What is Laytime?
Laytime is the time permitted in a contract for loading and/or discharging a Voyage Chartered Ship.
If this permitted Laytime is exceeded, the Shipowner or Ship Operator of the ship will be entitled to damages. These damages are normally agreed to be liquidated damages that is to say that a Daily Sum or Pro-Rata for Part of a Day will be negotiated in the form of Demurrage, payable for each day or part day of delay.
Generally, the Demurrage Rate is freely negotiated by the Shipowner or Ship Operator and Charterer concerned during the fixing stage. Demurrage Rate will reflect market conditions prevailing then.
Some Charterparties, such as Gencon 76, restrict the period in which the Demurrage Rate applies. If the ship is still delayed beyond this period the Shipowner can claim Damages for Detention instead of demurrage.
Unlike Demurrage, Damages for Detention will need to be proved. The basis on which Damages for Detention is calculated must be related to the actual loss of the Shipowner Usually, Damages for Detention is sanctioned by a court or arbitration. Where the freight market has increased dramatically the damages may well be more than the demurrage that would otherwise have been paid but conversely in a poor market they may be less. Shipowner who can show that a following, but previously agreed, Charterparty has been cancelled will clearly have a good basis on which to claim Damages for Detention.
Proving Damages for Detention might be a complicated matter. Therefore, it is easy to see why most Charterparties, such as Gencon 94, do not contain provision for any penalty other than Demurrage. On the other hand, the Gencon 76 Charterparty Form gives the Shipowner a right of lien on the cargo for Damages for Detention and that would surely expedite approval of the damage claim.
If a ship completes cargo operations before the Allowed Time or Laytime has been used, a Charterer may be entitled to a Reward or Bonus in the form of payment of Despatch Money. Usually, Despatch Money is payable at half the daily rate of Demurrage.
Laytime Calculation is not an activity to be undertaken lightly. There may be considerable sums of money at stake, which will have a noticeable effect on a ship’s profitability, or on a Charterer’s income.
Laytime Calculation can be divided into:
1. Check the Laytime related clauses in the Charterparty
2. Check the Statement of Facts (SOF)
3. Determine the Laytime Duration
4. Establish the Laytime Commencement
5. Allow for Laytime Interruptions
6. Establish the Laytime Cessation
7. Calculate the Demurrage or Despatch Money
1- Check the Laytime related clauses in the Charterparty: The relevant Charterparty specify Laytime Terms, so that by referring to the Charterparty in relation to the details supplied by the Statement of Facts (SOF) form, a Time Sheet (TS) can be drawn up which shows whether the allowed laytime has been exceeded or is not fully used. The interpretation of many of charterparty clauses and and careful wording needs to be employed in the drafting of Laytime Clauses, guided by knowledge of specialised case law on the subject.
2- Check the Statement of Facts (SOF): One of the main duties of a ship agent is to produce a written record of events occurring during a ship’s port call. Sometimes, Statement of Facts (SOF) referred to as a Port Operations Log. Statement of Facts (SOF) records ship’s arrival date and time, when berthed or shifted to another berth, cargo operations, bunkered and departed; the time NOR (Notice of Readiness) was tendered and accepted; weather conditions; and whatever else is relevant. No matter the reason for a ship’s port call, whether it is for drydocking or repairing; bunkering; cargo-operations; whether on voyage or time-charter; a ship agent should produce a Statement of Facts (SOF) form to be forwarded to the principal upon the ship’s departure.
Many ship agents use their own in-house designed Statement of Facts (SOF) form, but a Standard Document which can be used at any port, is available from BIMCO (Baltic and International Maritime Council), and can be used if the Ship agent or the principal so wishes. From Statement of Facts (SOF), a Time Sheet (TS) will be drawn up.
Practically, the principals brief ship agents fully about operational and chartering matters before a ship’s arrival in port. If possible the ship agent should be sent a copy of the charterparty for guidance. In this way, the ship agent should be aware of information needed to be incorporated into the Statement of Facts (SOF) form.
