Demurrage

in shipping, a charge made by a shipowner and paid by the owner of freight for delaying a ship in port beyond a reasonable time, usually specified in a contract. It is only fair that the carrier, who is paid by the ton, should not be delayed by tardiness in loading or unloading, or by detention in port by authorities who deem it necessary to inspect a cargo or even to hold it in quarantine. The owner of the goods, however, cannot be required to pay for time lost on account of war, bad weather, breakage of machinery, or misconduct of an officer or of a crew. In the latter case, the owner of the goods has a just claim.

In railroading, demurrage is a claim made upon the carrier, that is to say, the railroad company, for damages caused by improper delay or careless handling; as in case perishable fruit is delayed too long or glassware is broken in transit. A charge very similar to that made by a shipowner is made by railroads, usually for unnecessary delay in loading and unloading cars. Some railroad systems allow two days for loading and two days for unloading. A nominal charge as say one dollar a day is made for detention beyond that time. This regulation is considered entirely fair. Were it not that some charge were made shippers might order cars and hold them for a long time before loading. Receivers of goods might let cars stand on the track, awaiting their tardy convenience. In this way other shippers would be deprived of cars needed for transportation.

Modern legislatures have established the doctrine of reciprocal demurrage. Under laws recently enacted a railroad company is allowed a reasonable time to furnish the shipper a car. Further delay is penalized by a charge of so much per day.

In 1909 rules were adopted at Washington by the National Association of Railway Commissioners, composed of the federal and state railway commissions, an advisory body, having no existence under the law. After the adoption of the demurrage code by the association, the traffic managers of the biggest railroads in the country recommended its adoption. The new code provides briefly:

(1) All private cars in railroad service are to be subject to demurrage rules. (2) Forty-eight hours free time will be allowed for loading or unloading all commodities, but one day extra will be allowed when cars are held for reconsignment, switching orders, or inspection. (3) Industries owning their own tracks and switching engines will not be allowed any extra time. (4) At the expiration of free time a charge of $1 a day or fraction will be exacted. (5) No railroad can refund demurrage charges unless weather conditions are such that the freight will be damaged by loading or unloading, or unless it is impossible for the shipper to get to the car. (6) Shippers can average their demurrage charges at the end of each calendar month by receiving credit for the cars they have loaded or unloaded before the expiration of the free time.

See Railroads