Laytime and demurrage
Laytime is the contractual allowance for loading and discharge. Demurrage is the agreed compensation due when that allowance is exceeded. Both depend on precise wording and accurate port records.
Updated 26 July 2026
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.
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. Those days do not count, whether or not work happens. |
| 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. Cargo handling is the charterer's cost and, with it, most of the risk of a slow port. |
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.
Demurrage
When laytime expires and the ship is still working, she goes on demurrage. Demurrage is an agreed daily rate, payable pro rata for part of a day, and it is liquidated damages rather than a penalty. The owner does not need to prove what the delay actually cost.
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.
A worked calculation
Take a cargo of 30,000 tonnes fixed at 10,000 tonnes per weather working day SHEX for loading, demurrage at USD 18,000 per day, despatch half demurrage.
- Laytime allowed: 30,000 ÷ 10,000 = 3.0 days.
- Time actually used, after deducting excepted periods: 4.5 days.
- Time on demurrage: 1.5 days.
- Demurrage due: 1.5 × USD 18,000 = USD 27,000.
Had the same ship finished in 2.0 days, the saving of 1.0 day would have earned despatch of USD 9,000. The asymmetry is the point: the rate at which you lose money is twice the rate at which you gain it, so the loading rate you accept in the recap matters more than most charterers expect.
Making or resisting a claim
A demurrage claim stands or falls on documents. The ones that matter are the notice of readiness, the statement of facts, the time sheet, the 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.
Common questions
Is demurrage a penalty?
No. Demurrage is liquidated damages: an agreed daily rate compensating the owner for the vessel being detained beyond the laytime allowed. Because it is agreed in advance, the owner does not have to prove actual loss, and a court will not reduce it because the loss was smaller.
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. A time bar of 90 days from completion of discharge is common, and it usually requires the claim and all supporting documents to be submitted within that period. Miss it and the claim is gone regardless of merit, so the statement of facts and the notice of readiness need collecting at the time rather than later.
Does laytime apply to a time charter?
Not in the same way. Under a time charter the charterer pays hire for every day the vessel is on hire, including time in port, so there is no separate laytime allowance and no demurrage. The commercial risk of a slow port sits with the charterer by default.
This guide describes general market practice and is not legal advice. The signed contract, charter party and transaction-specific advice take precedence.