Laytime Calculation

Laytime Calculation

Laytime is the period of time within which the loading or discharging operation is required to be successfully completed according to the charter-party. Laytime is at the charterer’s free disposal in other words laytime is already included in the freight calculations. If laytime period is exceeded, charterer will have to pay remuneration to the shipowner in the form of demurrage or damages for detention.

Obviously, it is for the benefit of the charterer’s interest for the laytime period to be as broad as possible in order to take into account for unexpected events. Contrarily, it is to the economic advantage of the shipowner to have a prompt port turn-round and therefore shipowner is frequently prepared to offer an inducement to the charterer in the form of dispatch money if the loading or discharging operation can be completed in a short period of time.

Laytime Calculation 

In charter-party, period of laytime is unambiguously specified either as a specific number of days or as a fixed loading or discharge rate. Frequently, laytime period wording is less specific such as:

  • Customary Dispatch
  • As Fast As Ship Can Receive

These kind of laytime period phrases are interpreted as imposing an obligation to load within a reasonable time according to the custom of the port and the charterer is expected to exercise reasonable dispatch in administering the operation.

If laytime is indicated as a certain number of days or running days, this is interpreted by the courts as meaning consecutive periods of 24 hours running without interruption except in the case where specific days are excluded such as SHEX (Sundays and Holidays Excepted).

In charter-party, if excepted periods of laytime is not stipulated, then laytime would run continuously through Sundays, holidays and other periods such as Saturday afternoons, during which it was not customary to work in the port. Excepted periods of laytime is considered as a nutshell expression for the computation of average loading time. It is unimportant that excepted periods of laytime may be illegal to work on some of these days at a particular port.

Conventionally, laytime periods of 24 hours were regarded as calendar days running from midnight, but under modern forms of charter-party laytime periods will be treated as artificial or conventional days of 24 hours starting from the time when the NOR (Notice of Readiness) commences.

Alternative way of explaining laytime is in the form of working days. A working day is a day on which work is ordinarily done in the particular port, excluding Sundays and holidays (Fridays in Muslim countries). A working day describes the character of the day as a whole, and consequently the day will count even though the charterer does not intend to load on that day or is obstructed Saturday from using due to bad weather, unless bad weather condition is covered by an exception. Number of hours in a particular working day on which a ship is required to load will depend on the custom of the port. Generally, Saturday will normally count as a whole day although may not be customary to work in the afternoon.

Weather Working Day phrase is a further improvement, excluding from the calculation of laytime those working days on which loading would have been prevented by bad weather, had any loading been envisaged at that time. It is unimportant that the charterer had no intention of loading during such periods, since “the status of a day as being a weather working day, wholly or in part or not at all, is determined solely by its own weather and not by extraneous factors such as the actions, intentions and plans of any person”. If only a part of the working day is affected by bad weather, a suitable deduction from the laytime will be made in proportion to the length of the suspension.

In a broad sense, the word weather is interpreted by the courts and has been held to cover not only rain and gusts but also stack of ice which prevented loading. Contrarily, weather must influence the loading process and not simply the safety of the ship. Consequently, mere threat of bad weather, which resulted in a ship being ordered from the berth by the harbor master, did not prevent the period in question from counting as weather working days. Different method of evaluation which is progressively used in modern standardized forms is to base the calculation of laytime on a specified daily rate of loading or discharging such as 5,000 metric tons per weather working day. Number of lay days is then determined by dividing the total amount of cargo by the daily rate. Any resulting fraction must be treated as an appropriate fraction of the working day and will not permit the charterer to an extra full day. Frequently, lay days calculation is qualified by being expressed as:

  • Daily Rate Per Hatch
  • Daily Rate Per Workable Hatch

In Daily Rate Per Hatch, overall rate is calculated by multiplying the daily rate by the number of hatches, but the calculation of Daily Rate Per Workable Hatch is not so simple. Working Hatch term is used to indicate a hatch which can be worked either because under that hatch there is a hold into which cargo can be loaded or discharged. Once the hold has been loaded or discharged, that hatch ceases to be a working hatch.

Therefore, average daily quantity to be loaded into or discharged from the ship cannot be determined until the loading or discharging operations have begun, and may vary as those operations proceed. If all the hatches remain workable throughout the loading or discharging operation, then calculation will be moderately simple, since calculation can then be assessed in relation to the time taken to load or discharge the largest hold.

Important Factors to include in Laytime Calculation

When calculating laytime in a charterparty agreement, several important factors need to be taken into consideration. These factors include:

  1. Notice of Readiness (NOR): The time when the ship arrives at the port, and the master or the ship’s agent submits a formal notice to the charterer, stating that the ship is ready to load or discharge cargo.
  2. Laytime Commencement: The point at which laytime starts counting. This is often subject to specific conditions in the charterparty, such as the expiry of agreed notice time, working hours, or any other conditions stated in the agreement.
  3. Allowed Laytime: The amount of time agreed upon in the charterparty for loading and discharging operations. The laytime is usually expressed in running hours or days.
  4. Demurrage and Despatch Rates: Demurrage is a financial penalty imposed on the charterer for exceeding the allowed laytime, while despatch is a reward for completing the operations within the allowed laytime. The rates for demurrage and despatch are specified in the charterparty agreement.
  5. Exceptions and Interruptions: Charterparty agreements often specify conditions under which laytime may be suspended or not counted, such as bad weather, weekends, public holidays, or other force majeure events. It is essential to account for these exceptions when calculating laytime.
  6. Time Used for Loading and Discharging: The actual time taken for loading and discharging operations. This includes the time spent from the commencement of laytime until the completion of the operations.
  7. Time on Demurrage or Despatch: The difference between the allowed laytime and the actual time used for loading and discharging. If the actual time used is less than the allowed laytime, the difference is considered as despatch. If the actual time used exceeds the allowed laytime, the difference is considered as demurrage.

