Per Diem Charge

Definition

A per diem charge is the daily fee an ocean carrier assesses for containers that are kept by the consignee beyond the allocated "free days" specified in the freight agreement. This fee begins accumulating immediately upon the expiration of the free time and continues until the empty container is returned to the designated carrier terminal or depot.

Per diem is functionally identical to the charge known as detention. While sometimes used interchangeably with demurrage, it is crucial to understand that per diem (detention) applies when the container is outside the marine terminal, whereas demurrage applies when the container is still inside the terminal.

Function and Purpose

The primary goal of implementing the per diem charge is to maintain the fluid circulation of the carrier's container fleet. Ocean carriers rely on the prompt return of their equipment to manage global shipping demands.

By establishing a daily penalty, carriers strongly discourage importers from using valuable shipping containers as long-term storage units. The charge structure is typically punitive, escalating quickly to ensure importers prioritize unloading and returning the equipment promptly.

Expert Advice for Minimizing Charges

Logicmile Logistics Consulting strongly advises importers to develop strategies to mitigate exposure to costly per diem charges.

• Prioritize rapid Customs clearance and container retrieval planning before the vessel arrives.

• Ensure warehouse capacity and labor resources are secured to handle immediate container unloading.

• Communicate clearly with drayage partners to schedule the empty container return promptly after stripping the cargo.

If extended storage is required, the most cost-effective solution is to unload the cargo immediately upon receipt and transfer the goods to a dedicated commercial warehouse. Warehouse storage costs are significantly lower than the daily cumulative burden of per diem fees, and this action allows the trucker to return the ocean carrier's equipment on time.

Key Takeaways

• Per diem is a daily fee assessed by the ocean carrier when the container is off-site (detention).

• It applies after the expiration of the carrier's designated free days.

• Failure to return the container quickly results in substantial, accumulating daily charges.

• To avoid per diem, unload the cargo into cheaper warehouse storage and return the empty container immediately.