The Importance of Demurrage in International Banking Law

Demurrage an expense for delaying a ship or the penalty for exceeding free time allowed for loading/ unloading under the terms of the agreement with the carrier Demurrage is the term used in the rail and ocean industry; Detention is used in the motor industry .A financial penalty for exceeding the time allotted for loading or unloading a vessel ,This applies only when fault lies with the charter or shipper .Excess time taken for loading or unloading of a vessel not caused by the vessel operator, but due to the acts of a charterer or shipper also refers to imported cargo not picked up within prescribed time. Also demurrage relates to cargo (while the cargo is in the container). But detention relates to equipment (while the container is empty after unpacking or before packing. Detention & Demurrage charges will be applicable for shipments wherein customers have exceeded the standard free time applicable both in the import & export cycles. Demurrage will be levied when the Customer holds equipment inside the terminal for longer than the agreed free days and is applicable to all containers that remain at the terminal longer than the agreed free time. Detention charges will be levied when the Customer holds equipment outside the terminal longer than the agreed free time: it is applicable throughout the duration of Customer’s possession of container(s) in his custody, and until its safe return to container(s). The reverse of demurrage is dispatch. If the charterer requires the use of the vessel for less time than the lay time allowed, the charter party may require the ship-owner to pay dispatch for the time saved.