Ship Master should sign Statement of Facts (SOF). Interested parties to a ship’s port call should sign the completed Statement of Facts (SOF) form to avoid unnecessary disputes. It is in the laytime interpretation of those facts that disputes are likely to arise, not in the recording of events.
If one of the parties has an objection to the contents of a Statement of Facts (SOF) form, it should be signed Under Protest, a statement being added, clarifying the reasons for the objection.
Today, some ship agents provide an internet-based service that allows Shipowners and Charterers to access a running Statement of Facts (SOF) while the ship is under operation in port. Some ship agents allow the data to be moved into computer laytime calculation programs.
3- Determine the Laytime Duration:
Laytime Duration can be divided into:
- Calculable Laytime
- Definite Laytime
- Indefinite Laytime
1- Calculable Laytime: Calculable Laytime can be sub-divided into two (2) sub-sections:
- Calculable Laytime Tonnage Calculations: Tonnage Calculations are the most common types of Calculable Laytime. A Charterparty states that a ship is to load/discharge at a set rate of tons per day or per hour.
For example, for a ship loading 100,000 metric tonnes of cargo, minimum/maximum, at a rate of 10,000 tonnes daily, there will be 10 days of laytime available to the charterers.
On the other hand, if the Ship Master has a margin within which to load such as 100,000 100,000 metric tonnes of cargo 5% more or less owners’ option (MOLOO). If the ship eventually loaded 105,000 metric tonnes of cargo, available laytime can be assessed as follows: 105,000 metric tonnes / 10,000 tonnes daily = 10.5 days.
- Calculable Laytime Hatch Calculations: Hatch Calculations are more complicated than Tonnage Calculations, but occasionally need to be performed: Nonetheless, there are well-established procedures to assist.
For example, MV HANDYBULK YAGMUR is discharging coal on the basis of:
1- Discharge Rate of 1,750 metric tonnes per hatch daily
2- Total cargo of 70,000 metric tonnes,
3- 15,750 metric tonnes cargo in the largest cargo in Hold Number 5
4- MV HANDYBULK YAGMUR has five (5) hatches
Per Hatch Daily: MV HANDYBULK YAGMUR is to be discharged at 1,750 tonnes per hatch daily. Therefore, 5 Hatches x 1,750 metric tonnes = 8,750 metric tonnes daily.
70,000 metric tonnes total cargo / 8,750 metric tonnes daily = 8 days permitted laytime.
Per Workable Hatch Daily: If the terms Workable Hatch, Working Hatch or Available Hatch Daily are included, complications start. To be Workable Hatch under English Law, a hatch must be capable of being worked. In other words, there must be space beneath that hatch at the loading port, and there must be cargo under the hatch at discharge port.
In MV HANDYBULK YAGMUR example, as each hatch is emptied, the discharge rate would reduce by multiples of 1,750 metric tonnes daily, until all holds become empty one by one. Nevertheless, this is a complicated method of calculation, and English Law procedure lays down a simpler alternative which is followed in such cases. Firstly, establish the largest unit of cargo in the ship. In MV HANDYBULK YAGMUR example, 15,750 metric tonnes contained in Hold Number 5 constitutes the largest unit. Therefore, 15,750 metric tonnes / 1,750 daily = 9 days laytime overall. However, where the largest unit of cargo is served by two or more hatches, the unit tonnage must be sub-divided. Assuming two hatches served Hold Number 5, for example, 15,750 metric tonnes would first be divided by 2 before applying the factor of 1,750 metric tonnes daily. In that case, the largest indivisible cargo unit would become the 15,000 metric tonnes contained in Hold Number 2 hold, and the laytime duration calculation would then be 15,000 metric tonnes / 1,750 daily = 8.5714 days laytime.
2- Definite Laytime: Definite Laytime specifies how many days or hours are allowed, whether for loading or for discharging, or for both operations. For both loading and discharging operations laytime sometimes being known as for Laytime For All Purposes. Terms might be: “Cargo to be loaded within 10 Weather Working Days of 24 consecutive Hours”, or “20 Working Days of 24 Consecutive Hours, Weather Permitting, For All Purposes’.
