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HomeBill of LadingIs there a link between demurrage and Incoterms..??

Is there a link between demurrage and Incoterms..??

Is there a link between demurrage and Incoterms ®..??

This question was prompted by the below question from one of the readers.. Thank you Rizwan..

We have received huge shipment from our suppliers on CFR basis

In the Bill of lading the Consignee is To The order of Seller and our company name is in Notify party.

The seller has sent us the original Bill of lading 20 days after the vessel has arrived at destination port.

Hence there is a delay in clearing the goods. Can the shipping line claim demurrage charges from us or they should put claim on seller /shipper since the shipping line contract is with the seller and not us

Image for blank blRizwan, first of all pls check whether the bill of lading is issued “To Order of Seller” or “To Order of Shipper“..??

Bills of Lading are normally consigned To Order of Shipper since it maybe difficult to get the endorsement of the seller because in a lot of cases the seller, exporter and shipper in a shipment maybe different entities..

My answer is on the assumption that the bill is consigned To Order of Shipper and that the shipper and seller are the same and also that the shipper has endorsed the bill to you, making you the receiver of the cargo..

Back to the case, the seller endorsed the cargo to you and sent the original bills of lading late to you.. The shipping line promptly charged you for the demurrage because you cleared the cargo late..

From the shipping line’s perspective, they are right in doing so since you are the nominated receiver of this cargo and you cleared the cargo late..

Even though the shipment is under CFR terms according to which the shipper books the cargo with the shipping line, the shipping line may not charge the shipper for demurrage because

1) The contract between the shipping line and the shipper is a “contract of carriage” and not a “sales contract“.. CFR and (other Incoterms®) are commercial terms used in a sales contract between the seller and buyer..

The Incoterms® rules are not part of the contract of carriage, but there is a relationship between the two because depending on the Incoterms® rule chosen, the shipper may need to  negotiate a specific contract of carriage with the carrier with particular conditions relative to the Incoterms® rule chosen..

In regards to this particular case, Point A8 of the Incoterms® 2010 guidance notes for CFR says

The seller must, at its own expense, provide the buyer without delay with the usual transport document for the agreed port of destination.


When such a transport document is issued in negotiable form and in several originals, a full set of originals must be presented to the buyer.

2) As per current market practice, the demurrage/detention incurred at the destination port is ALWAYS charged by the shipping line to the consignee/receiver unless there is a prior arrangement between the shipper, consignee and the shipping line that the shipper will pay for this..

In this case, the issues of delay in dispatch of the documents in contravention of above guidance notes, the reason for the delay and the accrual of costs due to this delay are all issues between the seller and the buyer and it has no bearing on the shipping line’s decision to charge the consignee for the demurrage/detention and/or storage..

So Rizwan, the answer to your question “Can the shipping line claim demurrage charges from us or they should put claim on seller /shipper since the shipping line contract is with the seller and not us” is

  1. YES the shipping line is well within its right to claim demurrage charges from you as nominated consignee (you may in turn, as a buyer forward that claim to the seller due to the above delay from their end)
  2. NO the shipping line cannot claim demurrage charges from the shipper on the basis of the shipping line contract

Has anyone else had any experiences such as above.. How did you solve it if you did..??

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Hariesh Manaadiar
Hariesh Manaadiar
I am Hariesh Manaadiar, the Founder of Shipping and Freight Resource.. I have been in the dynamic shipping and freight industry for over three decades and have worked in several sectors.. I share my experiences and knowledge of the industry through this blog for those looking for help in the industry.. Stay subscribed for more free useful content about shipping, freight, maritime, logistics, supply chain and trade..


  1. We had similar situation back end but the issue was different there was some discrepancy in bill of lading we had telex transfer the bl and asked our freight forwarder to issue the bl at discharge portsince it was discrepancy in the bl which was shipping line safmarine was at fault. By the time we amend the bl vehemently with shipping line it was already too late at discharge port and their incurred ground rent charges in return our consignee billed to us for that delay

  2. Question: to whom to demurrage free days belong? in other words :
    – is the demurrage free time for the shipper/seller in case he is late in delivering the documents or
    – is the demurrage free period for the receiver to have time to clear the goods.

    We have a discussion about this with our shipper who says that as long as documents are presented within demurrage free period he should not be charged by the receiver for demurrage. We claim that these days were asked for so that the receiver, in this case in Turkey, can clear the goods and pick up the container.

    • Hi Anne Marieke, such situations requires close discussion and communication between buyer and seller.. In case either of them are aware that there will be delays in clearance due to documentary delays, they can always discuss with the shipping line and request for extra free days.. If there are any other issues causing delays in delivery the origin of issues will have to be identified and then discussed and decided accordingly.. Trust this helps..

  3. Rizwan _ u can negotiate with shipping line to waive half of demurrage charges , also negotiate with shipper to share with u that charges and u must know the reason of delay sending document , maybe u dont pay money or price of shipment on time



  4. Rizwan – appreciate if you share with us what ultimately happened? Were you successful in getting a waiver from the shipping line? Or did you contact the seller for compensation? Pls let us know so we have a complete overview of what happens in similar cases.

  5. Even we had same experience.

    We shipped goods and incurred huge detention & demurrage due to non clearance of goods by consignee.

    So, Shipping line charged the demurrage from us (Shipper).

    We tried to clear all demurrage charges but not successful so, finally our cargo has been destroyed by Line.

    • Hi Kusum,

      We are in a similar situation with one of our CFR shipment, The buyer has not cleared the goods. And with the long delay it has reached the point were the goods will be destroyed.

      In such case, who will pay the port dumerage charges against a CFR shipment as claimed by the shipping line, is it Buyer or Shipper ?

      Can anybody help, please ?

      My email ID is

  6. Great read, very informative. It’s important to note that demurrage that is incurred at the destination port is 100% of the time charged to the receiver. It’s really rare to see an agreement that bypasses that.

  7. Great, that very helpful and educational…
    As a young growing man in Shipping Industry I enjoy reading this Blog..

    • I agree with the solution. But, normaly when the shipping line doesn´t receive demurrage/detention from the receiver he try to receive it from the shipper, exactly on basis of the carriage contract. Regards. Monteiro da Rocha – shipping lawyer


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