Posted in Operations and Supply Chain Terms, Total Reads: 1976
It is a kind of liquidated damages which are paid for extra usage of a vessel (ship). When the person who charters the ship, exceeds the possession period for the ship agreed in the contract, he must pay the ship owner for the extra usage.
In the modern day shipping industry, where there aren’t many chartered vessels, the demurrage charges are levied when the ship is detained beyond the scheduled time for loading and unloading of goods.
This term is also being used in other transport sectors such as railways and road freight where charges are levied for holding the wagon/car beyond the stipulated time.