What Are Demurrage Charges?
Demurrage charges are fees paid by the charterer to the shipowner when laytime—the agreed time allowed to load or discharge cargo—is exceeded. These charges are typically calculated per hour or per day and are intended to compensate the vessel owner for lost time and revenue.
Common causes include:
- Delays in cargo readiness
- Inefficient port operations
- Customs clearance issues
- Miscommunication between parties
- Weather or port congestion (depending on contract terms)
1. Understand Your Charter Party Terms
Avoiding demurrage starts with understanding your contract. Review laytime allowances, Notice of Readiness (NOR) requirements, and any exemptions—such as weather delays or port holidays.
Pro tip: Not all time counts against laytime. Clauses like “weather working days” or “Sundays and holidays excepted” can significantly impact your exposure.
2. Communicate Early and Often
Clear communication across all stakeholders—shippers, agents, terminals, and vessel operators—is essential. Share timely updates on:
- Cargo readiness
- Terminal berth bookings
- Changes to ETA or port rotation
Real-time visibility helps prevent surprises that lead to costly delays.
3. Coordinate Pre-Arrival Activities
Many demurrage claims originate before the vessel even arrives. Minimize idle time by confirming:
- All required documentation is submitted
- Berthing schedules are locked in
- Customs and inspections are scheduled
- Cargo is prepped and accessible
Proactive planning = smoother port calls.
4. Issue the Notice of Readiness (NOR) Correctly
Improperly issued NORs are a common reason laytime doesn't start when expected. Ensure the vessel is:
- Fully ready to operate
- Within port limits
- Compliant with charter party requirements
A valid NOR is your best protection against unexpected demurrage.
5. Track Laytime Accurately
Precise laytime tracking is non-negotiable. Use a laytime calculator or partner with experts who can audit your port calls. Keep detailed logs and ensure the Statement of Facts (SOF) is accurate and complete.
Good documentation can be the difference between paying or avoiding excessive charges.
6. Negotiate Clear Demurrage Terms
Your charter party is your first line of defense. If delays are likely, consider:
- Adding buffer laytime
- Negotiating a lower demurrage rate
- Clarifying allowable delays (e.g., "exceptions to laytime")
Smart contracts reduce risk before the voyage begins.
7. Invest in Training
Your commercial and ops teams must understand how demurrage works. Without the right training, small errors can lead to major financial losses.
Our Intro to Demurrage and Advanced Demurrage courses are designed for charterers, operators, and shipping professionals who want to:
- Prevent costly mistakes
- Handle disputes confidently
- Improve operational decision-making
Don’t wait until the invoices hit your desk. Train your team now to protect your margins.
Final Thoughts: Avoiding Demurrage Is About Control
Demurrage is often preventable. By prioritizing contract clarity, operational planning, and cross-team communication, you can avoid unnecessary penalties and keep your voyages profitable.
Want to Reduce Your Demurrage Exposure?
At Haugen Consulting, we’ve helped clients eliminate excessive demurrage costs through targeted audits, training, and negotiation support. Whether you need a second opinion on a laytime claim or want to equip your team with industry-best practices—we’re here to help.
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Let’s talk about how we can help your team reduce exposure and improve performance.
