Demurrage that ate the margin
A grain cargo made a healthy trading margin on paper. Nine days of waiting at the discharge port turned it into a loss, and the contract said who paid.
The trade
A Panamax of milling wheat, bought FOB Black Sea and sold CFR to a North African buyer. The margin at the point of sale was roughly two dollars a tonne, which on 60,000 tonnes is a respectable trade.
What happened at discharge
The receiving port had one working berth and a queue. The vessel waited nine days beyond the agreed laytime. At the demurrage rate in the charter party, that was substantially more than the trading margin.
Who paid
The sale contract passed demurrage risk to the buyer, but only above a threshold and only if notices were served correctly and on time. One notice went to the wrong address, which was the address in an older version of the contract. The claim failed on that point alone.
What to take from it
- On thin margins, demurrage is not an operational detail. It is the largest single variable in the trade.
- Notice provisions are conditions, not formalities. A good claim served late or to the wrong party is not a claim.
- The margin quoted at the point of sale is not the margin. It is the margin before operations.