Despatch Money

The Voylay rules 93 definition of Despatch is: “DESPATCH MONEY” or “DESPATCH” shall mean an agreed amount payable by the owner if the vessel completes loading or discharging before the laytime has expired. As we have seen, laytime is the ‘free’ period within which the vessel must be loaded and discharged before the charterer must pay demurrage. An element of the freight agreed for the voyage has contributed to the cost of laytime and the charterer has effectively paid the owner to be able to use that time without further payment. The owner will have built the cost of the laytime into its voyage economics and will expect the time to be used with no additional income unless laytime is exceeded and the vessel earns demurrage. Against that background, despatch is a mechanism to encourage the charterer to load and discharge the vessel before laytime is exceeded so that any unused laytime is paid back to the charterer in the form of despatch. The owner should gain by completing the voyage early and embarking on the next voyage sooner thereby earning his next freight much quicker. Generally, the rate of despatch is usually half the rate of demurrage although the parties are free to agree any other sum if they wish. Despatch is very rare in the tanker market and it is thought that this is a result of the shorter laytime periods agreed in this trade: if a vessel completes loading and discharging with laytime to spare, no money changes hands as a result. Under Worldscale (freight) terms, laytime is 72 hours for both load and discharge, although owners and charterers can agree their own duration which normally varies from 12 hours for small tankers through to 96 hours or more for larger tankers. Calculating despatch is finding the time saved between completion of loading/discharge and the expected time of completion of loading/discharge according to the laytime agreed. You saw in Chapter 2 how averaging and reversing can affect the final calculation and the parties’ liability for demurrage and despatch. However, with despatch there are two further methods of calculation that need to be considered. The two methods to consider here are Despatch on Working Time Saved (WTS) and Despatch on All Time Saved (ATS). WTS is also referred to as ‘Despatch on All Working Time Saved’, ‘Despatch on Laytime Saved’ or ‘Despatch on All Laytime Saved’. Be aware of the potential confusion with the wording of the second term we consider here. To calculate WTS only the time from the completion of loading to expiry of demurrage excluding any periods excepted from the lay time will be taken into account. Example – Despatch on Working Time Saved (WTS) Laytime allowed – 10 days Sundays and Holidays Excepted. Vessel completes discharge on Friday having used only 7 days laytime out of an allowance of 10 days. Time saved in this case and despatch payable on 3 days. ATS means that the calculation includes any periods excepted from the laytime. Example – Despatch on All Time Saved (ATS). Laytime allowed – 10 days; Sundays and Holidays Excepted. Vessel completes discharge on Friday having used only 7 days. Sunday is excluded and Monday is a Holiday so laytime would have expired the following Wednesday giving rise to despatch of 5 days. Agreeing a fixture on an ATS basis could, as the examples show, increase the payment due to the charterer. It will also require the port agent to keep a record of events after the vessel has sailed so that an accurate calculation can be made taking into account the exceptions agreed in the charterparty.