By considering these factors, you can accurately calculate laytime, demurrage, and despatch for a voyage charterparty agreement, ensuring that both the Shipowner and the Charterer are fairly compensated for the time spent on loading and discharging operations.

 

Other important factors to include in Laytime Calculation:

1- Category of Laytime
2- Method of Calculating Laytime
3- Exceptions to Laytime
4- Commencement of Laytime

 

1- Category of Laytime

Laytime can be categorized into several types, depending on the specific circumstances and provisions in the charterparty agreement. Some common categories of laytime include:

  1. Reversible Laytime: In this type of laytime arrangement, the allowed time for loading and discharging is combined into a single, cumulative amount. If the time spent on either loading or discharging is less than the allocated time, the unused time can be applied to the other operation. This flexibility benefits the charterer as they can use the time more efficiently.
  2. Non-reversible Laytime: Unlike reversible laytime, non-reversible laytime separates the allowed time for loading and discharging. In this arrangement, any unused laytime from the loading operation cannot be applied to the discharging operation, and vice versa. This arrangement is less flexible for the charterer, as any unused time for one operation is not transferable to the other.
  3. Average Laytime: Average laytime is similar to reversible laytime, as it combines the allowed time for loading and discharging into a single amount. However, average laytime goes a step further by allowing the unused time from one operation to be applied to the other operation across multiple voyages under the same charterparty. This arrangement provides even more flexibility for the charterer, as it allows for the efficient use of laytime across several voyages.
  4. Straight Laytime: Straight laytime refers to a simple and straightforward laytime arrangement where the allowed time for loading and discharging is specified for each operation, with no provisions for reversibility or averaging.
  5. Weather Working Days (WWD): In this type of laytime, the allowed time for loading and discharging only counts during days with suitable weather conditions for the operations. This arrangement takes into consideration that operations may be disrupted or delayed due to bad weather, and laytime is only counted when the weather permits safe operations.
  6. Working Days: In this arrangement, laytime is only counted on working days, which typically excludes weekends, public holidays, or any other non-working days agreed upon in the charterparty.

Each category of laytime has its advantages and disadvantages, and the specific arrangement chosen depends on the agreement between the shipowner and the charterer, as well as the nature of the cargo, trade route, and other factors relevant to the voyage.

 

2- Method of Calculating Laytime

Calculating laytime is an essential process in voyage charterparty agreements, as it helps determine demurrage or despatch payments between the shipowner and the charterer. Here is a step-by-step method for calculating laytime:

  1. Determine the Terms and Conditions of the Charterparty Agreement: Review the charterparty agreement to identify the allowed laytime for loading and discharging, Notice of Readiness (NOR) requirements, demurrage and despatch rates, and any exceptions or interruptions to laytime.
  2. Identify Key Timelines: Note the arrival and departure times at the loading and discharging ports, as well as the times when NOR is given and when laytime starts counting.
  3. Apply Exceptions or Interruptions: If there are any exceptions or interruptions to laytime (such as bad weather, weekends, public holidays, etc.), apply these to the calculation, ensuring that laytime is not counted during these periods.
  4. Calculate Actual Laytime Used: Determine the actual time used for loading and discharging operations, starting from the commencement of laytime until the completion of the respective operations.
  5. Compare Actual Laytime Used with Allowed Laytime: For both loading and discharging, compare the actual time used with the allowed laytime specified in the charterparty agreement.
  6. Calculate Demurrage or Despatch: a. If the actual laytime used is less than the allowed laytime, calculate the difference and determine the despatch amount using the despatch rate specified in the charterparty agreement. b. If the actual laytime used exceeds the allowed laytime, calculate the difference and determine the demurrage amount using the demurrage rate specified in the charterparty agreement.
  7. Final Settlement: Calculate the difference between the demurrage and despatch amounts for both loading and discharging operations. If the difference is positive, the charterer owes the shipowner demurrage. If the difference is negative, the shipowner owes the charterer despatch.

By following this method, you can accurately calculate laytime, demurrage, and despatch in a voyage charterparty agreement, ensuring a fair and transparent settlement between the shipowner and the charterer.

 

3- Exceptions to Laytime

In a voyage charterparty agreement, there are certain situations where laytime may be suspended or not counted. These exceptions to laytime are generally outlined in the charterparty terms and conditions. Some common exceptions to laytime include:

  1. Weather Conditions: Laytime may be suspended or not counted during periods of bad weather, such as heavy rain, storms, or fog, which can disrupt or delay loading and discharging operations. This type of exception is often referred to as Weather Working Days (WWD).
  2. Weekends and Holidays: Laytime may be excluded on weekends, public holidays, or any other non-working days agreed upon in the charterparty. This exception is typically referred to as “Saturdays, Sundays, and Holidays Excepted” (SSHE) or “Saturdays, Sundays, Holidays Included” (SSHI), depending on whether laytime is counted or not during those days.
  3. Force Majeure Events: Laytime may be suspended during unforeseeable events or circumstances beyond the control of the parties involved, such as natural disasters, strikes, war, or other similar events. Force majeure clauses in the charterparty protect both parties from being held responsible for delays or failures in performance due to such events.
  4. Breakdowns or Accidents: Laytime may be suspended if the ship experiences a breakdown, accident, or any other operational issue that prevents the loading or discharging of cargo.
  5. Customs or Regulatory Delays: Laytime may be suspended or not counted during delays caused by customs inspections, port authority regulations, or other bureaucratic procedures.
  6. Waiting for Berth: Laytime may be suspended while the ship is waiting for a berth to become available at the port. This exception is typically referred to as “Waiting for Berth” or “Berth or No Berth” clauses.
  7. Shifting Between Berths: Laytime may be suspended during the time spent by the ship shifting between berths, as long as the shifting is not due to the ship’s fault or inefficiency.
  8. Specific Charterparty Clauses: The charterparty agreement may include additional exceptions or suspensions to laytime based on the specific circumstances or requirements of the parties involved.

