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Difference between Storage and Demurrage


  • Storage and Demurrage may have different or same meaning (country dependent)
  • Quick clearance of containers is essential to avoid hefty storage fees
  • Delays can lead to Storage AND Demurrage AND Detention charges

While efforts to standardize global shipping and its terminologies continue, sea freight customers continue to deal with different terms in day-to-day shipping.. Some terms mean and refer to different things in different countries..

Storage and Demurrage are two such terms..

Container operations in port

When a container is discharged off a ship at a container terminal, it is moved to the CY area within the port/terminal..

When the customer is ready to take delivery of the container after completion of all formalities like customs clearance etc, they will move the container directly from the CY..

Around 866 million TEUs were shipped globally in 2023 and this number is projected to reach 988 million by 2027.. The world’s busiest port Shanghai handled 49 million TEUs in 2023 (read that again) and Long Beach handled 8 million TEUs in 2023..

So whether it is Shanghai, Long Beach, or any other port in the world, no port has the storage capacity to store so many containers in its container yard..

So it is essential that the importers clear the cargo within the “free period” offered by the port as otherwise these containers will be stuck in the port affecting the yard space, and port productivity, causing berth and port congestion etc..

How storage and demurrage works

All ports offer a certain free period (Example: Felixstowe 5 free days, Hamburg 3 free days, New York 4 free days) to allow the customers time to process import requirements and take delivery of the containers from the port..

These free days, let’s call them “port free days” are the number of days allowed by the port/terminal to keep the containers in the port/terminal area without any charge, after which storage charges (also known as port storage) as published in the port/terminal tariff will apply..

This charge is called Port Storage or Storage..

When the customer exceeds the free period offered by the port/terminal as per their tariff, port storage will occur.. 

This may be billed by the port/terminal to the shipping line which will then bill the customer or in some countries, it is billed directly to the customer by the port as that charge/rate has nothing to do with the shipping line..

These port free days are different from, let’s call them “line free days”, which is the number of days allowed by the shipping line for the customer to pick up the full container for unpacking, take it to their warehouse, unpack it, and return the empty to the container depot nominated by the shipping line..

When the customer exceeds the free period offered by the shipping line as per their published tariff, demurrage and/or detention and/or combined demurrage/detention will occur..

It is entirely possible that a container or shipment of containers can incur port storage and demurrage and detention depending on the operations involved in that shipment..

Here is an example scenario..

Demurrage, Detention, and Port Storge calculation scenario

Scenario: A container is discharged off a ship on the 2nd July.. Consignee takes the release of the container from the port on the 12th of July and returns the empty to the nominated depot on the 19th of July..

  • Free days at port = 3 days
  • Demurrage free days offered by the shipping line = 7 days
  • Detention free days offered by the shipping line = 10 days

Port storage calculation example:

Using the above dates, the 3 free days offered by the port expires on the 4th of July and the container overstays its welcome in the port/terminal incurring port storage for 8 days till the 12th of July..

Demurrage calculation example:

As per the above dates, the box would have been sitting in the port/terminal for a total of 11 days till its delivery on the 12th of July..

The 7 free days offered by the line for demurrage will expire on the 8th of July..

11 days dwell time – 7 free days = 4 days.. So, the line will be eligible to charge the consignee DEMURRAGE for 4 days from 9th to 12th July at a rate fixed by the line..

Detention calculation example:

The full container moved out of port on the 12th, the customer returned the empty only on the 19th of July..

Detention free days = 10 days, which is valid till the 21st of July, but since the customer returned the empty on the 19th of July, DETENTION charges do not apply..