3-Indefinite Laytime: Sometimes, a Shipowner or Ship Operator may agree for his ship to be loaded or discharged as per:
- Custom of the Port (COP)
- Customary Despatch (CD)
- Customary Quick Despatch (CQD)
- Fast as Can (FAC)
These Indefinite Laytime terms provide a Charterer with an indefinite period during which to perform cargo operations. However, a Charterer must act reasonably. For example, it is unreasonable, for cargo not to be available upon a ship’s arrival within agreed laydays, and in such a case, the Shipowner or Ship Operator would normally become entitled to reimbursement by Damages for Detention. But risk of bad weather, port congestion, and suchlike are all for the Shipowner or Ship Operator to bear. Generally, Fast as Can (FAC) applies to geared-ships and can load or discharge without use of shore equipment and stipulates that the cargo will be loaded and/or discharged As Fast As the Ship Can, often adding a further stipulation that Charterers must be able to Deliver or Take-away the cargo at a particular daily tonnage rate.
- Deadfreight: Under English law, if a Deadfreight becomes payable to a Shipowner or Ship Operator, laytime is applied only on the portion of cargo actually loaded. For example,
1- Charterpart Cargo: 100,000 metric tonnes min/max
2- Loading Rate: 20,000 metric tonnes daily
3- Cargo Supplied: 90,000 metric tonnes
4- Deadfreight: 10,000 metric tonnes (100,000 – 90,000)
5- Laytime: 90,000 / 20,000 = 4.5 days
Under English law, a Shipowner or Ship operator claiming Deadfreight must return to the Charterer any benefit received. Therefore, two laytime calculations should be calculated. First, laytime calculation is based on actual cargo loaded or discharged. Second, laytime calculation is based on the original cargo that should have been loaded or discharged. Any difference in the Shipowner’s favour should be credited to the Charterer in return for payment of Deadfreight. In the above case:
Actual Laytime 4.5 days.
Original Laytime 100,000 metric tonnes / 20,000 = 5 days.
Laytime Saved to be Credited to Charterers against Deadfreight= 0.5 days.
Under American law, deadfreight is more straightforward, calculating laytime on what has been loaded, plus tonnage equivalent to the Deadfreight paid by charterers.
For Laytime Commencement:
- Ship must be Arrived
- Ship must be Ready
- Ship must accomplish Charterparty Commitments
1- Ship must be Arrived: Laytime is a subject which lends itself to dispute, and the definition of whether or not a ship has arrived in a laytime sense may sometimes be extremely legally complicated, there being much English law on the subject. Simply, to have arrived at a port, a ship must have reached either the loading or discharging place or, should that place be busy, the normal waiting place. Moreover, a Ship Master or Ship Agent must have tendered NOR (Notice of Readiness), in accordance with the Charterparty Clauses. NOR (Notice of Readiness) can be given orally, but usually a written form is used. It is an important duty of a Ship Agent to assist a Ship Master in tendering NOR (Notice of Readiness) for a ship’s arrival, and also to ensure that shippers or receivers officially Accept the ship’s NOR (Notice of Readiness). Usually, NOR (Notice of Readiness) is accomplished by signing and timing acceptance on the notice form. Although many shippers, receivers or charterers’ nominated port agents, accept NOR (Notice of Readiness) in accordance with the Charterparty Clauses.
2- Ship must be Ready: A ship must be physically capable of performing cargo-operations such as at a loading port, holds must be cleaned and prepared for receiving cargo and, if the Charterparty specifies, holds must be inspected and declared suitable by an appropriate authority before NOR (Notice of Readiness) will be accepted.
3- Ship must accomplish Charterparty Commitments: Usually, Charterparties stipulate that before laytime commences, a ship must get:
- Custom’s Cleared
- Free Pratique
Berth Congestion: In case cargo berths are occupied upon a ship’s arrival, Charterparties usually specify that NOR (Notice of Readiness) can be tendered from a Normal Waiting Place:
- WIBON (Whether in Berth or Not)
- WIFPON (Whether in Free Pratique, or Not)
- WCCON (Whether Custom’s Cleared or Not)
It is normal that time spent in eventual shifting from the waiting place to the first cargo berth will not count as laytime.