It is essential for both the shipowner and the charterer to be aware of these exceptions to laytime, as they can significantly impact the calculation of Demurrage or Despatch payments in a voyage charterparty agreement.

 

4- Commencement of Laytime

The commencement of laytime is a critical aspect of a voyage charterparty agreement, as it marks the starting point from which the allowed time for loading and discharging operations is counted. The commencement of laytime is typically determined by several factors, as outlined in the charterparty terms and conditions. Here are some key elements to consider:

  1. Notice of Readiness (NOR): The shipowner or their agent must submit a formal Notice of Readiness to the charterer, stating that the ship has arrived at the designated port and is ready to load or discharge cargo. The NOR is typically given in writing, although some charterparties may accept electronic or verbal notices.
  2. Laytime Clauses: The charterparty agreement will specify the conditions under which laytime commences. These conditions may include the time and date of the NOR, the expiry of any agreed notice time, or the commencement of loading or discharging operations.
  3. Working Hours: Laytime often commences within specific working hours, as agreed upon in the charterparty. For example, laytime may start during regular working hours on a weekday, or during daylight hours for operations that require visibility.
  4. Arrival at the Designated Port: The ship must have arrived at the designated port, anchorage, or berth before laytime can commence. This may involve waiting for a berth to become available, obtaining clearance from port authorities, or navigating to a designated anchorage point.
  5. Exceptions or Interruptions: In some cases, the commencement of laytime may be delayed due to exceptions or interruptions outlined in the charterparty agreement. These exceptions may include weekends, public holidays, bad weather, force majeure events, or other circumstances that could impact the loading or discharging operations.

Understanding the commencement of laytime is crucial for both shipowners and charterers, as it directly affects the calculation of laytime, demurrage, and despatch in a voyage charterparty agreement. Both parties must carefully review the charterparty terms and conditions to ensure that they are aware of the specific requirements and conditions for the commencement of laytime.

 

Laytime Calculation in a Voyage Charterparty Agreement

Laytime is a crucial aspect of a voyage charterparty agreement, referring to the time allowed for the charterer to load and discharge cargo at the designated ports. Calculating laytime accurately is essential to ensure fairness for both parties and avoid disputes over Demurrage or Despatch. Here is an outline of how to calculate laytime in a voyage charterparty agreement:

  1. Determine the Laytime Terms: Review the charterparty agreement to identify the laytime terms, which specify the allowed time for loading and discharging cargo. These terms may be expressed in hours, days, or other units of time, and may vary for different ports or types of cargo involved.
  2. Identify the Commencement of Laytime: Laytime typically commences when the ship is at the designated port, has provided a Notice of Readiness (NOR) to the charterer, and the laytime countdown commences after the expiration of any agreed waiting time. The charterparty may also specify conditions for when laytime can begin, such as the ship being in “all fast” or “fully berthed” status.
  3. Account for Exceptions and Interruptions: The charterparty agreement may outline certain exceptions or interruptions to laytime, such as bad weather, strikes, public holidays, or other events that prevent loading or discharging operations. Be sure to account for these exceptions when calculating laytime, as they can extend the allowed time without incurring demurrage.
  4. Calculate Laytime Used: Calculate the actual laytime used by determining the time elapsed between the commencement of laytime and the completion of loading or discharging operations. If laytime is expressed in working days, exclude non-working days, such as weekends and public holidays, from the calculation. Similarly, if laytime is based on working hours, exclude non-working hours.
  5. Compare Laytime Used with Allowed Laytime: Compare the actual laytime used with the allowed laytime specified in the charterparty agreement. If the actual laytime used is less than the allowed laytime, the charterer may be entitled to despatch, which is a refund from the shipowner for the unused laytime. If the actual laytime used exceeds the allowed laytime, the charterer may be liable for demurrage, which is a compensation paid to the shipowner for the extra time used.
  6. Calculate Demurrage or Despatch (if applicable): If demurrage or despatch is due, calculate the amount based on the agreed rate specified in the charterparty. Demurrage is typically calculated on a per day (or pro-rata basis) for each day the actual laytime exceeds the allowed laytime. Despatch, on the other hand, is calculated for each day the actual laytime is less than the allowed laytime.

By following these steps, you can accurately calculate laytime in a voyage charterparty agreement and ensure that both parties are treated fairly concerning loading and discharging operations. Proper laytime calculation helps prevent disputes over demurrage or despatch and contributes to smoother execution of the charterparty.

 

Laytime Calculation Example 1

Here’s an example of laytime calculation in a voyage charterparty agreement:

Charterparty Terms:

  • Allowed laytime for loading: 48 hours
  • Allowed laytime for discharging: 72 hours
  • Demurrage rate: $10,000 per day or pro-rata
  • Despatch rate: 50% of demurrage rate

Timeline:

  • Ship arrives and gives Notice of Readiness (NOR) at the loading port on April 1 at 10:00.
  • Laytime starts counting after 6 hours of waiting time on April 1 at 16:00.
  • Loading completed on April 3 at 18:00.
  • Ship arrives and gives NOR at the discharging port on April 10 at 08:00.
  • Laytime starts counting immediately.
  • Discharging completed on April 12 at 12:00.

Laytime Calculation:

Loading:

  1. Calculate the actual laytime used for loading: From April 1, 16:00, to April 3, 18:00, which is 2 days and 2 hours, or 50 hours.
  2. Compare actual laytime used (50 hours) with allowed laytime (48 hours): The actual laytime exceeds the allowed laytime by 2 hours.
  3. Calculate demurrage for loading: 2 hours of excess laytime, which is 1/12 of a day. Demurrage is $10,000 per day, so the demurrage for loading is (1/12 * $10,000) = $833.33.

