In international shipping operations, exporters often face confusion regarding the calculation and application of container demurrage fees and storage charges. While both expenses result from cargo delays, they operate under different triggering conditions and calculation methods.
Container Demurrage Fees Explained
Container demurrage refers to charges incurred when shippers exceed the free time allowance granted by shipping lines or carriers for container usage. This fee period begins on the day of cargo discharge and continues until the empty container is returned to the designated depot.
Storage Charges Defined
Storage charges apply when cargo remains at port terminals or container yards beyond their respective free storage periods. These time allowances are determined by terminal operators and may differ significantly from container free-time policies.
Key Differences Between the Two Charges
- Basis of Calculation: Demurrage fees measure container usage duration, while storage charges track cargo occupancy time at specific locations
- Responsible Parties: Shipping lines impose demurrage, whereas terminal operators assess storage fees
- Overlap Potential: These charges can occur independently — containers may incur demurrage before storage fees begin, or vice versa
Practical Example
Consider a shipment with 7-day free container time and 10-day free storage period. If retrieved on day 8, demurrage charges would apply while storage remains free. Only after day 10 would both charges potentially accumulate simultaneously.
Risk Management Recommendations
Exporters should carefully review both carrier container agreements and terminal storage policies to understand respective free periods and rate structures. Effective coordination of cargo collection and container return schedules can prevent unnecessary cost escalations.