What are Detention Fees?
Detention fees are what a cargo consignee pays for the use of a container outside of the terminal or depot, beyond the free time period offered by a carrier.
Difference Between Detention Fees Demurrage?
Detention Fees Explained
These are charged for the time a container spends occupied outside of the port, whilst awaiting an unload and return to its carrier. For example, an empty container can incur detention charges, if it languishes at its final delivery destination, beyond the allotted free time provided by the carrier.
Demurrage refers to the charge that the cargo consignee pays for the use of the container within the terminal beyond the free time period, set by the carrier.
Per Diem vs Driver Detention – Two Types of Detention Fees
Carriers need to keep equipment in circulation. When a consignee uses a container for longer than the agreed upon time – it is no longer making money off of new clients. It’s in limbo. Therefore, the carrier charges for the downtime of the container. These charges offset that lost time. The industry defines Detention Fees in two ways – Per Diem vs Driver Detention Fee.
Per Diem Fee – Applies to Containers Outside The Port
Detention Fees Per Diem (Per Day), refer to a fixed rate charged per container per day by the carrier. They occur when a consignee keeps a container away from its specified port, terminal or depot for longer than the free time allotted. Detention stops after equipment returns to the correct port or terminal. Like demurrage you are allotted a set amount of free time to return equipment that is removed from port. Keeping equipment (e.i. containers) beyond that free time results in a detention charge or per diem fee. These Detention Fees range between $50 to $100 per day.
Driver Detention Fee – Applies to Container Unloads
There is a small window of free time for physical loading or unloading a container. If a facility exceeds this window of free time, a carrier can charge a driver a detention fee at an hourly rate. A carrier charges a Driver Detention Fees if the driver waits in excess of agreed upon time. See the examples of where exceed time occurs, below:
- Port of Origin
- Port of Pick Up
- Warehouse Pick Up
- Destination Delivery
This charge compensates the carrier for time delays. Otherwise, they lose money on delayed returns of their equipment.
Why are Driver Detention Fees Charged?
Drivers receive a legal limit on the hours driven in a week. Consequently, if a driver exhausts that time idly waiting – they cannot move goods at a profitable rate. In addition, missing appointments or showing up late can result in drivers receiving fines. Additionally, drivers can work up to 14 hours (11 driving hours) straight. Once they are off the clock for the day, they are Drivers must wait 10 hours before working again, after their shift finishes. Overall, that means that drivers who are paid by mileage Driver lose money, who receive payment based on paid mileage. After all, they wait an excess amount of the allotted time for the unload or load. Thus, they need compensation. Otherwise, drivers can’t turn a profit – since they do not have the miles.
Who Enforces Detention Fees?
Typically, the carrier that owns the rented container charges Detention Fees. These fees occur at destination, rather than the port of entry. The carrier charges the drayage provider (3PL trucker), who charges the consignee.