Blog

Laytime and demurrage

• Publicado por Kristina German 19 de setembro de 2023 - Arquivado em Negócios - 21 visualizações

  Laytime refers to the time allocated to a vessel for the loading and unloading of cargo, while demurrage represents compensation for failing to complete these operations within the agreed laytime. The calculation of laytime involves three key stages:

  1. Commencement of Laytime: Laytime begins after a valid Notice of Readiness (NOR) has been presented. The NOR is considered valid if certain conditions are met:

     • The vessel arrives at the designated destination (e.g., port, berth, or dock) within the agreed-upon timeframe (laydays).
     • The vessel is fully prepared for loading, meeting all legal and physical requirements, including readiness of cargo spaces, proper vessel equipment, and correct documentation.

     The charterparty may include additional provisions defining when the vessel is considered to have arrived ("arrived ship") under specific circumstances, such as whether the vessel is in port, berth, customs cleared, or has received free pratique. The charter may also specify the acceptable times for submitting a valid NOR.

  2. Duration of Laytime: Laytime typically runs continuously from its commencement until cargo operations are completed or until it expires. Different types of laytime include fixed (explicitly specifying the allowed time for loading/unloading), calculable (based on factors like cargo quantity or weight), and other terms that may be customary for the port or charter.

  3. Interruptions to Laytime: Laytime may be interrupted by specific exception clauses within the charterparty. Common interruptions include:

     • Weather conditions: Laytime is not counted during adverse weather periods that impede loading or unloading (e.g., "WWD" - weather working day).
     • Weekends and Holidays: Certain clauses, like "SHEX" (Sundays and Holidays Excepted), exclude Sundays and holidays from laytime calculation.
     • Shifting from berth to berth.
     • Strikes and other unforeseen events.

  Demurrage and Dispatch: If loading or unloading extends beyond the agreed laytime, the charterer must pay demurrage to the shipowner. Conversely, if cargo operations are completed before the laytime expires, the charterer may receive dispatch as a reward for efficient loading/unloading, freeing the vessel for other assignments. The demurrage rate is stipulated in the contract (e.g., USD 5,000 per day pro rata), and the dispatch rate is usually half of the demurrage rate. Some contracts may not include provisions for dispatch.

  In some cases, commercial contracts like CIF (Cost, Insurance, and Freight) and FOB (Free On Board) may not specify the demurrage rate but instead refer to the charterparty for this information. When the charterparty is not available at the time of contracting, the CIF buyer or FOB seller assumes additional risk. To mitigate this, it's advisable to set a maximum demurrage rate (e.g., demurrage as per charterparty but capped at USD 5,000).

  Source: https://fortiorlaw.com/news/laytime-and-demurrage/