Discharging:

  1. Calculate the actual laytime used for discharging: From April 10, 08:00, to April 12, 12:00, which is 2 days and 4 hours, or 52 hours.
  2. Compare actual laytime used (52 hours) with allowed laytime (72 hours): The actual laytime is less than the allowed laytime by 20 hours.
  3. Calculate despatch for discharging: 20 hours of unused laytime, which is 5/6 of a day. The despatch rate is 50% of the demurrage rate, so the despatch for discharging is (5/6 * 0.5 * $10,000) = $4,166.67.

Final Settlement:

  1. Calculate the difference between demurrage and despatch: $833.33 (demurrage) – $4,166.67 (despatch) = -$3,333.34
  2. Since the difference is negative, the shipowner owes the charterer $3,333.34 as despatch payment.

In this example, the charterer is entitled to a despatch payment from the shipowner due to the actual laytime used being less than the allowed laytime, particularly for the discharging operations.

 

 

Laytime Calculation Example 2

Here’s another example of laytime calculation in a voyage charterparty agreement:

Charterparty Terms:

  • Allowed laytime for loading: 36 hours
  • Allowed laytime for discharging: 60 hours
  • Demurrage rate: $12,000 per day or pro-rata
  • Despatch rate: 50% of demurrage rate

Timeline:

  • Ship arrives and gives Notice of Readiness (NOR) at the loading port on May 5 at 14:00.
  • Laytime starts counting after 4 hours of waiting time on May 5 at 18:00.
  • Loading completed on May 7 at 20:00.
  • Ship arrives and gives NOR at the discharging port on May 14 at 09:00.
  • Laytime starts counting immediately.
  • Discharging completed on May 16 at 15:00.

Laytime Calculation:

Loading:

  1. Calculate the actual laytime used for loading: From May 5, 18:00, to May 7, 20:00, which is 2 days and 2 hours, or 50 hours.
  2. Compare actual laytime used (50 hours) with allowed laytime (36 hours): The actual laytime exceeds the allowed laytime by 14 hours.
  3. Calculate demurrage for loading: 14 hours of excess laytime, which is 7/12 of a day. Demurrage is $12,000 per day, so the demurrage for loading is (7/12 * $12,000) = $7,000.

Discharging:

  1. Calculate the actual laytime used for discharging: From May 14, 09:00, to May 16, 15:00, which is 2 days and 6 hours, or 54 hours.
  2. Compare actual laytime used (54 hours) with allowed laytime (60 hours): The actual laytime is less than the allowed laytime by 6 hours.
  3. Calculate despatch for discharging: 6 hours of unused laytime, which is 1/4 of a day. The despatch rate is 50% of the demurrage rate, so the despatch for discharging is (1/4 * 0.5 * $12,000) = $1,500.

Final Settlement:

  1. Calculate the difference between demurrage and despatch: $7,000 (demurrage) – $1,500 (despatch) = $5,500.
  2. Since the difference is positive, the charterer owes the shipowner $5,500 as demurrage payment.

In this example, the charterer is liable to pay demurrage to the shipowner, as the actual laytime used exceeded the allowed laytime for loading, while the actual laytime used for discharging was less than the allowed laytime.

 

 

Laytime Calculation Example 3

Here’s another example of laytime calculation in a voyage charterparty agreement:

Charterparty Terms:

  • Allowed laytime for loading: 24 hours
  • Allowed laytime for discharging: 48 hours
  • Demurrage rate: $8,000 per day or pro-rata
  • Despatch rate: 50% of demurrage rate

Timeline:

  • Ship arrives and gives Notice of Readiness (NOR) at the loading port on June 1 at 06:00.
  • Laytime starts counting after 2 hours of waiting time on June 1 at 08:00.
  • Loading completed on June 2 at 04:00.
  • Ship arrives and gives NOR at the discharging port on June 8 at 15:00.
  • Laytime starts counting immediately.
  • Discharging completed on June 10 at 12:00.

Laytime Calculation:

Loading:

  1. Calculate the actual laytime used for loading: From June 1, 08:00, to June 2, 04:00, which is 20 hours.
  2. Compare actual laytime used (20 hours) with allowed laytime (24 hours): The actual laytime is less than the allowed laytime by 4 hours.
  3. Calculate despatch for loading: 4 hours of unused laytime, which is 1/6 of a day. The despatch rate is 50% of the demurrage rate, so the despatch for loading is (1/6 * 0.5 * $8,000) = $666.67.

Discharging:

  1. Calculate the actual laytime used for discharging: From June 8, 15:00, to June 10, 12:00, which is 1 day and 21 hours, or 45 hours.
  2. Compare actual laytime used (45 hours) with allowed laytime (48 hours): The actual laytime is less than the allowed laytime by 3 hours.
  3. Calculate despatch for discharging: 3 hours of unused laytime, which is 1/8 of a day. The despatch rate is 50% of the demurrage rate, so the despatch for discharging is (1/8 * 0.5 * $8,000) = $500.

Final Settlement:

  1. Calculate the total despatch: $666.67 (despatch for loading) + $500 (despatch for discharging) = $1,166.67.
  2. Since there is no demurrage, the shipowner owes the charterer $1,166.67 as despatch payment.

In this example, the charterer is entitled to a despatch payment from the shipowner, as the actual laytime used for both loading and discharging was less than the allowed laytime.

 

Laytime Calculation Example 4

Here’s another example of laytime calculation in a voyage charterparty agreement:

Charterparty Terms:

  • Allowed laytime for loading: 30 hours
  • Allowed laytime for discharging: 50 hours
  • Demurrage rate: $9,000 per day or pro-rata
  • Despatch rate: 50% of demurrage rate

Timeline:

  • Ship arrives and gives Notice of Readiness (NOR) at the loading port on July 10 at 05:00.
  • Laytime starts counting immediately.
  • Loading completed on July 11 at 12:00.
  • Ship arrives and gives NOR at the discharging port on July 18 at 22:00.
  • Laytime starts counting after 3 hours of waiting time on July 19 at 01:00.
  • Discharging completed on July 21 at 00:00.

