What is the Meaning of Demurrage?

What is the Meaning of Demurrage?

7/11/2014 Umut Türker 3171 Times Read

It is the bane and the boon of many fields. It is probably necessary and inevitable. People involved in the professional sport of football use and describe things that are vastly different from what electrical engineers use and describe. When I was growing up, I often heard it said that Eskimos have 30 words for "snow". More recent and authoritative research has shown that Eskimos may have closer to 70 words for "ice" and that some Scandinavian people have over 180 words related to ice and snow! However, all this is a hindrance to other people encountering these words.


Before becoming acquainted with FreightArea.com, I may have heard of "demurrage" once or twice before, but I never fully comprehended it and certainly never mastered its meaning. Now, I shall try to explain what I have more recently learned about this and related words in the field of shipping.



Demurrage is closely related to the word, storage. Storage is simply storage, right? Wrong! In terms of shipping, storage is a fee or charge to the shipping line by the port if the container(s) is/are not removed from the port within a free grace period offered by the port. If the grace period is not met then the charges begin, and which are passed on to the consignee/recipient. Demurrage is also a charge; it is the charge to the consignee by the shipping line if the container is not cleared and returned to a specified empty depot with the grace period offered by the shipping line.



Demurrage is also closely related to the word, detention. To elaborate on demurrage, demurrage is the charge that is assessed before the cargo is picked up. Detention is the charge from the time that the cargo is picked up to the time that the empty container is returned. In brief, demurrage refers to cargo while detention refers to equipment. In all cases, the grace periods and the charges vary from country to country and from shipping line to shipping line.



There is a wonderful online calculator that will help you determine the specific charges for storage, demurrage and detention.


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Thus, shipping personnel have three words for "charges". It may not be as many as the Eskimo have for "ice" but I do hope that this post has clarified things so that you do not need to be fearful of jargon.