Calculation of Demurrage

In order to calculate the amount payable to shipowner, demurrage rate is multiplied by the number of days (or part of day) in excess of the agreed laytime. Example: Total Laytime Allowed 10 days. Demurrage Rate US$30,000 per day pro rata. Vessel exceeded laytime allowed for loading and discharging by 4 days 6 hours 30 mins. Demurrage payable =4d 6h 30m x US$30,000 per day =4.27083 days x $30,000 = US$128,125.00. To arrive at the number of days on demurrage a calculation of the time in port must be made making reference to the time allowed (laytime) and whether time is counting or whether it is an exception and does not count. The calculation is similar to using a stopwatch in that the clock will continue to run until there is a qualifying exception and the time will stop. It is therefore essential in any charterparty to know exactly when the agreed laytime has expired as the vessel, from that point, will be ‘on demurrage’. ‘ONCE ON DEMURRAGE, ALWAYS ON DEMURRAGE’. Although this is an overused and often misleading phrase, it is important to note that the rules for the ‘stopwatch’ change when a vessel is on demurrage and careful attention must be paid to the detail of the specific charterparty when this happens. General rule is that express exceptions to lay time do not apply to demurrage unless there is clear wording in the charterparty to that effect. This rule means that, in theory at least, the clock does not stop running once the vessel has gone on demurrage, hence the maxim ‘once on demurrage, always on demurrage’. Example: Asbatankvoy – Clause 7 last sentence reads as follows: Time consumed by the vessel in moving from loading or discharge port anchorage to her loading or discharge berth, discharging ballast water or slops, will not count as used lay time. If the vessel was moving from the anchorage to the berth and the laytime at that time had not been used up then time will not run during the period of moving to the berth. If, however, lay time had expired and the vessel was on demurrage then time would continue to run for such an event and the owner is entitled to demurrage for this time. Care must be taken over the wording of the charterparty as it is prevalent in the tanker market for events which interrupt laytime to also apply to demurrage (see BPVOY4 as an example). Asbatankvoy is usually fixed with a large number of additional clauses which have a similar effect. Demurrage would not run where there is a fault on the part of the shipowner, for example, a vessel breakdown, as an owner should not be able to profit (i.e. get paid demurrage) for its own breach of contract. General exceptions clauses will not apply to demurrage unless the wording specifically supports this. Time on demurrage ends at the same time as laytime would have done, such as completion of cargo operations or, as commonly found in the tanker market, at disconnection of cargo hoses.