Laytime Calculation:

Loading:

  1. Calculate the actual laytime used for loading: From July 10, 05:00, to July 11, 12:00, which is 1 day and 7 hours, or 31 hours.
  2. Compare actual laytime used (31 hours) with allowed laytime (30 hours): The actual laytime exceeds the allowed laytime by 1 hour.
  3. Calculate demurrage for loading: 1 hour of excess laytime, which is 1/24 of a day. Demurrage is $9,000 per day, so the demurrage for loading is (1/24 * $9,000) = $375.

Discharging:

  1. Calculate the actual laytime used for discharging: From July 19, 01:00, to July 21, 00:00, which is 2 days, or 48 hours.
  2. Compare actual laytime used (48 hours) with allowed laytime (50 hours): The actual laytime is less than the allowed laytime by 2 hours.
  3. Calculate despatch for discharging: 2 hours of unused laytime, which is 1/12 of a day. The despatch rate is 50% of the demurrage rate, so the despatch for discharging is (1/12 * 0.5 * $9,000) = $375.

Final Settlement:

  1. Calculate the difference between demurrage and despatch: $375 (demurrage) – $375 (despatch) = $0.
  2. Since the difference is zero, neither party owes the other any payment for demurrage or despatch.

In this example, the charterer and the shipowner do not owe each other any demurrage or despatch payment, as the demurrage for loading is offset by the despatch earned during discharging.

 

Laytime Calculation Example 5

Here’s another example of laytime calculation in a voyage charterparty agreement:

Charterparty Terms:

  • Allowed laytime for loading: 42 hours
  • Allowed laytime for discharging: 54 hours
  • Demurrage rate: $11,000 per day or pro-rata
  • Despatch rate: 50% of demurrage rate

Timeline:

  • Ship arrives and gives Notice of Readiness (NOR) at the loading port on August 3 at 14:00.
  • Laytime starts counting after 6 hours of waiting time on August 3 at 20:00.
  • Loading completed on August 5 at 10:00.
  • Ship arrives and gives NOR at the discharging port on August 12 at 18:00.
  • Laytime starts counting after 4 hours of waiting time on August 12 at 22:00.
  • Discharging completed on August 15 at 08:00.

Laytime Calculation:

Loading:

  1. Calculate the actual laytime used for loading: From August 3, 20:00, to August 5, 10:00, which is 1 day and 14 hours, or 38 hours.
  2. Compare actual laytime used (38 hours) with allowed laytime (42 hours): The actual laytime is less than the allowed laytime by 4 hours.
  3. Calculate despatch for loading: 4 hours of unused laytime, which is 1/6 of a day. The despatch rate is 50% of the demurrage rate, so the despatch for loading is (1/6 * 0.5 * $11,000) = $916.67.

Discharging:

  1. Calculate the actual laytime used for discharging: From August 12, 22:00, to August 15, 08:00, which is 2 days and 10 hours, or 58 hours.
  2. Compare actual laytime used (58 hours) with allowed laytime (54 hours): The actual laytime exceeds the allowed laytime by 4 hours.
  3. Calculate demurrage for discharging: 4 hours of excess laytime, which is 1/6 of a day. Demurrage is $11,000 per day, so the demurrage for discharging is (1/6 * $11,000) = $1,833.33.

Final Settlement:

  1. Calculate the difference between demurrage and despatch: $1,833.33 (demurrage) – $916.67 (despatch) = $916.66.
  2. Since the difference is positive, the charterer owes the shipowner $916.66 as demurrage payment.

In this example, the charterer is liable to pay demurrage to the shipowner, as the demurrage incurred during discharging is not entirely offset by the despatch earned during loading.

Laytime Calculation Example 6

Here’s another example of laytime calculation in a voyage charterparty agreement:

Charterparty Terms:

  • Allowed laytime for loading: 60 hours
  • Allowed laytime for discharging: 72 hours
  • Demurrage rate: $10,000 per day or pro-rata
  • Despatch rate: 50% of demurrage rate

Timeline:

  • Ship arrives and gives Notice of Readiness (NOR) at the loading port on September 4 at 16:00.
  • Laytime starts counting after 4 hours of waiting time on September 4 at 20:00.
  • Loading completed on September 7 at 00:00.
  • Ship arrives and gives NOR at the discharging port on September 14 at 07:00.
  • Laytime starts counting immediately.
  • Discharging completed on September 16 at 20:00.

Laytime Calculation:

Loading:

  1. Calculate the actual laytime used for loading: From September 4, 20:00, to September 7, 00:00, which is 2 days and 4 hours, or 52 hours.
  2. Compare actual laytime used (52 hours) with allowed laytime (60 hours): The actual laytime is less than the allowed laytime by 8 hours.
  3. Calculate despatch for loading: 8 hours of unused laytime, which is 1/3 of a day. The despatch rate is 50% of the demurrage rate, so the despatch for loading is (1/3 * 0.5 * $10,000) = $1,666.67.

Discharging:

  1. Calculate the actual laytime used for discharging: From September 14, 07:00, to September 16, 20:00, which is 2 days and 13 hours, or 61 hours.
  2. Compare actual laytime used (61 hours) with allowed laytime (72 hours): The actual laytime is less than the allowed laytime by 11 hours.
  3. Calculate despatch for discharging: 11 hours of unused laytime, which is 11/24 of a day. The despatch rate is 50% of the demurrage rate, so the despatch for discharging is (11/24 * 0.5 * $10,000) = $2,291.67.

Final Settlement:

  1. Calculate the total despatch: $1,666.67 (despatch for loading) + $2,291.67 (despatch for discharging) = $3,958.34.
  2. Since there is no demurrage, the shipowner owes the charterer $3,958.34 as despatch payment.

