Demurrage: Maritime Glossary

Demurrage is a charge a charterer pays the shipowner when a vessel is kept in port for loading or discharging beyond the free time, called laytime, agreed in the charter party. It compensates the owner for the ship being unable to earn elsewhere while it waits.

How demurrage is calculated

Demurrage runs at a daily rate set in the charter party, applied to the time the vessel is detained after laytime has expired. It is usually pro-rated by the hour, and continues until loading or discharge is complete and the vessel can sail. Where operations finish early instead, the charterer may earn a rebate called despatch.

Why demurrage matters in procurement

For anyone supplying a vessel in port, demurrage is a reminder that time alongside is expensive. A late or incomplete chandlery delivery that holds a ship at berth can expose the charterer to demurrage, which is one reason buyers value suppliers who quote and deliver fast and accurately.

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Related terms

Laytime Charter party Bill of lading ETA window Disbursement account All glossary terms →

Frequently asked questions

What is demurrage in shipping?

Demurrage is a charge the charterer pays the shipowner when a vessel stays in port beyond the agreed free time (laytime) for loading or discharging. It compensates the owner for the delay.

What is the difference between demurrage and detention?

Demurrage covers a vessel or its cargo held at the port or terminal beyond free time. Detention typically covers equipment, such as containers, kept outside the port beyond the allowed period. Both are penalties for exceeding agreed time.

Is demurrage the same as despatch?

No. Demurrage is paid by the charterer to the owner when laytime is exceeded. Despatch is the opposite: a rebate the owner may pay the charterer when loading or discharging finishes early.

Who pays demurrage?

The charterer normally pays demurrage to the shipowner, under the terms of the charter party, when the agreed laytime for cargo operations is exceeded.