Turn Time (TT): In some ports ships wait their turn to load or discharge. When waiting turn, laytime will not usually count. Sometimes Turn Time (TT) is limited to “24 hours” and laytime commences once Turn Time (TT) period has elapsed, or earlier if cargo operations begin within that period. Where No Turn Time (TT) limit is specified, the risk of excessive delay is that for a shipowner. When markets are in their favour, some charterers attempt to impose Turn Time (TT)’ conditions into a charterparty, even though there is no such custom for same at the ports involved such as “48 hours Turn Time (TT) Both Ends”.
4- Establish the Laytime Commencement: Once a ship has arrived at a port, complied with all formalities and contractual commitments, and tendered NOR (Notice of Readiness), laytime will commence in accordance with the Charterparty Terms. For example, “at 0800 hours next working day”, or “12 hours following tendering and accepting NOR (Notice of Readiness)”.
Commencement of time counting and the commencement of actual loading or discharging can, under certain circumstances, be quite different. For example, a charterparty may stipulate
- 36 HRS TT EIU (36 Hours Turn Time Even If Used) and SHEX EIU (Sundays and Holidays Excepted Even If Used)
This ship may arrive at 6:00 PM on a Friday, work the entire weekend and time would not commence to count until 36 hours after 8:00 AM Monday. Such a ship would have been working for over four days before time even commences to count. Therefore, it is crucial to ensure also that NOR (Notice of Readiness) is handed in at the earliest permissible moment. When the port operation has already commenced, it does not mean that a NOR (Notice of Readiness) is not needed.
Ship Arrival Before Laydays
If a ship arrives at a loading port within the laydays before the Cancelling Date, the charterer is obliged to produce a cargo for the ship.
However, the charterer is not obliged to produce any cargo before the laydays if the ship arrives early. Even though the charterer is not obliged to provide cargo, the Shipowner must tender NOR (Notice of Readiness) and time will begin to count in accordance with the Charterparty Terms. In this case, the exceptions to laytime, in addition to those agreed upon, will include any time up to the first time and date mentioned in the agreed laydays. In this situation, the time lapse between presenting a NOR (Notice of Readiness) and time starting to count that would exist under more normal conditions disappears.
For example, the laycan for a ship on a Gencon Charterparty may have been agreed as Wednesday 10th November – Tuesday 16th November. The time to count from 14:00 if NOR delivered in office hours before noon and 08:00 the next day if delivered after noon. A rate of 15,000 tonnes per day Weather Permitting was agreed for cargo handling. If the ship arrived on Wednesday 10th at 07:45, the NOR would have been tendered at 09:00 and time and time started to count from 1400 that day. But if the ship arrived on Friday 5th November at 11:00 and tendered immediate notice time would start to count at 1400 on Friday 5th. None of the time up to 00:01 on Wednesday 10th would count either because it was a weekend, excepted under the Charterparty Terms, or because the time was before commencement of laydays. However, as soon as Wednesday 10th arrived the laytime clock would start to run, and unless the weather prevented any work it would do say at 00:01. A whole 14 hours earlier than the charterer may have counted on. Some charterers have countered this advantage for the Shipowner by demanding a Charterparty Clause that prevents the NOR being presented before laydays.
5- Allow for Laytime Interruptions: Once laytime has commenced, unless a ship’s cargo-handling equipment breaks down, it will continue unhindered until the completion of cargo operations, or until Laytime Expires or Demurrage Commences.
