Demurrage

Demurrage refers to a charge levied by shipping lines or terminal operators when cargo remains at the port or terminal beyond the stipulated free time allowed for loading or unloading. This fee incentivizes swift cargo movement, helping to avoid port congestion and delays in supply chains.

Key Characteristics

• Applicability: Applies mainly to containerized cargo left in a terminal after the expiry of “free days,” which usually range from 3 to 7 days, depending on port and contract terms.
• Responsible Party: Typically paid by the consignee (importer/receiver) or their agent.
• Calculation: Charged per container, per day, and can escalate quickly after the free period. Charges vary by port, line, and container size/type.

Demurrage in the Supply Chain

• Prompt Cargo Clearance: Demurrage encourages importers or exporters to pick up or return containers promptly, freeing terminal space for new consignments.
• Cost Management: Failure to plan lead to significant unexpected costs—particularly in periods of port congestion.
• Contractual Terms: Demurrage is separate from detention charges (fees for holding containers outside the terminal) and should not be confused with storage charges applied by the terminal directly.