Meaning
A compensatory fee is charged by a shipping line when a charterer or consignee exceeds the allowed free time for using a container or holding a vessel. International ocean carriers impose carrier demurrage to recover the cost of equipment being out of service. This charge accumulates on a daily basis until the empty container is returned to the designated terminal.
The tariff rates are set by the carrier and registered with the Chinese Ministry of Transport.
Fee Accumulation
Charges begin to accrue immediately after the expiration of the free time specified in the contract. Under typical import contracts in China, carrier demurrage is calculated using a progressive rate structure where the daily fee increases after a certain number of days. This encourages the quick turnaround of containers.
Financial Liability
When disputes arise over who is responsible for delays in unloading, the carrier holds a lien over the cargo to secure payment. The liability for carrier demurrage usually falls on the consignee who is receiving the goods, but the shipper may remain liable if the contract allows it. Shipping lines often refuse to release subsequent shipments if outstanding fees remain unpaid.
Container Release
Resolution of outstanding fees is required before the shipping line will issue the equipment release order. If a factory faces unexpected delays during customs inspections, the resulting carrier demurrage can exceed the value of the goods themselves. Managing these turnaround times is critical for maintaining supply chain efficiency.