Generally, Charterparties include Express Causes interrupting Laytime in the event of:
5a- Weekends and Holidays
5b- Shifting Between Berths
5d- Ship’s Gear Breakdowns
5e- Bad Weather
5a-Weekends and Holidays: If these are to interrupt laytime, the Charterparty can be said to be on SHEX terms (Sundays and Holidays Excepted), or on FHEX terms (Fridays and Holidays Excepted) if in Muslim countries. Should weekends and holidays count as laytime, the Charterparty can be said to be based on SHINC (Sundays and Holidays Inclusive) – FHINC in Muslim countries. The terms SHEX and SHINC came into use when Saturdays were considered part of the working week. Nowadays of course Saturday is also a non-working day and the terms have been altered slightly to SSHEX and SSHINC. Usually, Shipbrokers refer to this as FULL SHEX or FULL SHINC as the case may be when talking to each other. Normally, a charterparty will specify the actual time before a holiday or a weekend that laytime is to be suspended. For example: “From 18:00 hours on the day preceding a holiday”. If no such time is specified, laytime is usually suspended from midnight on the day preceding a holiday. In the same way, a charterparty will normally specify the actual time of resumption of laytime following a holiday or weekend such as 07:00 hours Monday. If no such time is specified, laytime will usually recommence at 00:01 hours on the day following a holiday or weekend. If cargo operation is performed during an excepted period, laytime will not normally count, unless the contract allows it to such as “time not to count during weekends, unless used”.
Alternatively, a Charterparty may emphasise that “time used during weekends is not to count, even if used”.
Occasionally, a Charterparty may emphasise that “actual time used during weekends is to count as laytime’, or even ‘half time actually used to count”. It may also be agreed that the period between Notice of Readiness (NOR) being tendered and the commencement of laytime may count as laytime “if actually used”.
5b- Shifting Between Berths: It is common practice for Charterparty wording to permit loading and discharging at more than one berth or anchorage at each port. Consequently, time spent shifting between berths or anchorages is normally taken to be for Shipowners’ Account. But, Charterers and Shipowners may be agreed number of berths or anchorages be exceeded, it becomes reasonable that the shifting time involved should count as laytime, and that the expenses involved, such as towage and pilotage, should also be for the Charterers’ Account.
5c- Strikes: Usually, there is an Express Clause in a Charterparty to the effect that delays due to shore strikes are not to count as laytime.
5d- Ship’s Gear Breakdowns: If a ship’s gear is being used and it breaks down, laytime should not continue during the period of breakdown. It may be that, for example, one crane out of four has broken down and, in such a case, apportionment of the degree of loss must be carried out. In this case, laytime would continue at a rate of 75% until the crane is repaired.
However, if there is a shore machinery breakdowns, and it may be that the shipowners have knowingly or unwittingly assumed responsibility for these in their Charterparty. Some Charterparties exclude time lost due to stoppages of shore machinery “beyond the Charterers control”, which means just that under English law. Therefore, a shore crane breakdown that is judged to be beyond Charterers’ control. Usually, Charterers do not own or otherwise control the crane. Such a break-down will, therefore, interrupt laytime. Under American law it may be that the alternative view would be upheld, in shipowners’ favour, although that is not completely certain. While most modern revisions of Charterparties have removed this wording, there are still several widely-used forms containing this expression or another to similar effect.
5e- Bad Weather: Charterparty Clauses that are referring to bad weather interruptions of laytime at one time could be divided into two types:
- Weather Working Days (WWD)
- Days, Weather Permitting (DWP)
For many years it had been accepted that the Weather Working Days (WWD) expression favoured Charterers and the Days, Weather Permitting (DWP) favoured Shipowners.
In cases of Weather Working Days (WWD), laytime does not count during period of bad weather that interrupt loading or discharging, nor does laytime count when bad weather occurs during a working day even if, had the weather been fine, no attempt would have been made to work. Weather Working Days (WWD) describe a type of working day. It does not matter whether the ship was actually working or not. Therefore, even if a ship is not actually on the loading or discharging berth, for example because it is occupied by another ship, if time has commenced to run and bad weather occurs during a working day, that time will not count against charterers as laytime. A working day not only refers to a day when work normally takes place, it is also that part of the day when work is normally done in the port in question. Therefore, If the word “working” is not qualified in any way, the bad weather would have to occur during the port working part of the day for it to be deducted from the laytime. Conversely, where the charterparty reads “working day of 24 consecutive hours”, which is now more normal, then bad weather occurring at any time, once laytime had started to run, would be deductible even if the charterer had no intention of working during such a period.
