What is Demurrage?
Demurrage is the compensation payable by a charterer (or sometimes cargo owner) to a ship owner when the vessel has been detained at a port beyond the allowed laytime. It is essentially a liquidated damages provision in the charter party for the ship owner's loss of use of the vessel.
Demurrage Rate
The demurrage rate is agreed in the charter party, typically expressed as a daily rate (e.g., USD 15,000 per day). Once laytime expires, demurrage accrues continuously — it does not stop for weekends or holidays unless specifically stated.
Despatch vs Demurrage
The opposite of demurrage is despatch — money paid by the owner to the charterer for completing operations faster than the allowed laytime. Despatch is typically half the demurrage rate.
