Glossary


Terms & Glossaries of Shipping and Trading

Demurrage

Demurrage is a penalty charge against shippers or consignees for delaying the carrier's equipment beyond the allowed free time provision of the tariff at the rail ramp; International Transportation: A storage charge to shippers, which starts accruing after a container is discharged from a vessel. The charge varies according to rules of the appropriate tariff.

What is Demurrage?

Demurrage refers to the charges that the charterer pays to the ship owner for its delayed operations of loading/unloading. Officially, demurrage is a form of liquidated damages for breaching the laytime as it is stated in the governing contract (the charter party). The demurrage sometimes causes a loss to the seller as it increases cost of the total freight. The inverse of demurrage is despatch. If the charterer requires the use of the vessel for less time than the laytime allowed, the charter party may require the shipowner to pay despatch for the time saved.