THE DIFFERENCE BETWEEN PARKING, DETENTION AND DEMURRAGE FEES

Here is an explanation of the different potential fees associated to a container

In the field of port logistics and containerized freight, there are different kind of fees that are important to differentiate. This is the case for "parking" charges, "demurrage" charges and "detention" charges. These are related words that are very often confusing. It is necessary to be aware of these charges on arrival and to know in which case they are applicable.

Parking: it is the operator of the port terminal who invoices these fees. They relate to the occupation of the port space beyond the franchise period granted. The charges apply since containers that are stuck in the port compound, occupy marshalling space, affect port productivity, cause congestion at the docks and the port itself. They are billed progressively per calendar day of storage. The longer the container stays, the higher the cost per day will be.

Demurrage: it is the shipping company that charges these costs. This charge is due and invoiced when the customer keeps the shipping company equipment in the terminal for a period longer than the negotiated franchise period. It is applicable to all containers that remain in the terminal for a period longer than the defined time according to the franchise. Here again, it is essential to note that the accounts are carried out in calendar days.

Detention: it is the shipping company that charges these costs. Detention charges apply when the customer keeps the company's equipment (container) in custody outside the port terminal for longer than the negotiated deductible. They will be billed until the container is returned in good condition to the agreed terminal or empty container park.

Real life example of port logistics

The shipping company grants an importing customer 4 days of free time (calendar) at destination.

The ship arrives at the port of Le Havre on Thursday 04th of May and the container is VAQ at 11PM. The administrative processes do not allow the customer to remove the container from the terminal on Friday May 05th of 2019. The BAD is obtained on Monday May the 8th, which means 4 days after the VAQ of the container. The 4 days of free time therefore cease to apply. The container is towed on Tuesday 9th to the warehouse for unloading and returned on Thursday 11th.

Therefore, according to the diagram below, the applicable fees are as follows:
- Demurrage charges: 1 day (Monday 08). The customer kept the equipment at the port terminal.
- Detention fees: 3 days (from Tuesday 09 to Thursday 11). The customer kept the equipment outside the port terminal.

Good to know

• All calendar days count towards the franchise granted by the shipping company (public holidays and weekends included);
• It is necessary to anticipate the documentary processes so as not to waste time and risk being invoiced for the various costs mentioned above;
• It is essential to include, in the negotiation of sea freight with the freight forwarder, the days of free time granted on arrival because they can be huge. The implementation of a warehouse in the port area can greatly reduce or even cancel a large part of the costs explained above.