Averaged Laytime

As a general rule, separate laytime calculations must be drawn up for loading and for discharging. Strictly, a saving of time on one operation cannot be applied to extend the time available for the performance of the other unless there is an express clause to this effect in the charter. If there is such a clause, there are three ways of achieving this effect. The first is simply to make no distinction between time allowed for loading and discharging. As we have seen, some charterparties, particularly tanker charters, simply specify a number of hours within which the loading and discharging operations, together, must be completed. Alternatively, where a specified number of days or hours is set out for the loading operation and, separately, for the discharging operation, the parties can either agree that the two operations shall be averaged or that they should be reversible. Occasionally this is expressed as an option by the charterers either to average or to reverse. Averaging: Where charterers have the right to average, they may take credit for time saved in one operation and apply it to time ‘overspent’ in the other operation. The setting-off which is done relates to time used and not to the value of such time in the form of demurrage or despatch. Therefore, where (as is often the case) the demurrage rate is twice the despatch rate, it is very much in the charterers’ interest to credit time saved against excess time used. Averaging can turn the paying party into the party receiving the money. Example: The demurrage rate is US$10,000 per day and the despatch rate is US$5,000 per day. Time saved at the loadport is six days. Excess time used at the discharge port is four days. If the two operations are dealt with separately, charterers receive despatch at the load port of US$30,000 and pay demurrage at the discharge port of US$40,000. The result is that the charterers made a net payment of US$10,000. However, if the charterers were entitled to average, they would transfer four of the six days saved at the load port to time used at the discharge port. That would mean that they were entitled to US$10,000 by way of despatch and had no liability to pay demurrage. In order to avoid an outcome such as the one set out above, some clauses will provide that ‘charterers have the right to average the days allowed for loading and discharging to avoid demurrage.’ If these words are used, the charterers are not entitled to use their right to average so as to make despatch money payable to it in circumstances where it would not otherwise be payable. It is possible for the charterers to lose their liberty to average if they act in a manner inconsistent with the intention to exercise such liberty. If they were to obtain payment for load port despatch (eg by deducting it from freight) it might then be too late to set off time saved at the load port against excess time used at the discharge port.