Demurrage
Demurrage is a charge for keeping a ship or a cargo container beyond the free time allowed. Under a charterparty it compensates the shipowner when loading or discharge overruns the agreed laytime; in container shipping it is a daily fee for boxes left at the terminal.
Also called: demurrage charges · container demurrage · vessel demurrage · laytime and demurrage
In the charterparty sense, a voyage charter allows the charterer a period of laytime to load and discharge. If the work takes longer, the charterer pays demurrage at a daily rate fixed in the charter, which serves as agreed damages for keeping the ship from its next employment. The charter's terms decide when laytime starts, what time is excluded and which delays count.
In container shipping, carriers and terminals allow a number of free days. After that, demurrage is charged per container per day while a full box stays in the terminal, and detention is charged while equipment is kept outside beyond its free time. In the United States, the Federal Maritime Commission's billing rule, published in February 2024, requires invoices to contain specified information and to be issued within 30 days of the charges last being incurred; a billed party need not pay an invoice that fails those requirements. In 2025 the D.C. Circuit set aside the part of the rule on who may be billed, leaving the rest in effect.
For trade finance and payments people, demurrage is how delay turns into cost. Late documents, discrepancies under a letter of credit, held payments, sanctions screening queries and foreign currency shortages at the destination all keep cargo waiting. It is the pressure that leads receivers to seek delivery against a letter of indemnity when the bill of lading is not yet in hand.
In practice
The contract decides everything: when the clock starts, what is excluded and whether the shipowner's own delays count. Two charters with the same daily rate can produce very different bills for the same delay.
Example
A tanker's voyage charter allows 72 hours for discharge, with demurrage at US$30,000 a day. Discharge takes five days because the receiver's bank has not yet released payment. The charterer owes two days of demurrage, US$60,000, which it will usually try to pass on to the receiver under the sale contract.
Learn more on Money Wiki
This page gives the short answer. Money Wiki has a longer guide to Demurrage, with more detail and background.
Commonly confused with
| Term | How it differs |
|---|---|
| Detention | In container shipping, demurrage is charged while a full container stays inside the terminal. Detention is charged while the carrier's container is kept outside the terminal beyond its free time. |
See also
- Letter of IndemnityA letter of indemnity is a written promise to compensate another party for any loss caused by acting on a request. In shipping it is what a receiver gives a carrier to obtain delivery of cargo without presenting the original bill of lading.
- Bill of LadingA bill of lading is a transport document issued in connection with the carriage of goods by sea. Depending on its form, it can evidence receipt of the goods, contain the carriage terms and function as a document controlling delivery.
- IncotermsIncoterms are standardized trade terms published by the International Chamber of Commerce that allocate specified delivery responsibilities, costs and risks between buyer and seller. They do not by themselves determine ownership, payment method or every contractual obligation.
- Letter of CreditA letter of credit is a bank’s conditional undertaking to pay when the seller presents documents that comply with its stated terms. Banks examine documents rather than confirming the physical quality or performance of the goods.
- Maritime ChokepointA maritime chokepoint is a narrow sea passage that a large share of world trade must pass through and that has no cheap alternative route. Disruption at one raises freight, insurance and energy costs and quickly reaches currencies and payments.