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Demurrage

Demurrage refers to fees charged for delays in returning equipment after an allotted time period. Specifically: - In shipping, demurrage is charged by vessel owners to charterers for delays in unloading cargo beyond the agreed lay time. It is also charged by container suppliers to merchants for late returns of shipping containers. - In rail transport, demurrage is charged to shippers for holding rail cars beyond the free time for unloading or to connecting railroads for delays in returning empty cars. - In business, demurrage fees are sometimes included in delivery contracts and charged by delivery trucks for delays in unloading beyond the agreed time window.

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261 views2 pages

Demurrage

Demurrage refers to fees charged for delays in returning equipment after an allotted time period. Specifically: - In shipping, demurrage is charged by vessel owners to charterers for delays in unloading cargo beyond the agreed lay time. It is also charged by container suppliers to merchants for late returns of shipping containers. - In rail transport, demurrage is charged to shippers for holding rail cars beyond the free time for unloading or to connecting railroads for delays in returning empty cars. - In business, demurrage fees are sometimes included in delivery contracts and charged by delivery trucks for delays in unloading beyond the agreed time window.

Uploaded by

albert
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Demurrage

The term Demurrage comes from the field of vessel chartering (notably voyage chartering)
and refers to the period during which the charterer remains in possession of the vessel after
the period of time normally given to him to charge and discharge the cargo (lay time). By
extension Demurrage refers to the amount of money that the charterer will have to pay to the
shipowner for its extra use of the vessel.

Because the supply of a shipping container to a merchant has a very similar nature to the
contract of a supply of a vessel to a voyage charter, the industry refers to this container usage
beyond the time allowed as Container Demurrage. This extra usage usually entitles the
container supplier (usually the shipping carrier) to claim a certain amount of money from the
merchant.

In principle it can be considered that the assimilation between vessel demurrage and
container demurrage is correct given that both refer to the same concept, which is the late
return of a piece of equipment supplied by one party to another for the purpose of carrying a
cargo. However, the actual regime of container demurrage is still to be determined precisely.

Shipping
In commercial shipping, demurrage is an ancillary cost that represents liquidated damages
for delays. It occurs when the vessel is prevented from loading or discharging cargo within
the stipulated laytime (see Affreightment: under Charter-parties).

In container haulage, customers are given a set period of time in their contract to tip (unload)
their container delivery. Acceptable times for tipping are usually between 3 and 4 hours; time
spent on site after that is considered "demurrage". Hauliers will usually charge an hourly rate
for each hour after the agreed allowed time.

Demurrage can also refer to the cost levied by shipping lines to cover redecoration of the
container after use by the merchant, but it could also be the charge made by the shipping line
to customer for not returning their container in a reasonable time.

Railway transport
In railway law, it is the charge on detention of trucks (or rolling stock), either to the shipper
for holding the car (laden or not), or to the connecting railroad(s) while the car is empty and
returning to the home road (in either case, as a way to encourage speedy unloading and return
of empties to improve utilization of rolling stock).

Business and banking


In business, demurrage is a delay in delivery of a product via delivery truck. When a delay
occurs with product delivery, the delivery party can elect to claim a no fault delay by
submitting a demurrage charge. Criteria for allowable demurrage, payment conditions, and
payment terms for demurrage are typically prenegotiated and accepted by the vendor via
contract prior to conduct of business. Some vendors allow free no-cost time for limited
hour(s) when demurrage occurs, others do not allow free time for delays. The demurrage
charge is normally an hourly rate. Unforeseeable until delivery, costs of delays are sometimes
separately invoiced from the cost of deliverable.

In banking, demurrage is the charge per ounce made by the Bank of England in exchanging
coin or notes for bullion.

Currency
Main article: demurrage (currency)

In complementary currencies' field, demurrage is a cost associated with owning or holding


currency. It is sometimes referred to as a carrying cost of money. The term was used by
Silvio Gesell. It is regarded by some as having a number of advantages over interest: while
interest on deposits lead to discount the future and to place immediate gains ahead of long-
term concerns, demurrage does the opposite, creating an incentive to invest in assets which
lead to longer-term sustainable growth. Furthermore, demurrage acts like inflation,
stimulating the circulation of the currency, encouraging economic activity, and increasing
employment.

Gas cylinders
The rental fee for a gas cylinder assessed by the vendor until the tank is returned.

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