Per Diem vs. Demurrage in Drayage: What You Need to Know

In the logistics and drayage industry, terms like per diem and demurrage are crucial for understanding cost structures and managing shipments effectively. Both relate to fees incurred for the use of shipping containers but differ in their application and impact.

What is Per Diem?

Per diem charges, often referred to as detention fees, are daily rates charged by the shipping line for the use of their container outside the port beyond the free allotted days. These fees are incurred if the consignee retains the container longer than allowed for unloading or storage.

Key Points about Per Diem:

• Daily Charges: Imposed per day after free time expires.

• Responsibility: Usually the consignee or drayage provider.

• Purpose: To ensure quick turnaround of containers and availability for other shipments.

What is Demurrage? Demurrage charges apply when a container remains at the port or terminal beyond the free storage period. This fee compensates the port for space utilization and encourages prompt container pick-up.

Key Points about Demurrage:

• Port Storage Fee: Incurred for storage at the port beyond free time.

• Responsibility: Usually the consignee.

• Purpose: To expedite cargo movement and free up terminal space.

Comparing Per Diem and Demurrage:

• Location: Per diem applies outside the port; demurrage applies within the port.

• Fee Basis: Both are daily charges but for different stages of the container’s journey.

• Objective: Both aim to optimize container usage and port operations.

Conclusion:

Understanding the differences between per diem and demurrage charges is essential for efficient logistics management. By staying informed about these fees, businesses can better plan their operations, avoid unnecessary costs, and ensure timely movement of goods. For expert guidance on managing these logistics challenges, trust ROC Global Logistics.

For more insights and logistics solutions, visit ROCGL.

Other useful topics:

Drayage vs. Intermodal Transportation: Understanding the Differences

Warehousing vs. Container Yard Storage: Choosing the Right Option for Your Logistics Needs

Understanding LFD and ERD in Drayage

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