Demurrage

Demurrage is a fee a shipper pays to a vessel owner for time a ship spends waiting to load or unload beyond the time allowed in the charter.

A ship chartered to carry a commodity is given an agreed amount of time, laytime, to load or unload at port. Demurrage is the penalty the charterer pays the shipowner for every extra day the vessel is held beyond that allowance, compensating the owner for a ship sitting idle instead of earning revenue on its next voyage.

Demurrage becomes a significant cost during port congestion, when queues of vessels waiting to load or discharge stretch far beyond normal laytime, sometimes for weeks. Buyers and sellers negotiate over who bears this cost when delays are outside either party’s control, and persistent congestion at a major export or import terminal can itself become a signal that a chokepoint or a demand surge is straining the supply chain.