In this example, the charterer is entitled to a despatch payment from the shipowner, as the actual laytime used for both loading and discharging was less than the allowed laytime.

 

Laytime Calculation Example 7

Let’s consider a voyage charterparty agreement with the following terms:

  1. Allowed laytime for loading: 48 hours
  2. Allowed laytime for discharging: 72 hours
  3. Demurrage rate: $5,000 per day or pro-rata
  4. Despatch rate: $2,500 per day or pro-rata

The ship’s timeline for loading and discharging operations is as follows:

Loading:

  • Ship arrives at the loading port: April 1, 10:00
  • Notice of Readiness (NOR) submitted: April 1, 12:00
  • Laytime commencement: April 1, 18:00 (6 hours after NOR)
  • Loading completed: April 3, 20:00

Discharging:

  • Ship arrives at the discharging port: April 10, 08:00
  • NOR submitted: April 10, 10:00
  • Laytime commencement: April 10, 16:00 (6 hours after NOR)
  • Discharging completed: April 13, 14:00

Laytime Calculation:

Loading:

  • Actual time used for loading: April 1, 18:00 to April 3, 20:00 = 50 hours
  • Time on demurrage: 50 hours (actual) – 48 hours (allowed) = 2 hours
  • Demurrage for loading: 2 hours * ($5,000 / 24) = $416.67

Discharging:

  • Actual time used for discharging: April 10, 16:00 to April 13, 14:00 = 70 hours
  • Time on despatch: 72 hours (allowed) – 70 hours (actual) = 2 hours
  • Despatch for discharging: 2 hours * ($2,500 / 24) = $208.33

Final Settlement:

  • Demurrage (loading) – Despatch (discharging) = $416.67 – $208.33 = $208.34
  • The charterer owes the shipowner $208.34 in demurrage.

In this example, the charterer is liable to pay demurrage to the shipowner, as the demurrage incurred during discharging is not entirely offset by the despatch earned during loading.

 

Laytime Calculation Example 8

Let’s consider a voyage charterparty agreement with the following terms:

  1. Allowed laytime for loading: 36 hours
  2. Allowed laytime for discharging: 60 hours
  3. Demurrage rate: $6,000 per day or pro-rata
  4. Despatch rate: $3,000 per day or pro-rata

The ship’s timeline for loading and discharging operations is as follows:

Loading:

  • Ship arrives at the loading port: May 1, 08:00
  • Notice of Readiness (NOR) submitted: May 1, 10:00
  • Laytime commencement: May 1, 12:00 (2 hours after NOR)
  • Loading completed: May 2, 22:00

Discharging:

  • Ship arrives at the discharging port: May 9, 06:00
  • NOR submitted: May 9, 08:00
  • Laytime commencement: May 9, 14:00 (6 hours after NOR)
  • Discharging completed: May 11, 18:00

Laytime Calculation:

Loading:

  • Actual time used for loading: May 1, 12:00 to May 2, 22:00 = 34 hours
  • Time on despatch: 36 hours (allowed) – 34 hours (actual) = 2 hours
  • Despatch for loading: 2 hours * ($3,000 / 24) = $250

Discharging:

  • Actual time used for discharging: May 9, 14:00 to May 11, 18:00 = 52 hours
  • Time on despatch: 60 hours (allowed) – 52 hours (actual) = 8 hours
  • Despatch for discharging: 8 hours * ($3,000 / 24) = $1,000

Final Settlement:

  • Despatch (loading) + Despatch (discharging) = $250 + $1,000 = $1,250
  • The shipowner owes the charterer $1,250 in despatch.

In this example, the charterer is entitled to a despatch payment from the shipowner, as the actual laytime used for both loading and discharging was less than the allowed laytime.

 

 

Laytime Calculation Example 9

Let’s consider a voyage charterparty agreement with the following terms:

  1. Allowed laytime for loading: 24 hours
  2. Allowed laytime for discharging: 48 hours
  3. Demurrage rate: $4,000 per day or pro-rata
  4. Despatch rate: $2,000 per day or pro-rata

The ship’s timeline for loading and discharging operations is as follows:

Loading:

  • Ship arrives at the loading port: June 1, 14:00
  • Notice of Readiness (NOR) submitted: June 1, 16:00
  • Laytime commencement: June 1, 18:00 (2 hours after NOR)
  • Loading completed: June 2, 20:00

Discharging:

  • Ship arrives at the discharging port: June 8, 22:00
  • NOR submitted: June 9, 00:00
  • Laytime commencement: June 9, 06:00 (6 hours after NOR)
  • Discharging completed: June 10, 20:00

Laytime Calculation:

Loading:

  • Actual time used for loading: June 1, 18:00 to June 2, 20:00 = 26 hours
  • Time on demurrage: 26 hours (actual) – 24 hours (allowed) = 2 hours
  • Demurrage for loading: 2 hours * ($4,000 / 24) = $333.33

Discharging:

  • Actual time used for discharging: June 9, 06:00 to June 10, 20:00 = 38 hours
  • Time on despatch: 48 hours (allowed) – 38 hours (actual) = 10 hours
  • Despatch for discharging: 10 hours * ($2,000 / 24) = $833.33

Final Settlement:

  • Demurrage (loading) – Despatch (discharging) = $333.33 – $833.33 = -$500
  • The shipowner owes the charterer $500 in despatch.

In this example, the charterer is entitled to a despatch payment from the shipowner, as the actual laytime used for both loading and discharging was less than the allowed laytime.

