Nautical Term: Demurrage
Definition of Demurrage
Demurrage refers to a fee imposed on shippers or consignees when they keep the carrier’s equipment beyond the allowed free time. The length of the free time and demurrage charges are detailed in the charter party or freight tariff.
For instance, let’s assume the following scenario:
The freight forwarder, XYZ Corp, entered into a charter party agreement with ABC Shipping, where ABC Shipping would transport a container of goods from the Port of New York to the Port of Shanghai.
The charter party agreement stated that ABC Shipping would provide the necessary equipment for loading the container, including a cargo crane and container handling equipment.
The charter party agreement also stipulated that ABC Shipping would be entitled to a demurrage fee if the container was not loaded onto the vessel and the cargo equipment was not returned to ABC Shipping within the free time allowed by the charter party agreement.
In the above example, the charter party agreement between XYZ Corp and ABC Shipping sets out the free time allowed for loading the container and returning the cargo equipment to ABC Shipping. If XYZ Corp fails to load the
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