Demurrage

What Does Demurrage Mean?

Demurrage is a penalty imposed by a transport company when a party exceeds the allotted time for storing cargo in the company’s warehouse. It is also referred to as a detention charge.

Insuranceopedia Explains Demurrage

Cargo can be stored in a transport company’s warehouse for a specified period of free time, typically 72 hours. If the cargo remains beyond this allotted time, the company begins charging demurrage. Either the sender or the receiver may be responsible for these charges.

Demurrage penalties apply in both the trucking and shipping industries. These charges come on top of other costs of moving goods, which is why shippers commonly carry freight insurance to protect the cargo itself while it is in transit or held in a warehouse. Trucking companies that regularly face demurrage also carry commercial trucking insurance for their vehicles and liability.