What is LAYTIME? What is DEMURRAGE? What is DESPATCH Money?

The amount of time the ship is expected to be in port, mainly for loading and discharging the cargo, is agreed upon, and this is known as laytime. Should the ship be delayed in port due to lack of cargo or other causes that could reasonably be said to be the charterer’s responsibility, then the shipowner may be entitled to claim compensation in the form of ‘demurrage’, which is payable by the charterer, who is in breach of the charterparty terms and is therefore under an obligation to compensate the owner. Demurrage is the payment of liquidated (pre-arranged) damages for keeping the ship in port for loading or discharging purposes for a longer period than the agreed time. Demurrage rates are based on the vessel’s Daily Running Cost or the Time Charter Equivalent. If the ship finishes earlier than expected, the shipowner pays ‘Despatch’ to the charterer at a daily rate which is usually half the equivalent daily rate for demurrage but this only applies in dry cargo chartering. Note that there is no Despatch in tanker chartering. The owner always remains the carrier and when the master signs the bills of lading, they are signed on behalf of the owner. This means that in the event of any claims for shortages or other discrepancies in the cargo, the owner is responsible and not the charterer. The exception to this is when the bill of lading states that certain cargoes are carried, for example, “on deck at charterer’s risk”