So in essence for this container, the customer would pay

  • Port Storage = 8 days (2nd July to 4th July falls under port free days, so from 5th July to 12th July, 8 days of storage applicable) – to the port directly or via the shipping line
  • Demurrage = 4 days (2nd July to 8th July is free, demurrage from 9th July to 12th July) – to the shipping line
  • Detention = 0 days (10 days free so 12th July to 21st July is free, empty returned on 19th July so no detention)

Combined demurrage/detention calculation example: 

In the above example, if the “combined demurrage/detention” principle is used, then

  • Port Storage = 8 days (2nd July to 4th July falls under port free days, so from 5th July to 12th July, 8 days of storage applicable) – to the port directly or via the shipping line
  • 7 free days (for both dem and det) offered by the line ends on 8th July
  • The container moved out on the 12th of July and the empty container was returned on the 19th of July
  • So there will be Combined Demurrage/Detention for 11 days payable to the shipping line

If the free days is shown as just “free days” it usually refers to “combined demurrage/detention” which is what a lot of the shipping lines apply to keep the calculations simple..

  • If “x” free days is offered for demurrage only, then that means that the client has “x” free days to pick up the full container after which the empty has to be returned the same day to avoid costs..
  • If “x” free days is offered for detention only, then that means that the client can use the “x” free days to unpack the container and take it back to the depot.. They might have some unpacking problems at their warehouse which necessitates such requests..

If you request additional line free days from the shipping line they may ask if it is for demurrage or detention as the line’s requirement varies in different ports..

What I have mentioned above is the generic and most common form of use of these two terms demurrage and detention..

In some countries like Saudi Arabia, USA and Japan, the term demurrage is used to refer to storage in the port/lines terminal.. But in majority of the countries there is a difference between demurrage and storage..

The best option would be for you to check with the shipping line in your country how these terms and free days are defined and what they are referring to when they say “storage” or “demurrage”..

So why does the shipping line charge demurrage and detention

In a container shipping line operation, the cost of the container, repair, maintenance, leasing, etc works out to around 20% of the shipping line’s cost (as per my last discussion with a shipping line)..

A container, like a ship, will make money for its owner only when it is in circulation and not when it is idle..

In the above case, the container stayed for an extra 11 days with the consignee.. This means for those 11 days the container was out of the control of the shipping line which meant that this particular container did not yield any revenue for the shipping line for these 11 days..

The charging of the demurrage and detention by the shipping line is their way of getting some compensation for the period that this container was out of the revenue-generating cycle..

However there are several discussions as to whether demurrage and detention charges are justified.. You can decide which side you are on..

Who pays for demurrage, detention, storage..?? 

In the case of imports, the consignee would be liable for the same and in the case of exports, the shipper would be liable for the same.. There could however be cases where the consignee could not clear the container because they didn’t receive the relevant documents from the shipper in time..

In such cases, the consignee would look to the shipper for compensation, but for the shipping line, this is revenue lost and they need someone to pay for it..

Conclusion

So in summary, there are several charges associated with a shipment.. Demurrage, detention, and storage can be considered as “unexpected, non-budgeted, uncosted, unforeseen and avoidable” charges because no one in their right mind wants to incur these charges..

  • Shipping line offers X days as free for the full to be picked up and empty returned in the case of imports and vice versa for exports
  • This means the client has X days to pick up the full container and return the empty to the nominated depot and vice versa for exports
  • If the time frame exceeds X days, then the shipping line will bill the client for those many days that the container was in the custody of either the consignee or the shipper
  • 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)
  • Storage relates to charges levied by the port/terminal
  • Demurrage and detention do not apply to LCL shipments and apply only to FCL shipments..

This article has been republished after some critical updates..


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Hariesh Manaadiar
Hariesh Manaadiarhttps://www.shippingandfreightresource.com
I am Hariesh Manaadiar, the Founder of Shipping and Freight Resource.. I have been in the dynamic shipping and freight industry for over three decades and have worked in several sectors.. I share my experiences and knowledge of the industry through this blog for those looking for help in the industry.. Stay subscribed for more free useful content about shipping, freight, maritime, logistics, supply chain and trade..

23 COMMENTS

  1. “14 days free container detention at port of discharge” does this mean 14 days is only applicable on detention.
    how about the demurrage ? Is there standard is 5 days free time demurrage?