In cases of Days, Weather Permitting (DWP), it was understood until 1982 that only working time actually interrupted by bad weather would fail to count as laytime. All this, however, was before the case of the MT VORRAS (1982) case. MT VORRAS (1982) was a tanker and the judges of the English Court of Appeal had to determine the meaning of the term “72 running hours, weather permitting, Sundays and holidays included…”, where the ship was kept from a loading berth for some days owing to bad weather. They held that bad weather at the time was such as to prevent the loading of a ship of the MT VORRAS type and as such, laytime should not count.
In other words, that decision on a MT VORRAS has effectively eroded the long-held and sacred distinction in the dry-cargo market between Weather Working Days (WWD) and Days, Weather Permitting (DWP).
In modern charterparties, shipbrokers still encounter either the terms Weather Working or Weather Permitting, although under English law there is effectively now no difference.
However, both will probably refer in the same clause to “days of 24 consecutive hours”, a similar expression to the running hours used in the MT VORRAS (1982) case. The word ‘consecutive’ is, in fact, extremely important, having evolved over very many years in order to avoid costly disputes. Where the term days of 24 consecutive hours is incorporated into a charterparty’s laytime provisions, and this is the term used in almost all modern dry-cargo charterparties, it in effect means that a laytime day will run continuously for 24 hours each day, unless specifically interrupted by some charterparty factor such as a weekend or holiday, bad weather, or a strike.
It is of no consequence whether the Working Day of a port is of less than 24 hours. The parties to the Charterparty have agreed to ignore port Working Days and to define a Laytime Day as running continuously for 24 hours, except for any specified interruptions.
If the words 24 consecutive hours do not appear, as occasionally happens by intent, although perhaps more often by mistake, variations in today’s practices may arise.
The term Weather Working Days (WWD) on its own without qualification is indeed affected by the number of hours actually worked in a port. Should bad weather occur outside working periods in the normal, non-working and otherwise idle time, laytime will not be affected. However, if bad weather occurs in normal working time, even if the ship was idle at the time, laytime will be interrupted and the degree of interruption has to be reached by apportioning working time in a port against a 24-hour day.
Since MT VORRAS (1982) case, the term ‘Weather Working Days (WWD) and Days, Weather Permitting (DWP) should be taken to be the same as for the above example, and the terms “weather working days of 24 hours” and “working days of 24 hours, weather permitting”, i.e. without the all-important “consecutive” must also be treated in the same manner.
6- Establish the Laytime Cessation:
Commonly, dry-cargo laytime ceases simultaneously with the termination (cessation) of cargo-operations i.e. as loading is completed. Sometimes, nevertheless, certain cargo work such as trimming, lashing or securing will be required, the time for which would reasonably be added to laytime.
Most charterparties are silent also on the consequence of laytime of time taken for reading drafts, perhaps an essential activity before Bill of Lading weight can be estimated. Usually, Charterers will recognize this activity as essential and include same as laytime, normally reading drafts involves a fairly short time.
Nevertheless, a draft survey is extremely restricted by, for example, bad weather, and there might well be a dispute between the parties unless the charterparty stipulates whether time dedicated to establishing a ship’s draft should count as laytime or not.
7- Calculate the Demurrage or Despatch Money: can be sub-divided into
7a- Damages for Detention
7d- Averaging Laytime
What is Time Sheet (TS)?
After obtaining the Statement of Facts (SOF) and the relevant Charterparty, the shipbroker having reached this seventh stage can move on to using a Time Sheet (TS) to compile the laytime calculation.
Time Sheet (TS) is a document displaying laytime used, taking into account all the factors noted, before arriving at a balance of Despatch Money in favour of Charterers, or Demurrage Money in favour of Shipowners or Ship Operators.
Time Sheet (TS) is based on facts provided from the SOF (Statement of Facts) as interpreted by the relevant Laytime Clauses in the governing charterparty, themselves interpreted by understanding of the law relating to Laytime.
7a- Damages for Detention: If charterers fail to abide by the provisions of a charterparty and, as a result, allowed laytime is exceeded, shipowners are usually entitled to reimbursement for their loss if any. One way of reimbursement could be by claiming Damages for Detention, nevertheless, Damages for Detention could be a prolonged and expensive legal exercise. Therefore, Charterers and Shipowners avoid the problem by negotiating a daily level of Demurrage (Liquidated Damages) for the time spent more than agreed laytime.
