Demurrage is a charge payable to the owner of a chartered ship in respect of failure to load or discharge the ship within the time agreed.

What Is Demurrage?

Demurrage is a fee charged to cargo containers that have been at a port, railyard, terminal, or other location past its allotted or contracted free time. How much the demurrage charge is can vary depending on a number of factors and is typically enforced by port officials. 

Free storage time allotted for containers at ports can vary, usually from 4-7 days. That said, it is critical to be cognizant of individual port policies and procedures pertaining to demurrage along the entire transportation route. Generally, rail and air cargo shipments are allotted 48 hours free of charge to store containers. Less time is usually allotted if the container has special requirements or is open top. The amount of time allotted to pick up cargo can also vary depending on vendor agreements.

Key Takeaways

    • Demurrage is applied when containers are not unloaded or moved from a site in a timely manner.
    • Demurrage charges can vary based on things like location, vendor, and market conditions.
    • Demurrage risks can be mitigated by having a backup carrier and using demurrage software solutions.

What Are Demurrage Charges?

Demurrage charges are applied to cargo containers at ports, rail yards, etc. that are scheduled for pickup, yet remain past their allotted free time. This is commonly referred to as the “Last Free Day”, after which shippers are charged each day for the number of container(s) that remain on-premise until the cargo is transported elsewhere.

cargo containers subject to demurrage charges

How Much Do Demurrage Charges Cost

Unfortunately for shippers, there is not a single governing body that determines demurrage charges and rates, so these costs can vary from location to location. Industry estimates range from $100 per container per day, up to $300 and more dependent on market conditions.

Having containers held up in customs when crossing borders is a  common source of demurrage charges in the shipping industry. The party responsible for demurrage costs incurred can mitigate risk by contracting a backup courier should problems arise with the original courier.

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