End of Lay Time

End of Lay Time

Once cargo operations are completed, the vessel will immediately begin to perform the voyage for which it has been chartered.

In practice, this may not be readily possible due to further formalities that may need to be performed in port. Such formalities may include operations to lash and secure the cargo and interactions with customers, government officials, or banking officers due to disputes between parties that have an interest in the cargo. Such eventualities may be provided for in the charter party.

However, even if no provision exists and delays that are beyond the owner’s control occur, then such delays count as lay time. Once started, cargo operations should continue uninterrupted until cargo is fully loaded or discharged or until the available laytime is exhausted.

Laytime ends upon the completion of cargo operations. If further work is needed with respect to trimming, stowing, or lashing the cargo, then the time spent may be added to laytime.

 

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End of Lay Time in Ship Chartering

Lay time is an essential component of ship chartering, representing the time allowed by the charter party (the agreement between the shipowner and the charterer) for the charterer to load and unload cargo at the port. This period, agreed upon by both parties, is crucial to ensure smooth operations and minimize the cost and risk of delays. The end of lay time marks the conclusion of this period, after which demurrage or despatch may apply.

Demurrage and Despatch

  1. Demurrage: If the charterer exceeds the agreed-upon lay time, they must pay the shipowner a penalty called demurrage. Demurrage is typically calculated as a fixed amount per day or per hour of delay, as specified in the charter party.
  2. Despatch: Conversely, if the charterer finishes loading and unloading the cargo before the lay time expires, they may be entitled to receive a payment called despatch from the shipowner. Despatch is generally calculated as a percentage (usually 50%) of the demurrage rate, rewarding the charterer for their efficiency.

Notice of Readiness (NOR)

The end of lay time is determined by a series of events and notifications that take place during the loading and unloading process. One such critical event is the Notice of Readiness (NOR), which the ship’s master (or the shipowner’s agent) issues to the charterer, notifying them that the vessel is ready to load or unload cargo.

The lay time begins once the NOR has been acknowledged by the charterer and a certain period, known as laytime commencement, has passed. This period varies depending on the terms of the charter party but is typically between 6 and 24 hours after the NOR is issued.

Calculating the End of Lay Time

The end of lay time is calculated by adding the agreed lay time duration to the moment the laytime commencement period expires. Any time that is not considered lay time (such as Sundays, holidays, or periods during which the vessel cannot load or unload cargo due to circumstances beyond the charterer’s control) is excluded from the calculation.

Once the lay time has ended, the charterer is no longer entitled to use the ship for loading or unloading purposes without incurring demurrage charges. Conversely, if the charterer finishes loading and unloading before the lay time ends, they may be entitled to receive despatch.

The end of lay time in ship chartering is a critical milestone that impacts both the charterer and the shipowner. It determines the point at which demurrage or despatch may apply, providing an incentive for efficient cargo handling and minimizing delays in the shipping process.

 

Calculating the End of Lay Time

The end of lay time in ship chartering is an essential milestone, as it determines when demurrage or despatch may apply. To calculate the end of lay time, follow these steps:

  1. Establish the Laytime Commencement: The laytime commencement is the moment when the lay time begins to count. This typically starts after a certain period has elapsed since the Notice of Readiness (NOR) was issued and acknowledged by the charterer. The specific duration depends on the terms of the charter party and is usually between 6 and 24 hours.
  2. Determine the Agreed Lay Time: The agreed lay time is the time allowed for loading and unloading cargo, as stipulated in the charter party. This can be expressed in hours or days, and may be different for the loading and unloading ports.
  3. Identify Exclusions: Certain periods are excluded from the lay time calculation, such as Sundays, holidays, or any time when the ship cannot load or unload cargo due to circumstances beyond the charterer’s control (e.g., bad weather, port congestion, or labor strikes). Make a note of these exclusions.
  4. Calculate the Actual Lay Time: To calculate the actual lay time, start from the laytime commencement and add the agreed lay time duration. Then, subtract any excluded periods from the total. The result is the actual lay time.
  5. Determine the End of Lay Time: The end of lay time is the moment when the actual lay time has been fully utilized. It is calculated by adding the actual lay time to the laytime commencement. If there are any interruptions or exclusions during the lay time, adjust the calculation accordingly.

For example, let’s say the laytime commencement is on May 1st at 12:00 PM, the agreed lay time is 48 hours, and there is a 24-hour exclusion due to a public holiday. In this case, the actual lay time would be 72 hours (48 hours of lay time + 24 hours of exclusion). The end of lay time would be on May 4th at 12:00 PM (May 1st, 12:00 PM + 72 hours).

Once the lay time has ended, the charterer is no longer entitled to use the ship for loading or unloading purposes without incurring demurrage charges. Conversely, if the charterer finishes loading and unloading before the lay time ends, they may be entitled to receive despatch.

 

Trimming, Stowing, or Lashing the Cargo may be added to Laytime

In ship chartering, certain activities related to handling cargo, such as trimming, stowing, or lashing, may be included in the laytime calculation, depending on the specific terms agreed upon in the charter party. Including these activities as part of laytime can impact the end of laytime, demurrage, and despatch calculations.