7b- Demurrage: If all allowed Laytime is used before the completion of cargo operations, and the parties (Shipowners and Charterers) to a charterparty have anticipated this possibility, it is customary that a governing charterparty will provide for Demurrage to be paid to the shipowners.
Demurrage amount is negotiated with the charterparty and is usually described as per day or pro-rata for part of a day. Occasionally, Demurrage might be described as per ton but in such a case it is important to verify whether the ton refers to a Summer Deadweight Tonnage of the ship involved, or per cargo ton, or per registered ton.
Generally, Address Commissions (ADCOM) and Brokerages are deductible from Demurrage payments, just as in the case of Freight or Deadfreight but this has to be clearly stated in the Commission Clause (Brokerage Clause).
Demurrage is intended to reflect the Daily Running Cost of a ship, including port bunker consumption, and where appropriate, a fair profit level. Nevertheless, shipping is a free market and there may be circumstances when shipowners accept low or negotiate high demurrage rates.
Once laytime has been fully used, Demurrage should normally run continuously, night and day, weekend and working period, with no interruptions until cargo work is completed unless the charterparty expressly provides otherwise, such as: “shifting time from anchorage to berth not to count as laytime or as time on demurrage”.
Generally, laytime interruptions such as bad weather, weekends, and holidays, will not interfere with Demurrage Time, although breakdowns on a ship affecting discharge will interrupt Demurrage Time.
Generally, it can be stated that the much-used shipping phrase: “Once on Demurrage, Always on Demurrage” means what it says.
7c- Despatch: What is Despatch? What is Despatch Money?. It is usually agreed that if a ship completes cargo operations within the available laytime, the charterer will be rewarded by the payment of Despatch Money, which is commonly arranged at half the daily rate of Demurrage (DHD: Despatch Half Demurrage).
Nonetheless, a few charterers negotiate that daily despatch is the same as daily demurrage. On the other hand, ro-ro ships, car carriers, or coaster ships are anticipated a fast turn-round in port. Therefore, ro-ro ships, car carriers, or coaster ships’ charterparty usually stipulate Free Despatch (No Despatch At All).
No Address Commissions (ADCOM) or Brokerages are payable on Despatch Money.
Despatch can be sub-divided as being payable on:
- All-Time Saved
- Laytime Saved (Working Time Saved)
Despatch on All-Time Saved:
For example, MV HANDYBULK YAGMUR completes loading at 12:00 HRS on a Friday, MV HANDYBULK YAGMUR’s charterparty stipulates:
- “per weather working day of 24 consecutive hours, Saturdays, Sundays and Holidays Excepted, Even If Used” (SSEX EIU)
Therefore, laytime would be suspended in normal circumstances from Friday 24:00 HRS through to Monday 00:01 HRS.
At 12:00 HRS on Friday there are 3 days of Laytime remaining and, since the term All-Time Saved means exactly what it says, the shipbroker has to base data on the theoretical case that if the MV HANDYBULK YAGMUR had not completed loading on the Friday at 12:00 HRS and MV HANDYBULK YAGMUR had remained in port operating cargo when would laytime have been fully used?
Despatch would therefore be calculated:
All-Time Saved Laytime Saved (Working Time Saved)
Friday 1200/2400 12 hours
Saturday 0000/2400 0 hours
Sunday 0000/2400 0 hours
Monday 0000/2400 24 hours
Tuesday 0000/2400 24 hours
Wednesday 0000/1200 12 hours
5 days 3 days
Allowing for the weekend that has been saved by the charterers due to their completing the cargo operation before the expiry of allowed laytime, charterers have in effect saved the shipowner some 5 days and, under All-Time Saved terms, are therefore qualified to 5 days Despatch.
Despatch on Laytime Saved (Working Time Saved):
Based on Laytime Saved (Working Time Saved), only the 3 remaining days of laytime would apply as Despatch, despite weekends or holidays or bad weather or any other factor occurring once the ship had departed.
