Reversible Laydays
Reversible Laydays/Right to Average Laydays: Normally, demurrage and dispatch are calculated separately for loading and discharging. However, the charter party may include other terms on a case by case basis as agreed by the parties.
For instance, it may be that the charterers are given the option to treat the lay time periods as reversible. Under this arrangement, the laydays allowed for loading and discharging are added together, and the time used for loading may then be deducted, with the remaining time being available for discharging.
If all the laytime is used for loading, the ship comes on demurrage on arrival at the discharging port and the time will then count immediately.
Where the charterers are given the option to average the laydays, the loading and discharging are drawn up separately. The resultant demurrage and dispatch are then added or set off against each other and calculated on the result.
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Reversible Laydays in Ship Chartering
In the context of ship chartering, Laydays refer to the period agreed upon in a charter party during which the charterer can make the ship available for loading or unloading without having to pay additional money, also known as demurrage.
The term “reversible” in “Reversible Laydays” refers to the flexibility given to the charterer in terms of the use of laytime. When laydays are reversible, it means that the laytime allocated for loading can be used for discharging, and vice versa.
For instance, let’s say the charter party agreement specifies 10 days for loading and 10 days for discharging. If the charterer only uses 7 days for loading, they can then use the remaining 3 days for discharging, giving them a total of 13 days for discharging. The total laytime remains 20 days, but how the charterer uses it is flexible.
This can be beneficial for the charterer, providing more flexibility in their operations. It allows them to manage their time more effectively, especially if there are unforeseen delays or difficulties in one part of the operation.
However, it’s important to note that the details of how reversible laydays work will depend on the specific terms set out in the charter party agreement. These terms can be negotiated and will depend on the individual circumstances of the charterer and the shipowner.
It’s important to understand that this arrangement is primarily beneficial to the charterer. With reversible laydays, the charterer has the flexibility to manage their time and operations depending on the circumstances at the loading port and the discharging port.
For example, let’s imagine that the loading port is experiencing delays due to congestion. Instead of having to rush to complete loading within the specific laytime and risking demurrage charges, the charterer with reversible laydays can use some of the laytime originally allocated for discharging. This helps in effectively dealing with unexpected situations without incurring additional costs.
However, this flexibility for the charterer could potentially mean less predictability for the shipowner. The shipowner may find it more difficult to plan the ship’s schedule accurately because they won’t know exactly when the ship will be available again.
On the other hand, the advantage for the shipowner is that the charterer might be willing to pay a higher charter rate in exchange for the flexibility that comes with reversible laydays. Therefore, whether to offer reversible laydays can be a strategic decision for the shipowner, balancing the potential for higher charter rates against the risk of less predictable scheduling.
Reversible Laydays Example 1
“Laydays” or “laytime” refers to the time agreed between the parties during which the owner will make the ship available for loading or discharging cargo without payment additional to the freight. When laydays are “reversible”, it means that the laytime allocated for loading and discharging can be used interchangeably.
Let’s say, for example, that a charter party agreement states that the ship will have 5 laydays at the loading port and 5 laydays at the discharging port. If the laydays are stated to be reversible, then these 10 total laydays can be used either at the loading or the discharging port as needed.
Let’s consider a practical example:
- The ship arrives at the loading port on May 1st. The loading begins and is completed by May 4th. Therefore, only 4 days out of the 5 allocated loading laydays were used.
- The ship then sails to the discharge port and arrives on May 10th. The discharge operation takes 6 days and is completed by May 16th.
Normally, this would be a breach of the agreement, as the discharge took one day longer than the allocated 5 discharging laydays. But since the laydays are reversible in this case, the extra unused day from the loading port can be applied to the discharging port.
Therefore, there’s no breach of agreement, as the total laytime used for both loading and discharging operations is still within the total of 10 reversible laydays (4 used at the loading port + 6 at the discharging port).
Reversible Laydays Example 2
For this scenario, let’s say that a charter party agreement provides for 6 laydays at the loading port and 4 laydays at the discharging port, and these laydays are reversible.
- The ship arrives at the loading port on June 1st. The loading operation is surprisingly efficient and is completed by June 5th. Therefore, only 5 out of the allocated 6 loading laydays were used, leaving 1 day unused.
- The ship then sails to the discharging port and arrives on June 10th. The discharge operation, however, faces some unexpected delays and takes 5 days to complete, ending on June 15th.
Without the provision of reversible laydays, this would be a violation of the charter party agreement, because the discharge operation took one day longer than the 4 laydays allocated for discharging.