 

 

Laytime Calculation Example 10

Let’s consider a voyage charterparty agreement with the following terms:

  1. Allowed laytime for loading: 72 hours
  2. Allowed laytime for discharging: 96 hours
  3. Demurrage rate: $7,000 per day or pro-rata
  4. Despatch rate: $3,500 per day or pro-rata

The ship’s timeline for loading and discharging operations is as follows:

Loading:

  • Ship arrives at the loading port: July 1, 08:00
  • Notice of Readiness (NOR) submitted: July 1, 10:00
  • Laytime commencement: July 1, 12:00 (2 hours after NOR)
  • Loading completed: July 4, 18:00

Discharging:

  • Ship arrives at the discharging port: July 12, 20:00
  • NOR submitted: July 12, 22:00
  • Laytime commencement: July 13, 04:00 (6 hours after NOR)
  • Discharging completed: July 16, 18:00

Laytime Calculation:

Loading:

  • Actual time used for loading: July 1, 12:00 to July 4, 18:00 = 78 hours
  • Time on demurrage: 78 hours (actual) – 72 hours (allowed) = 6 hours
  • Demurrage for loading: 6 hours * ($7,000 / 24) = $1,750

Discharging:

  • Actual time used for discharging: July 13, 04:00 to July 16, 18:00 = 86 hours
  • Time on despatch: 96 hours (allowed) – 86 hours (actual) = 10 hours
  • Despatch for discharging: 10 hours * ($3,500 / 24) = $1,458.33

Final Settlement:

  • Demurrage (loading) – Despatch (discharging) = $1,750 – $1,458.33 = $291.67
  • The charterer owes the shipowner $291.67 in demurrage.

In this example, the charterer is liable to pay demurrage to the shipowner, as the demurrage incurred during discharging is not entirely offset by the despatch earned during loading.

 

 

Timesheets and Laytime Calculation

Timesheets play a crucial role in laytime calculation for voyage charterparties, serving as a record of key events and timelines related to the loading and discharging of cargo. These documents provide a detailed account of the ship’s operations at the ports and help determine if any demurrage or despatch is owed between the parties. Here’s an overview of timesheets and their role in laytime calculation:

  1. Purpose of Timesheets: Timesheets serve as a chronological record of the events that occur during a ship’s port stay, such as the ship’s arrival, Notice of Readiness (NOR) submission, commencement of laytime, cargo operations, and departure. These records ensure transparency, facilitate laytime calculation, and provide evidence in case of disputes.
  2. Information in Timesheets: Timesheets typically include the following information:
    • Ship’s name and the charterparty details
    • Date and time of the ship’s arrival at the port
    • Date and time of the ship’s berthing
    • Date and time of the NOR submission
    • Commencement of laytime and any waiting time (if applicable)
    • Dates and times of loading or discharging operations, including any interruptions or exceptions
    • Date and time of the ship’s departure from the port
  3. Timesheets Role in Laytime Calculation: Timesheets provide essential data for calculating laytime by recording the commencement and completion of cargo operations. By referring to the timesheet, the parties can determine the actual laytime used and compare it to the allowed laytime specified in the charterparty. This comparison forms the basis for calculating any demurrage or despatch that may be owed.
  4. Timesheets Preparation and Submission: Timesheets are typically prepared by the ship’s master or agent and submitted to the charterer, shipowner, and other relevant parties. It’s essential to ensure that the timesheets are accurate, clear, and properly documented to avoid confusion or disputes.
  5. Disputes and Claims: In case of disagreements or disputes related to laytime calculation, timesheets serve as evidence to support the parties’ respective positions. Accurate and complete timesheets can help resolve disputes quickly and efficiently.

Timesheets are critical for laytime calculation in voyage charterparties, providing a comprehensive record of the ship’s port activities and ensuring transparency and accountability. Proper documentation and submission of timesheets can help prevent disputes, facilitate smooth operations, and protect the interests of both the shipowner and the charterer.

 

BIMCO Standard Time Sheet

The Baltic and International Maritime Council (BIMCO) is the world’s largest international shipping association, providing a range of services to its members, including the development of standard contracts and clauses for the shipping industry. Among its various offerings, BIMCO provides a standard time sheet to help facilitate laytime calculation and maintain transparency during the loading and discharging of cargo.

The Baltic and International Maritime Council (BIMCO) Standard Time Sheet is a widely recognized and accepted template for recording key events and timelines related to cargo operations in the chartering process. Using a standardized format ensures that all relevant parties are familiar with the document and can easily interpret the information it contains.

Key elements of the BIMCO Standard Time Sheet include:

  1. Header: The header contains the ship’s name, charterparty details, and the time sheet’s purpose (i.e., whether it is for loading or discharging operations).
  2. Arrival and Berthing: This section records the date and time of the ship’s arrival at the port, submission of the Notice of Readiness (NOR), and the ship’s berthing.
  3. Laytime Commencement: This part documents the commencement of laytime and any waiting time, if applicable.
  4. Cargo Operations: This section records the dates and times of loading or discharging operations, including any interruptions or exceptions that may impact the laytime calculation (e.g., weather delays, strikes, breakdowns).
  5. Departure: The departure section notes the date and time of the ship’s departure from the port, signaling the end of cargo operations.
  6. Summary: The summary provides an overview of the total laytime used, allowed laytime according to the charterparty agreement, and any demurrage or despatch incurred.
  7. Signatures: The time sheet should be signed by the ship’s master or agent and, ideally, counter-signed by the charterer or their representative to confirm the accuracy of the information provided.

By using the BIMCO Standard Time Sheet, parties involved in the chartering process can ensure a consistent and accurate record of the ship’s activities during port stays. This standardization helps facilitate laytime calculation, maintain transparency, and minimize the potential for disputes related to laytime, demurrage, or despatch. To download a copy of BIMCO Standard Time Sheet, please check www.bimco.org

 

 

 

What is the difference between Laycan and Laytime?

Laycan and laytime are two distinct concepts in the shipping industry, particularly in the context of charterparties. Understanding their differences is essential for both shipowners and charterers when negotiating a charterparty agreement.

