Laytime calculation and ship demurrage
Laytime is the contractual allowance for loading and discharge. Calculate that allowance first, count the time used under the charter party, then apply demurrage or despatch to the balance.
What laytime is
On a voyage charter the owner quotes a freight rate that assumes the ship will be in port for a certain length of time. That allowance is laytime. It is not a target and it is not advisory. It is a contractual allowance, and the moment you exceed it money starts moving from the charterer to the owner.
Laytime is expressed in one of two ways. Either a fixed period, such as 72 hours total laytime, or a rate of work, such as 10,000 mt per weather working day, from which the allowance is calculated once the final cargo quantity is known.
Laytime calculation: formula and worked example
For a rate-based allowance, divide the contractual cargo quantity by the contractual loading or discharging rate. Compare the allowed time with the counted time used. The charter party decides which quantity, time unit, exceptions and rounding method apply.
- Allowed laytime = cargo quantity ÷ contractual rate of work.
- Time on demurrage = counted time used − allowed laytime.
- Demurrage due = time on demurrage × daily demurrage rate.
Take a cargo of 30,000 tonnes fixed at 10,000 tonnes per weather working day SHEX for loading, with demurrage at USD 18,000 per day and despatch at half demurrage.
- Laytime allowed: 30,000 ÷ 10,000 = 3.0 days.
- Time actually used after deducting excepted periods: 4.5 days.
- Time on demurrage: 4.5 − 3.0 = 1.5 days.
- Demurrage due: 1.5 × USD 18,000 = USD 27,000.
If the same operation finished in 2.0 counted days, it would save 1.0 day. At half the demurrage rate, that produces USD 9,000 despatch if the agreed wording pays despatch on that saved time. This arithmetic is the final step. A valid notice of readiness and the correct treatment of each event come first.
When laytime starts
Three things generally have to happen before the clock runs.
- The vessel arrives
- She reaches the agreed destination. Whether that means the berth or the port depends on whether the charter is a berth charter or a port charter, and the difference decides who carries the risk of congestion.
- She is ready in all respects
- Holds clean and ready for the cargo, gear working, documentation in order. A notice given by a vessel that is not actually ready can be invalid, and an invalid notice can cost the owner days.
- Notice of readiness is tendered
- The master or the agent tenders NOR to the charterer or shipper, within the hours the charter party allows for tendering.
Laytime then usually begins after a period of turn time, commonly six or twelve hours from tendering, unless loading or discharging starts earlier, in which case actual time used normally counts from that point.
How laytime is counted
The abbreviations in a fixture recap are doing real work here. They decide which hours count against your allowance and which are free.
| Term | What it means for the clock |
|---|---|
| WWD | Weather working day. Time lost to weather that actually prevents work does not count against laytime. |
| SHEX | Sundays and holidays excepted. Qualifiers such as unless used or even if used decide whether work performed during the excepted period counts. |
| SHINC | Sundays and holidays included. Everything counts. |
| ATUTC | All time used to count. The exceptions fall away and the clock simply runs. |
| EIU | Even if used. Excepted time stays excepted even when the ship is worked during it. |
| FIOST | Free in, out, stowed and trimmed. This allocates cargo-handling cost to the charterer. It does not by itself decide when laytime runs. |
The record of what actually happened is the statement of facts, signed by the agent and usually countersigned by the master. It is the primary evidence in any later argument, which is why it is worth reading on the day rather than three months afterwards.
Ship demurrage after laytime expires
When laytime expires and the ship is still working, she goes on demurrage. Demurrage is an agreed daily rate, usually payable pro rata for part of a day. It is generally treated as liquidated damages under the contract rather than a new rate negotiated after the delay.
The rule that surprises charterers most is that once the vessel is on demurrage, the exceptions which used to interrupt laytime generally stop working. Weather, holidays and the rest no longer protect you. Time runs until the cargo operation finishes.
Despatch
The reverse also exists. If you finish inside the laytime allowance, the owner pays despatch, customarily at half the demurrage rate. Despatch is usually payable on working time saved rather than on all time saved, and which of those two applies is a term you agree rather than a default.
The laytime statement and demurrage claim
The laytime statement is the time calculation built from the agreed allowance and the port record. It normally shows the notice of readiness, commencement time, each operational event, every deduction or exception, completion and the final demurrage or despatch balance. The statement of facts supplies the chronology. It is not the same document as the laytime statement that applies the charter party to that chronology.
A demurrage claim stands or falls on documents. The ones that matter include the notice of readiness, statement of facts, laytime statement, time sheet, pumping or loading log where relevant, and the charter party itself. Collect them at the port, not later.
Check the time bar first, then check the validity of the notice of readiness, then check the arithmetic. Errors are common in all three, and a claim that is right on the merits still fails if it is served a day late or without a document the clause requires.
Primary sources and editorial scope
The links below are the primary references used for this guide. Poseidon's text is its own explanation of general market practice. Licensed form wording remains with its publisher, and the signed fixture governs every live transaction.
- BIMCO Laytime Definitions for Charter Parties 2013 Primary definitions for laytime terms when incorporated into a charter party.
- BIMCO GENCON 2022 The current edition of BIMCO's general-purpose voyage charter party.
Common questions
Is demurrage a penalty?
Demurrage is generally treated as agreed liquidated damages for detaining the vessel beyond allowed laytime, not as a charge invented after the delay. The owner normally claims the contractual daily rate pro rata without itemising the actual loss. The charter-party wording and governing law still control the claim.
What does "once on demurrage, always on demurrage" mean?
Once laytime has expired and the vessel is on demurrage, the exceptions that would have interrupted laytime, such as bad weather or holidays, generally stop applying. Time runs continuously until loading or discharging is complete, unless the charter party expressly says otherwise or the delay is the owner's fault.
How long do we have to bring a demurrage claim?
Whatever the charter party says. Some forms and riders use a 90-day period from completion of discharge, while others do not. The clause may require the claim and every named supporting document within the period. A late or incomplete submission can be time-barred, so collect the statement of facts and notice of readiness at the port.
Does laytime apply to a time charter?
Not in the ordinary voyage-charter sense. Under a time charter, hire continues while the vessel remains on hire, including time in port. There is normally no separate voyage laytime and demurrage regime unless one is specially agreed for a particular employment. Off-hire and other charter-party provisions can change who bears a given delay.
This guide describes general market practice and is not legal advice. The signed contract, charter party and transaction-specific advice take precedence.