What is demurrage in a voyage charter?

What is demurrage in a voyage charter?

• A. Demurrage is a fee payable to the shipowner for delays caused by the charterer beyond laytime.
• B. Demurrage is the fee paid to port authorities.
• C. Demurrage is the initial hire payment.
• D. Demurrage is the cost of fuel.

Answer: (A)

Demurrage is the fee payable to the shipowner when the vessel is delayed beyond the agreed period for loading or unloading, known as laytime. In a voyage charter, the charter party fixes laytime and the rate of demurrage. If loading or unloading runs past this laytime because of delays caused by the charterer, demurrage accrues to compensate the owner for the time the ship is tied up and not earning its hire. If the operations are completed within laytime, a despatch payment might be due to the charterer, instead of demurrage. This is not a fee to port authorities, not the initial hire, and not the cost of fuel. For example, if laytime is five days and loading takes six days, one day of demurrage would be payable at the agreed rate.

Demurrage is the fee payable to the shipowner when the vessel is delayed beyond the agreed period for loading or unloading, known as laytime. In a voyage charter, the charter party fixes laytime and the rate of demurrage. If loading or unloading runs past this laytime because of delays caused by the charterer, demurrage accrues to compensate the owner for the time the ship is tied up and not earning its hire. If the operations are completed within laytime, a despatch payment might be due to the charterer, instead of demurrage. This is not a fee to port authorities, not the initial hire, and not the cost of fuel. For example, if laytime is five days and loading takes six days, one day of demurrage would be payable at the agreed rate.