  78. if it is express B/L, what message shipping line or forwarding agent send to their counterpart at destination port. what shipping documents required at importing / exporting country to clear the shipment.

  80. Det is charged for detaining the transport and dem is charged for keeping the good at port. det will be charged by trnsporter and dem will be charged by port…

  82. We have concluded an agreement with buyers in Japan after they insisted on 21 days freetime. Only after the contract has been signed and product delivered, did we realise that this 21 days freetime actually means nothing! Our buyer in Japan is only removing the containers after the 7 days freetime and then a further 14 days later. So, we are stranded with paying for the additional 14 days at JPY4000 per container from day 8 – 15 and then JPY8050 per container from day 16 – 21. In total this is more than the freight rate per container! Am I right in saying that this should actually have been demurrage charges and not freetime? How do I go about in turning the shipping line’s arm to change/reduce this or is there nothing that I can do about this?

  83. In your example, if holiday is 5th and 6th of July, the demurrage and detention will be extended to 11th Jul? Pls kindly advise.

    Thank you!

  84. Hi nannadiar
    I asked you this question because I read that demurrage relates to cargo ; even there is no liability for th shipping line concerning the equipement.

    thnks in advance

    • Hi Nazim,. for SOC’s there is no liability for the shipping line.. They are not paying rent towards it so there will be no dem/det applicable there.. However, if there are any port/depot storages , that will have to be paid to the shipping line..

  86. Hi. The same principle as in detention and demurrage of containerised cargo applies. For a example is a ship is schedueld to pick up some dry/ wet bulk cargo at a certian port and same arrives there before cargo is ready, provided there is free days allowed after docking, the detention charges will apply, and if cargo is loaded on a ship and for some reason docs are not presented in time or other issues beyong the control of the master or captain of the ship, then demurrage charges will apply. This does not apply of course to natural causes, strikes, lock outs etc etc.

    • Well we could call it that yes.. Only difference could be that demurrage and detention charges may be different depending upon the shipping line.. Detention is normally cheaper than Demurrage..

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