Can Ocean Carrier Charge Demurrage Fees to Shippers Indefinitely?
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Demurrage cargo claims are skyrocketing among Recoupex clients. Supply chains has been disrupted since the pandemic, and war conflict leading to increased delays. One of the critical issue is the accumulation of demurrage charges on containers.
When containers are provided by the carrier, bills of lading specify a specific ‘free time’ during which the containers must be returned. Failure to comply with this timeframe results in the incurrence of demurrage charges, which accumulate on a daily basis leaving consignees grappling with the financial implications, and there’s the possibility of insolvent consignees not taking delivery of goods further compounds the problem, leaving ports with uncollected containers incurring daily demurrage charges.
Under normal circumstances, the shipper bears the liability for demurrage charges even after the transfer of the bill of lading. However, the consignee of the bill may also become liable if they take delivery, demand delivery, or make a claim against the carrier. It is worth noting that a party abandoning the cargo will not trigger these conditions, thus leaving the shipper as the sole party liable for container demurrage once the ‘free time’ has expired.
Demurrage charges cannot run indefinitely!
There comes a point when the shipper’s failure to arrange the return of containers amounts to a renunciation of the contract. At this stage, demurrage charges cease, and the shipper’s outstanding liability in damages is limited to the value of the container. In the case of MSC v Cottonex, the court held that the carrier was entitled to demurrage charges until the shipper renounced the contract. The court also found that the carrier’s claim for the value of the containers was reasonable.
To summarize: ocean carriers cannot charge demurrage fees for an indefinite period of time. Shipper has to make it clear that he is not willing nor able to take containers and repudiate the contract.
Recoupex is a hub of transport lawyers – experts in cargo claims. We assess your case quickly. We have successfully recovered claims from Maersk, Sealand, Hapag-Lloyd, Mediterranean Shipping Company – MSC, CMA CGM, and other carriers.
