Averaged Laytime

Separate laytime calculations must be drawn up for loading and for discharging unless there is an express clause in charter-party. In a stringent manner, a saving of time on loading operation cannot be applied to extend the time available for discharging operation unless there is an express clause to this effect in the charter-party. If there is such an express clause in charter-party, there are three (3) ways of achieving this effect:

  1. Specify Number of Hours/Days
  2. Averaged Laytime
  3. Reversible Laytime

In a charter-party, parties can agree to make no distinction between time allowed for loading and discharging with an express clause. As can be observed in tanker charters, parties simply specify number of hours within which the loading and discharging operations, together, must be completed.

In a charter-party, parties can either agree that the two operations (loading/discharging) shall be averaged (Averaged Laytime) or shall be reversible (Reversible Laytime) with an express clause. Occasionally, this is expressed as an option by the charterers either to average or to reverse.

In Averaged Laytime, charterers have the right to average, charterers 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. Generally, 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.

For example, demurrage rate is $20,000 per day and despatch rate is $10,000 per day. Time saved at the loading port is six (6) days. Excess time used at the discharging port is four (4) days. If the two operations are dealt with separately, charterers receive despatch at the load port of $60,000 and pay demurrage at the discharge port of $80,000. The result is that the charterers made a net payment of $20,000. On the other hand, if the charterers were entitled to average laytime, charterers would transfer four (4) of the six days (6) saved at the load port to time used at the discharge port. That would mean that charterers were entitled to receive $20,000 by way of despatch and had no liability to pay demurrage.

In some cases, it is possible for the charterers to lose their liberty to average laytime, if charterers act in a manner inconsistent with the intention to exercise such liberty. If charterers were to obtain payment for load port despatch 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.