  1. Trimming: Trimming refers to the process of leveling and distributing the cargo evenly within the ship’s cargo holds. This process ensures stability, safety, and efficient utilization of space on the vessel. Trimming is particularly important when dealing with bulk cargoes, such as coal, grain, or iron ore.
  2. Stowing: Stowing is the process of arranging and securing the cargo inside the ship’s holds in a way that maximizes space utilization, ensures safety, and prevents damage to the cargo and the vessel. Proper stowing is crucial for various cargo types, including containerized, break-bulk, or project cargoes.
  3. Lashing: Lashing is the process of securing cargo using ropes, chains, or other devices to prevent movement during the voyage. This process is especially important for containerized, heavy-lift, or project cargoes that may shift or cause damage to the vessel or other cargo if not properly secured.

Inclusion in Laytime

Whether trimming, stowing, or lashing activities are included in laytime depends on the terms and conditions set forth in the charter party. If these activities are considered part of laytime, the time spent on them will count towards the allowed laytime duration. Consequently, the end of laytime calculation will be affected, as the time spent on these activities will be added to the agreed laytime.

For example, if the agreed laytime is 48 hours and it takes 8 hours to complete trimming, stowing, and lashing activities, the laytime will be extended to 56 hours (48 hours of agreed laytime + 8 hours for trimming, stowing, and lashing).

It is essential for both the charterer and the shipowner to clearly define and agree upon the inclusion of trimming, stowing, or lashing activities in the laytime calculation to avoid disputes and misunderstandings related to the end of laytime, demurrage, or despatch.

 

Where can I find the Laytime Definitions For Charter Parties?

We kindly suggest that you visit the web page of BIMCO (Baltic and International Maritime Council) to obtain the original Laytime Definitions For Charter Parties 2013 and other documents. www.bimco.org

 

What is Laytime and Lay Day in shipping?

In shipping, laytime and lay day are fundamental concepts related to the time allocated for loading and unloading cargo during a ship chartering agreement. These terms are essential to understand as they help determine the cost and efficiency of cargo handling and can impact demurrage or despatch calculations.

  1. Laytime: Laytime refers to the period agreed upon between the shipowner and the charterer, during which the charterer is allowed to load or unload cargo at the port without incurring any additional costs. It is usually expressed in hours or days and may differ for the loading and unloading ports. Laytime is negotiated and specified in the charter party, which is the contract between the shipowner and the charterer.

The laytime calculation starts after the Notice of Readiness (NOR) is issued by the ship’s master (or the shipowner’s agent) and acknowledged by the charterer. Once the laytime commencement period (usually between 6 and 24 hours) has passed, the laytime begins to count.

  1. Lay Day: Lay day is a term often used interchangeably with laytime, but it specifically refers to the individual days within the laytime period. Each lay day represents a 24-hour period, starting from the laytime commencement, during which the charterer has the right to use the vessel for loading or unloading purposes.

If the charterer exceeds the agreed-upon laytime, they will have to pay a penalty called demurrage to the shipowner. Demurrage is calculated as a fixed amount per day or per hour of delay, as agreed upon in the charter party. On the other hand, if the charterer completes loading and unloading before the end of the laytime, they may be entitled to receive a payment called despatch from the shipowner, which is typically calculated as a percentage (usually 50%) of the demurrage rate.

Laytime and lay day are essential concepts in shipping that define the time allocated for cargo handling in a ship chartering agreement. They help maintain efficiency and minimize delays, while also impacting the calculation of demurrage and despatch payments between the charterer and the shipowner.

Which conditions End the Laytime in Ship Chartering?

In ship chartering, the laytime is the period allocated for loading and unloading cargo without incurring additional costs. The end of laytime is determined by various conditions and events that occur during the cargo handling process. Here are some common conditions that can end the laytime:

  1. Completion of Cargo Operations: The most common condition that ends laytime is the completion of cargo operations, including loading and unloading. When the charterer finishes these operations before the agreed laytime expires, they may be entitled to receive a payment called despatch from the shipowner.
  2. Expiration of Agreed Laytime: If the agreed laytime expires while cargo operations are still ongoing, the laytime ends, and the charterer is no longer entitled to use the vessel without incurring additional costs. In this case, the charterer will have to pay a penalty called demurrage to the shipowner for the extra time used.
  3. Mutual Agreement: The charterer and the shipowner may mutually agree to end the laytime before the completion of cargo operations or the expiration of the agreed laytime. This could occur due to unforeseen circumstances, changes in the cargo requirements, or other factors that necessitate an early termination of the laytime.
  4. Force Majeure: In some cases, unforeseen events beyond the control of either party, such as extreme weather, natural disasters, or geopolitical issues, may force the end of laytime. When such events occur, both parties may be released from their obligations under the charter party, and the laytime may end without any penalties or additional payments.
  5. Termination of Charter Party: If the charter party is terminated by either the shipowner or the charterer due to a breach of contract or other valid reasons, the laytime may end prematurely. The implications of such termination, including any penalties or compensation, will be determined by the terms and conditions of the charter party.

The end of laytime in ship chartering can be triggered by various conditions, including the completion of cargo operations, the expiration of the agreed laytime, mutual agreement between the parties, force majeure events, or the termination of the charter party. Understanding these conditions is crucial for both the charterer and the shipowner to manage their risks and obligations effectively.