Demurrage

Demurrage is an important term in foreign trade and shipping. It refers to the extra fee payable by the charterer (cargo owner or freight forwarder) to the shipowner when loading or unloading operations are not completed within the agreed free time under a charter party or bill of lading, causing the vessel to be delayed at port. It is usually calculated per day, with rates pre-agreed in the contract, and is intended to compensate the shipowner for losses caused by vessel delay. It is commonly used in bulk commodity trade, container transport, and chartering. Notes: Free time varies by port, cargo type, and contract; demurrage is the opposite of despatch, which is a reward paid by the shipowner for completing loading/discharging early; demurrage differs from detention, which usually refers to container overdue use fees. Foreign trade practitioners should closely monitor loading/discharging progress to avoid high demurrage costs and clearly specify rates, commencement time, and liability allocation in contracts.