Is Working Time Saved the same as Laytime Saved? With laytime described as a day of 24 consecutive hours, it will be the same. Otherwise, if one is involved in apportioning working time, then despatch should be apportioned in the same method.
All-Time Saved Vs Laytime Saved (Working Time Saved)
Shipbrokers may notice assessments such as Despatch on All-Time Saved favors the Charterers. On the other hand, Laytime Saved (Working Time Saved) favors the Shipowners. The fairness of All-Time Saved Vs Laytime Saved (Working Time Saved) is an endless debate. The Shipowners inherently state that as laytime excepts certain periods like Sundays and holidays, then Despatch should be on the same ground. The Charterers dispute this by claiming that a ship is earning all the time she is at sea regardless of which day of the week and this should reward the Charterers for every day without exception.
Despatch Money in Bulk Sugar Trades
Some trades, such as bulk sugar trades, are based on laytime far more than the time needed to complete cargo operations. Consequently, shipowners should this into account when negotiating bulk sugar business and calculate the Saved Time as a Despatch Expense in the Voyage Estimation.
7d- Averaging Laytime: can be sub-divided into:
- Non-Reversible (Normal) Laytime
- Reversible Laytime
- Average Laytime
- Non-Reversible (Normal) Laytime: If nothing is expressly stipulated in the charterparty, and where loading and discharging port laytime allowances are separately reckoned, it can be accepted that laytime is Non-Reversible (Normal) Laytime. Therefore, laytime for loading port and for discharging port is reckoned simply individually and it is possible even to calculate, claim, negotiate and settle the load port despatch or demurrage sums before even a ship has arrived at the discharge port.
- Reversible Laytime: In Reversible Laytime, allowance for both the loading and discharging ports are added and computed together. Either the charterparty may openly be on reversible terms without actually stating, for example, 10 days All Purposes, or 15 Total Days, or there may be an Express Laytime Clause providing the Charterers the right or the option to apply Reversible Laytime conditions if Charterers so wish, in other words, if Charterers compute the laytime to be in their favor to do so. Consequently, any laytime saved from the loading ports can be taken forward and added to laytime allowed at the port of discharge.
- Average Laytime: In Average Laytime, separate calculations are performed for the loading and the discharging port, with the final results for each being merged to assess what is finally due. For example, 3 days demurrage at load port would be canceled out by 3 days despatch at the discharge port, even though the daily amount of demurrage may be twice that of despatch.
Reversible Laytime Vs Average Laytime
On the face of it, it may seem there is no difference between the application of Reversible Laytime and Average Laytime. However, differences can materialize and, with the same basic facts, it is likely to achieve three different results by applying each of the above options.
VOYLAY Rules 1993
VOYLAY Rules 1993 describes the Laytime Definitions. VOYLAY Rules 1993 comprises the laytime terms that have been defined by prominent shipping practitioners.VOYLAY Rules 1993 may be found useful in daily laytime computing. One word of warning, however. VOYLAY Rules 1993 are associated with international practice and not necessarily with a particular code of law. Therefore, there may be small but important differences between the definition appearing in VOYLAY Rules 1993 from legal practice in a certain country.
VOYLAY Rules 1993 do not automatically apply to every charterparty fixture formed. Charterers and Shipowners should simply add a brief clause into the charterparty to the effect that in the event of a dispute the VOYLAY Rules 1993 are to apply in interpreting certain terms or expressions.
VOYLAY Rules 1993 would indicate that the foremost factors to be defined are Port and Berth. This is primarily appropriate because many charterparties stipulate certain Berths for loading or discharging while other charterparties merely mention the Port. If the charterer plans to operate the ship at a precise Berth, it may be in the charterer’s interest to name the Berth and therefore make the charterparty fixture a Berth Charter. There are numerous motivations why the charterer may want to nominate a precise Berth but from a pragmatic point of view as regards laytime the significant distinction between Berth Charters and Port Charters is that if a named Berth is not available for a reason in which time would not count, for example, neap tides, then the risk of incurring demurrage is reduced. Under a Port Charter, time would count if other berths within the port were not affected.