Demurrage (Maritime)

Demurrage is the financial penalty payable by a charterer to a shipowner when the charterer uses more time than allowed (laytime) for loading or discharging cargo. It is calculated as a daily rate specified in the charter party.

Answer in Brief

Demurrage = (Time Used − Laytime Allowed) × Demurrage Rate per Day

If the charter party allows 3 days for discharge and the charterer takes 5 days, demurrage for 2 days is payable.

Laytime — The Starting Point

Laytime is the time allowed to the charterer to load or discharge the cargo. It begins when the Master serves a Notice of Readiness (NOR) — notice that the ship has arrived at port and is ready in all respects to load/discharge.

Time counts from: NOR acceptance (or a fixed time after NOR, depending on charter party terms) Time stops: When cargo operations are complete and the vessel is free to depart

Certain events do not count as laytime:

• Time when ship is not ready (equipment failure attributable to shipowner)
• Time when port is closed (public holidays — depends on charter party: SHEX, SHINC, WWD, WIBON clauses)
• Time lost due to bad weather (if WWD — Weather Working Days — applies)

Demurrage Rate

Demurrage rates are negotiated in the charter party and expressed in US dollars per day (or per hour). They vary by vessel type and market:

• Handysize bulk carrier: $5,000–15,000/day
• Capesize bulk carrier: $15,000–40,000/day
• VLCC tanker: $20,000–60,000/day

Demurrage is sometimes called “liquidated damages” — it represents the shipowner’s loss from the ship being idle beyond the agreed period.

Dispatch

The opposite of demurrage. If the charterer completes cargo operations faster than the allowed laytime, the shipowner pays dispatch to the charterer.

Dispatch rate is typically half the demurrage rate (called “dispatch at half demurrage”). Not all charter parties include dispatch — it depends on negotiation.

Statement of Facts and Time Sheet

The Statement of Facts is the document prepared by the port agent recording:

• Time NOR tendered and accepted
• Commencement and completion of cargo operations
• All stoppages, reasons, durations

The Time Sheet is derived from the Statement of Facts and calculates whether demurrage or dispatch is due.

Who prepares these: Port agent, countersigned by the Master. As the officer in charge of cargo watch, your cargo log book entries form the basis of the Statement of Facts. Accurate log keeping is essential — it can be the difference between winning or losing a demurrage claim.

Seafarer Responsibilities

• Log every stoppage: Note exact time when operations stopped, reason, and when they resumed. Do not round times.
• Weather events: Record exact time rain began, time cargo hatches were closed, time operations resumed. These determine whether weather time counts.
• Signing documents: Read carefully before signing. Statements of Facts signed without qualification can affect demurrage claims.

Frequently Asked Questions

Q: Does the crew benefit from demurrage savings? Not directly — demurrage is a commercial matter between shipowner and charterer. However, efficiency in cargo operations reflects well on the vessel.

Q: Can the Master refuse to load if laytime hasn’t started? The Master must be ready to load when laytime begins. If there’s a commercial reason to delay NOR, that’s a company/charterer decision — not the Master’s alone.

Q: What is “once on demurrage always on demurrage”? Once demurrage commences, it runs continuously regardless of subsequent events (unless the charter party specifies exceptions). A rain shower during demurrage does not pause the demurrage clock.

Questions about cargo operations, time sheets, or Statement of Facts signing? Chat with SailorGPT