Laycan:

  1. Laycan stands for “laydays cancelling,” which refers to a specific range of dates within which the ship is expected to be available for loading or discharging operations. This range is agreed upon by both the shipowner and charterer and is mentioned in the charterparty agreement.
  2. The laycan period typically consists of two dates: the earliest date when the ship is expected to be ready (Laydays), and the latest date when the charterer can cancel the agreement if the ship is not ready (Cancelling).
  3. If the ship arrives within the laycan period and submits a Notice of Readiness (NOR), the charterer is obligated to begin loading or discharging operations. If the ship does not arrive within the laycan period, the charterer has the option to cancel the charter or renegotiate the terms.

Laytime:

  1. Laytime refers to the agreed-upon period during which the charterer is allowed to load or discharge cargo without incurring any additional costs. This period is also specified in the charterparty agreement.
  2. The laytime commences when the ship arrives at the loading or discharging port, submits the NOR, and meets any other requirements outlined in the charterparty agreement.
  3. If the loading or discharging operations are completed within the allowed laytime, no additional costs are incurred. However, if the charterer exceeds the allowed laytime, they may be liable for demurrage charges. Conversely, if the charterer completes the operations before the laytime expires, they may be entitled to despatch.

Laycan is a range of dates during which the ship is expected to be available for cargo operations, while laytime is the agreed-upon period allowed for loading or discharging cargo without incurring additional costs. Both concepts are crucial in managing the efficiency and costs of shipping operations and are essential components of a charterparty agreement.

 

What happens if ship arrives before Laycan?

If a ship arrives before the laycan period, there are a few possible outcomes, depending on the terms and conditions of the charterparty agreement:

  1. Waiting Time: The ship may have to wait until the laycan period begins before submitting the Notice of Readiness (NOR). During this waiting period, the ship is not considered to have arrived at the port for the purpose of the charterparty agreement. The charterer is not obligated to start loading or discharging operations until the laycan period begins.
  2. Early NOR Acceptance: In some cases, the charterparty agreement may include a clause that allows the charterer to accept the NOR submitted by the ship before the laycan period commences. This is usually at the charterer’s discretion and depends on the availability of cargo or berth. If the charterer agrees to accept the early NOR, then the laytime will start counting as per the terms of the charterparty, which could be immediately or after an agreed waiting time (for example, after a few hours or the next day).
  3. Agreement Amendment: The shipowner and charterer may agree to amend the laycan period, making it start earlier to accommodate the ship’s early arrival. This change would be mutually agreed upon and documented in the charterparty agreement.

It’s important to note that the outcomes and implications of a ship arriving before the laycan period are subject to the specific terms and conditions outlined in the charterparty agreement. Both the shipowner and charterer should carefully consider these terms to ensure smooth and efficient operations.

 

Top Laytime Calculation Software Companies

Some of the top laytime calculation software companies include:

  1. Veson Nautical – A leading provider of maritime software solutions, Veson Nautical offers the Veslink IMOS Platform, a cloud-based solution that covers a wide range of maritime operations, including laytime calculation, voyage management, and chartering.

Website: https://www.veson.com/

  1. BIMCO – The Baltic and International Maritime Council is an international shipping association that provides several resources for the maritime industry, including the BIMCO Laytime Calculation tool. This tool is designed for members to calculate laytime and demurrage/despatch amounts quickly and accurately.

Website: https://www.bimco.org/

  1. Danaos Corporation – A maritime software company offering various solutions for ship management and operations, Danaos Corporation provides the Laytime Module, which is part of their Chartering System. This module automates laytime calculations and generates laytime statements of facts.

Website: https://www.danaos.gr/

  1. SDSD – With over 30 years of experience in maritime software, SDSD offers the Matrix Laytime, a cloud-based laytime and demurrage calculation tool. The software assists users in calculating and managing laytime, demurrage, and despatch for charter parties.

Website: https://www.sdsd.com/

  1. Chinsay – Chinsay provides a collaborative cloud platform called Intelligent Contract Platform (ICP) for the freight and commodity industry. It enables users to manage and calculate laytime, as well as capture, analyze and share data for better decision making.

Website: https://www.chinsay.com/

6. Burmester-Vogel Laytime Calculator – Burmester-Vogel Laytime Calculator platform integrates with email systems, and other MAPI compliant email systems. B&V offers ready-to-use templates for dry cargo and tanker business, templates for contracts, repeated businesses, or individual department requirements with all usual SHEX/FHEX terms.

Website: https://www.burmester-vogel.com/

7. Netpas – Netpas is a maritime software company offering various solutions for ship management and operations. Netpas has a Laytime Calculator – Laytime(Dem/Des) Estimator & Calculator. Shipbrokers can estimate and calculate the Demurrage and Despatch money for the voyages.

Website: https://netpas.net/

Please note that some of these solutions may be integrated into broader maritime management platforms and may require subscription or membership for full access to their features.

 

Laytime Calculation Process

Laytime applies only to voyage charters and is the period of time that the ship has available for loading and discharging operations at port and may include waiting time.

BIMCO defines laytime as: “The period of time agreed between the parties during which the owner will make and keep the vessel available for loading and discharging without payment additional to the freight.”

Courts, however, have generally construed laytime as the time allowed for the charterer to load and unload. The principles of laytime are similar for dry cargo and tanker charters, although due to the nature of the ships and the very different characteristics of cargo and port operations, there are some fundamental differences in the estimation of laytime.

Laytime is agreed and stipulated in the charter party contract. Because the charterer is responsible for loading/unloading operations, the responsibility to adhere to the limits set by lay time lies with the charterer. The agreed time will be compared at the end of the voyage to the actual time as calculated in the laytime statement.

The process for lay time calculation follows a series of steps:

1. Vessel’s arrival
2. Notice of readiness (NOR)
3. Waiting time
4. Commencement of laytime
5. Disruption of laytime
6. End of laytime
7. Statement of facts