Demurrage is fine, which is charged, by the owner of the ship or by the railway company for the delay in loading or unloading beyond the specified time. It is a result of a failure to abide by the rules agreed to in a charter agreement. It is a charge payable to the owner of a chartered ship on failure to load or discharge the ship within the time agreed. Demurrage fees are charged if your container has not been picked up from the port before the Last Free Day. Once free time is expired, the shipper is charged a daily demurrage fee until the cargo is removed from the terminal.
The charge is levied by the shipping line to the importer. Specifically, it is when a charge is payable to the owner of a chartered ship on the failure to load or discharge the ship within an agreed time period. To understand who is responsible for the delay; a penalty is assessed against a consignor, consignee, or another party who is deemed to be responsible for any delay in loading or unloading a shipping vessel.
Demurrage may be caused due to a variety of reasons –
- Consignee did not receive the documents in time for customs clearance.
- Documentation received by the consignee is incorrect or insufficient.
- Consignee was unaware of the arrival of the cargo and was unable to do the customs clearance in time.
- Consignee does not have the finances in order to clear the container in time.
- Dispute between shipper and consignee.
- Cargo received was not as per the sales order.
Demurrage charges are effectively penalty charges. They are applied to all types of vessel whether it be in a port, feeder terminal or container yard. these charges are raised when the full container is not moved out of the port/terminal for unpacking within the allowed free days offered by the shipping line. The charges are applied after the free allotted time has run out. Example: Delays in shipping are commonplace and as a result, customers may incur a multitude of extra charges which they have not catered for. One such extra charge is the Demurrage charge. Charges differ based on the terminal or carrier and typically range from $75 to $150 per container, per day, during the first 5 days and can go even higher if the container stays longer.