Legal Definitions - contract demurrage

The term "demurrage" generally refers to a charge levied when a vessel, vehicle, or container is delayed beyond the agreed-upon period for loading or unloading cargo. This charge compensates the owner of the transport equipment for the loss of its use during the delay.

Contract demurrage specifically refers to demurrage charges where the terms, rates, and conditions for such charges are explicitly defined and agreed upon within a written contract between the parties involved. This means the parties have negotiated and formalized the rules for delays in their agreement, rather than relying solely on standard industry tariffs or general practices.

• Example 1: International Shipping

  A large furniture manufacturer contracts with a shipping line to transport several containers of finished goods from Asia to Europe. Their detailed shipping agreement includes a clause stating that the manufacturer will have 72 hours of "free time" to unload the containers at the destination port once they are made available. After this period, a contract demurrage charge of $180 per container per day will apply for each day or part thereof that the containers remain unreturned to the shipping line.

  This illustrates contract demurrage because the specific duration of free unloading time and the exact daily charge for exceeding it are not just standard industry practice, but are explicitly written into and mutually agreed upon within the signed shipping contract between the manufacturer and the shipping line.

• Example 2: Rail Freight Transport

  A grain distributor enters into a long-term agreement with a railway company for the regular transport of bulk grain in specialized hopper cars. Their service contract stipulates that the distributor has 48 hours to unload each rail car upon its arrival at their silo facility. If unloading extends beyond this period, a contract demurrage fee of $250 per rail car per day will be charged by the railway company, as outlined in their comprehensive service agreement.

  Here, the railway company and the grain distributor have contractually agreed on the precise duration of free unloading time and the specific financial penalty for any delays, making these charges a clear example of contract demurrage.

• Example 3: Road Haulage and Logistics

  A national supermarket chain contracts with a third-party logistics (3PL) company for the delivery of perishable goods from its central warehouse to individual stores. The logistics service agreement specifies that each supermarket location has a maximum of 90 minutes to unload a delivery truck. If a truck is held for longer than 90 minutes due to store delays, a contract demurrage fee of $85 per hour (or part thereof) will be applied, as detailed in their logistics service agreement.

  This demonstrates contract demurrage because the specific free unloading time and the hourly charge for exceeding it are not merely industry norms but are explicitly defined and mutually accepted terms within the signed agreement between the supermarket chain and the logistics provider.