However, because the laydays in this agreement are reversible, the unused day from the loading port can be applied to the discharging port. So, even though the discharging operation took 5 days, it is still within the total of 10 reversible laydays (5 used at the loading port + 5 at the discharging port). Hence, there is no breach of the agreement.
Reversible Laydays Example 3
Consider a charter party agreement that allows for 7 laydays at the loading port and 3 laydays at the discharging port, and these laydays are reversible.
- The ship arrives at the loading port on July 1st. The loading operation takes a little longer than expected and finishes on July 8th. Thus, all 7 allocated loading laydays were used.
- The ship then sails to the discharging port, arriving on July 15th. The discharge operation encounters several issues, resulting in a longer operation than planned, taking 5 days and concluding on July 20th.
Under normal circumstances, this would represent a breach of the charter party agreement, as the discharge operation took 2 days longer than the allocated 3 discharging laydays.
However, because the laydays in this agreement are reversible, the days can be shifted as needed between the loading and discharging operations. Since all 7 days were used at the loading port and 5 days at the discharging port, we have a total of 12 laydays used.
But in this case, because the total reversible laydays in the agreement are 10 (7 loading + 3 discharging), the charterer has exceeded the allowed laytime by 2 days. This would put the charterer into ‘demurrage’, which means they would have to pay extra to the shipowner for the additional days the ship was used beyond the agreed laytime.
Reversible Laydays Example 4
Assume a charter party agreement provides 8 laydays at the loading port and 2 laydays at the discharging port, and these laydays are reversible.
- The ship arrives at the loading port on August 1st. Due to a highly efficient team and favorable conditions, the loading operation is completed by August 6th. Therefore, only 6 out of the allocated 8 loading laydays were used, leaving 2 days unused.
- The ship then sails to the discharging port and arrives on August 10th. The discharge operation faces delays due to unforeseen circumstances and takes 4 days to complete, ending on August 14th.
Normally, this would be a breach of the charter party agreement, as the discharge operation took 2 days longer than the allocated 2 discharging laydays.
However, because the laydays in this agreement are reversible, the 2 unused days from the loading port can be applied to the discharging port. So, even though the discharging operation took 4 days, it is still within the total of 10 reversible laydays (6 used at the loading port + 4 at the discharging port). Thus, the charterer is not in breach of the agreement.
Reversible Laydays Example 5
Let’s consider a charter party agreement that allows for 10 laydays at the loading port and 5 laydays at the discharging port. These laydays are stated to be reversible.
- The ship arrives at the loading port on September 1st. The loading operations are swift and finish by September 8th. This means that only 8 out of the allocated 10 loading laydays were used, leaving 2 days unused.
- The ship then sails to the discharging port and arrives on September 15th. The discharge operation faces significant difficulties and takes 8 days to complete, concluding on September 23rd.
If the laydays were not reversible, this would be a violation of the charter party agreement, as the discharge operation took 3 days longer than the allocated 5 discharging laydays.
However, because the laydays in this agreement are reversible, the unused 2 days from the loading port can be applied to the discharging port. Therefore, even though the discharging operation took 8 days, it is still within the total of 15 reversible laydays (8 used at the loading port + 7 at the discharging port).
However, the charterer has still exceeded the total laytime by 1 day (8 days at loading port + 8 days at discharging port = 16 days). This would put the charterer into ‘demurrage’, which means they would have to pay extra to the shipowner for the additional day the ship was used beyond the agreed laytime.
Reversible Laydays Example 6
In this scenario, let’s assume a charter party agreement that provides for 4 laydays at the loading port and 6 laydays at the discharging port, with these laydays being reversible.
- The ship arrives at the loading port on October 1st. Due to an unexpected labor strike, the loading operation takes longer than planned and is completed by October 6th. This means that all 4 allocated loading laydays were used, and an extra 2 days were used beyond the allocated time.
- The ship then sails to the discharging port and arrives on October 12th. The discharge operation is unexpectedly smooth and efficient, taking only 4 days to complete, concluding on October 16th.
Under standard circumstances, the delay at the loading port would be a violation of the charter party agreement, as the loading operation took 2 days longer than the allocated 4 loading laydays.
However, because the laydays in this agreement are reversible, the 2 unused days from the discharging port can be applied to the loading port. Therefore, even though the loading operation took 6 days, it is still within the total of 10 reversible laydays (6 used at the loading port + 4 at the discharging port). Thus, the charterer is not in breach of the agreement.