Difference between ground rent and demurrage and detention
This is a question from Siddhartha
What is ground rent , is it different from demurrage and detention ?
and who will collect ground rent ?
Siddhartha, in very simple terms, ground rent indicates Storage and it is different from demurrage and detention..
Storage could occur under below conditions :
- On import full container(s) at the port or inland terminal while it is under the custody of the shipping line before the container is released to the importer..
- On import full container(s) at a customs bonded warehouse where the importer or customs have requested it to be moved for the purpose of inspection etc..
- On empty containers at an empty depot where the shipping line is storing it for the purpose of utilisation for exports, but due to overstock, or lack of space on board the ship or lack of exports they are forced to keep the boxes under storage..
- On export full containers at the port or inland terminal while it is under the custody of the shipping line before the container is shipped on board.. This could generally happen if the exporter has already moved the container into the port, but has some documentary or other issues to sort out before it is shipped.. By contrast very less containers go into storage over exports as compared to imports..
- On transhipment containers (full or empty) at the port while it is under the custody of the shipping line awaiting a connecting vessel..
- On containers that are detained by Govt. authorities like Customs, Health, Police etc..
Storage is charged and collected by the entity that is storing the container in their facility for the shipping line or the exporter or importer..
Demurrage and detention is charged by the shipping line in accordance with the number of free days offered and as per the tariff set by the shipping line..
Storage is charged by the port, inland terminal or shipping line in accordance with the number of free days offered and as per the tariff set by them..
To summarise :
- Storage – amount charged by the entity storing the container (full or empty) till it moves out of the facility
- Demurrage – amount charged by the shipping line from the time of expiry of free days till it is moved out of port or terminal for unpacking
- Detention – amount charged by the shipping line from the time the full container is picked up till it is returned empty to the depot nominated by the shipping line
- Once returned, till it is reused, the empty container can incur storage at the depot
So its more or less like a circle of life.. 🙂
Very detailed and well explained. Thanks for posting.
I am a bit confused now.what is the difference between demurrage and detention charges.Is this always charged by shipping line to forwarder or consignee or is this charged by port authority?
Ajay, if you search my blog for the word demurrage you will find this post https://www.shippingandfreightresource.com/difference-between-demurragedetention/ which explains it in detail..
The containers reaching ‘POL’ early by a couple of days prior to cut-off date now have to pay ‘Plug-in’ charges levied by some of the lines.
Our containers are hauled by rail from ICD to POL. Though departures are fairly regular, one is always tempted to move containers in advance to avoid ‘Shut-out’.
If the container is delayed due to late rail out, it has to pay VIA charges for the scheduled ship, or incur heavy losses till the next ship berths. If it reaches early, it attracts ‘Plug-in’ charges. Either way the exporter is at the receiving end.
Hi Mahesh, some of the ports do levy such charges.. Example, in South African ports there is a stack period..
If containers arrive AFTER the stack period then the client/shipping line has to approach port to allow the container(s) to be allowed in.. Depending on the situation at the port, they might allow it.. This is called Late Arrival..
Same in the case if the container(s) arrives BEFORE the stack period, depending on the situation at the port, port might allow it.. This is called Early Arrival..
Both these activities are charged as per the port tariff set and it is usually the exporter that pays this cost..
Ports have to have some sort of control over the movement of containers into the port for a particular vessel, otherwise there will be delays to the operation of the ship..
Strange I always thought detention was just while container waiting at warehouse POL until time of shipment.