Demurrage is a charge levied by shipping lines or port authorities when cargo or containers remain at the port or terminal beyond the allowed free time.
How It Works:
- Goods arrive at the port and are unloaded.
- A free storage period is provided.
- If goods are not cleared within this time, demurrage charges apply.
- Charges increase based on the number of extra days.
- Payment is required before goods are released.
Benefits:
- Encourages timely clearance of goods
- Helps reduce port congestion
- Improves logistics efficiency
- Ensures better resource utilization
Example:
An importer delays customs clearance and the cargo stays at the port for 7 days instead of 3 free days, resulting in demurrage charges for the extra 4 days.