Demurrage refers to which of the following arrangements?

• A. A financial incentive paid by the charterer to the shipowner if loading/discharging is longer than planned.
• B. A fee charged by the vessel for excessive laytime.
• C. A rebate given by the shipowner to the buyer for early payment.
• D. A surcharge levied by the port for delayed clearance.

Answer: (A)

Demurrage is the charge payable by the charterer to the shipowner when loading or unloading runs beyond the agreed laytime. It serves two purposes: it compensates the owner for tying the vessel up longer than planned, and it creates a financial incentive for the charterer to complete cargo handling within the scheduled window. This makes the first option the best fit because it emphasizes a payment tied to delays relative to the planned timeline. It’s not a rebate for early payment, and it isn’t a port surcharge; those terms describe different kinds of charges or incentives not related to the vessel’s time used for loading or unloading.