    • Hi Shiow, that completely depends on the country and the line you are using as lines have different terminologies and so do countries.. It is better to clarify with the line what this entails..

    • Combined means, you can mix Demurrage and Detention together.
      if some shipping line informed you like 20 days of combined freetime, you can use 20 days as demurrage or 20 days as detention or 10 days detention plus 10 days demurrage..and so on. hope this is clear answer.

  2. If you order goods from abroad … the sender sends out more than you require… the shipping company then charges you money for said items… but still will not release them can this be done … the sender has been paid in full … can he stop the release of said items

  3. In Pakistan the Demurrage is charged by Port authorities on full containers from vessel berthing date (5 days free time allowed to consignees).
    Storage is charged by Terminal on full containers from berthing date (5 days free time allowed)
    Detention is charged by carrier also from berthing date till container is returned as empty at carrier’s nominated depot. Carriers also allow some free days to their consignees.

  4. is the shipping line possible to charge storage and demurrage at the same time?.. or at one container only?.. pls advise the difference between storage and demurrage charges.

  5. Its still confusing can any one suggest me with simple examples the difference between detention demurage and port storage in export shipment,as far my knowledge is concerned

    Detention is the nos of free days offered by the shipping line to the shipper if the container is gated in after the free time detention charges apply as per tariff.

    port storage is the nos of free days offered by the line to the shipper once the container is gated in after the free time offered till the vessel sails.

    port storage charges will apply as per tariff.

    demmurage means if the container is inside the port if it crosses the free time demmurage charges will apply as per tariff.

    please confirm if my understanding about export shipment is correct.

    • Hi Avish, did you read my article “https://www.shippingandfreightresource.com/ground-rent-vs-demurrage-detention/“.. If you still have any doubts, let me know..

      1) Storage – amount charged by the entity storing the container (full or empty) till it moves out of the facility
      2) 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
      3) 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
      4) Once returned, till it is reused, the empty container can incur storage at the depot

  6. In South Africa, it is understood as per Mr. Hariesh.

    The rest of the world understands it as Mr. Prabir does – I do not know why South Africa views it differently?

    It can and has caused massive amounts of confusion between South African parties and foreign parties; even within the same organisation when communicating with foreign agents.

  7. Sir, my understanding is the same as Mr Prabir DasGupta. Let say the shipping line able to provide 3 days FOC for Port area, then shipping line is reponsible to clear the item within three days. Then, the shipping line provide another FOC 3 days AT their own storage around port if there is any issues with their transport. So both demurrage and storage charges will incur if the shipping line took out the container later than these 6 days. After that, the shipping line sent the item to consignee and give them 5 days FOC where within these days, the consignee need to unstuff the items and return the container to shipping line where this is when the detention comes if consignee fail to return the container after 5 days. please, do enlighten me if am wrong.

  8. Ok, what about a situation where consignee tried to pay before items were shipped and upon arrival the shipping agent and clearing agent inflate costs?
    Then added storage etc over a weekend in sa, what can I do to recover my funds?
    I have been ripped off

  9. How about ground rent ? Is it same as Storage ? Is it charged by the port to shipping line and shipping lines intern charges the same to consignee ?

  10. I am afraid my understanding is different.
    It is called Detention when the charge levied by the shipping line on the consignee if the container is not cleared and returned to the nominated empty depot within the specified free days offered by the line. The free days and charges might vary depending on the country and shipping line.
    Whereas Demurrage/Storage is the charge levied by the port on the shipping line (since they have the account with the port) if the container is not moved out of the port within the specified free days offered by the port.. The shipping line in turn recovers this cost from the consignee.
    Kindly comment and correct me if I am wrong.

    • No sir, your understanding is not right.. Demurrage/Detention is definitely a charge associated with the shipping line.. Storage is a charge generally associated with the port, but in certain countries, it can also be associated with the line if a container is moved to a private depot by the shipping line..

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