Lay time
What is Laytime?
The time periods allowed for loading and/or discharging are known as lay time.
LAYCAN: The agreed range of dates in which the ship must arrive at the agreed place, if
the ship cannot arrive at the agreed time the charterer has the option of cancelling the
contract but this must be done within 48 hours otherwise contract is still valid.
Commencement of lay time
Three factors:
• Vessel must be an ‘arrived ship’;
• Vessel must be actually ready to load
• Shipowner must give notice of readiness (NOR)
Arrived Ship
• Port, dock or berth C/P? charterer to nominate?
• Problems with the “arrived ship” in port C/P: Where is vessel waiting?
• Arrived ship – common law interpretation
– Within geographical and legal area of the port
– At immediate and effective disposition of C.
Notice of readiness (NOR)
A valid NOR is given when the vessel is in fact ready to load at the time the notice is given.
If it is later discovered that the vessel was actually not ready to load, then the notice will be
ineffective and lay time will not commence.
Actual readiness to load will depend on
The position of the vessel;
Its physical capability to receive the cargo
A vessel loaded rice under charter for a port where the charterers knew that it could
not be discharged without the permission of the British Government. They did not
inform the shipowner of this fact. Permission was refused, and the ship was delayed.
Held: charterers were liable for the delay.
C/P will prescribe when NOR can be given. Vessel must be actually ready to load when
NOR given.
Laytime
• May be fixed or determined by custom of port.
• Days or running days: usually 24 hour period without interruption except where
specific days are excluded
• Non-working days: Sunday or other, plus holidays
• Working day is whole day: not just working hours
• Weather working day: excluding days in which weather does not permit loading
There will be an agreement on how long it will take the charter to load and discharge
the cargo at the chosen ports.
If the charter takes too long, he will owe the ship owner more money – Called Demurrage
If he gets away early the ship-owner will owe him a refund – Called Despatch
Demurrage and Despatch Money
Demurrage
– Liquidated damages calculated in advance
– Need to be realistic and not abusive
– ‘Once on demurrage - always on demurrage’
Despatch
– Usually half of demurrage rate
– Incentive for charterer to load and discharge faster than laytime allowance
Purpose of the Laytime Calculation
The purpose of laytime calculations is to determine whether on completion of loading or
discharge operations despatch is payable to the charterers or demurrage is due to the owners.
The port agent is normally responsible for calculating the sum due and rendering accounts,
but the master should also keep a tally of laytime used as he may be required to confirm the
agent’s figures. The master should also be aware, at any given moment, of whether laytime
has commenced, is still running, is interrupted or has expired.
Laytime calculations are recorded on a laytime statement. There are seven stages in a
laytime calculation:
1. Read relevant clauses in the charter party.
2. Obtain Statement of Facts from agent.
3. Determine duration of laytime allowed.
4. Establish time of commencement of laytime.
5. Allow for interruptions to laytime as per the charter party.
6. Establish time of expiry of laytime.
7. Calculate despatch or demurrage payable.
The Statement of Facts is an extract from the port operations log kept by the
charterer’s agent, and contains times of all relevant events, including:
Arrival of ship;
Tendering of notice of readiness;
Commencement of laytime;
Commencement of cargo operations;
Periods of suspension of laytime, with reason in each case (so that risk of stoppage
can be apportioned);
Termination of cargo operations;
Termination of laytime.
The Statement of Facts should be approved by all parties involved (master, stevedore,
agent, etc.), and will normally be presented by the agent to the master for his signature and
return; the master should retain a copy.
It is important before signing to compare the times stated with those recorded onboard the
ship, since the charterer’s agent may have obtained inaccurate times from his terminal
supervisor.
The Statement of Facts is used by the agent in drafting up the Laytime Statement, from
which any amount of demurrage or despatch money payable will be calculated.
Laytime Calculations – Exercises
Q. (1) A charter party reads: "vessel to discharge at the average rate of 1,000 tonnes per
weather working day of 24 hours (Saturdays after 1pm, Sundays and holidays
also until 8 am Monday and/or next working day after holidays excepted). Time
to count 24 hours after Master has given written notice of readiness.
Demurrage shall be paid at the rate of $1200 per day and proportionally for any
part of a day, despatch at the rate of $600 and proportionally for all time saved".
The vessel arrived with a B/L quantity of 12,500 tonnes and notice of readiness
was accepted at 8 am Monday 12 April; the 16 April (Good Friday) and 19 April
(Easter Monday) were public holidays. Rain prevented work on 21 April from
2100 until midnight. Discharging completed Saturday 1 May at 1300.
Make out a laytime statement and calculate the amount of demurrage or
despatch due in sterling, exchange rate $1.80; state also to whom payable.
Q. (2) A charter party reads: ‘cargo to be discharged at an average rate of 750
tonnes per day of 24 consecutive hours save that, at the discharging port the
following periods shall be excluded namely, from the midnight preceding any
holiday until 0700 on the first working day following such holiday, and from
noon on Saturday until 0700 on the following Monday, and time lost owing to
weather conditions.
Time to begin 24 hours after Master has delivered written notice of readiness.
Any days on demurrage to be at £0.12 per gross register ton per day or pro rata,
despatch at the rate £0.06 per gross register ton per day, pro rate for all time
saved" The ship of 7032 tons gross arrived on Tuesday 21 December with 9,000
tonnes of sulphur, notice of readiness was accepted at 0800 the same day.
Discharging was completed at 0600 Wednesday 12 January; the 27 and 31
December were the only holidays.
Make out a laytime statement and calculate the demurrage or despatch; state
also to whom payable.
Q. (3) A charter party reads: "A full and complete cargo of raw sugar in bulk of
12,000 tonnes... any days on demurrage in loading to be paid at the rate of £650
per day or pro rata... despatch to be paid at the rate of £325 per day of 24 hours
pro rata on all time saved... Laytime to commence 24 hours after receipt of notice
or readiness during business hours... For each 750 tonnes, one weather working
day (Sundays, holidays and Saturdays after 1pm excepted) to be allowed the
charterers for loading".
Notice of readiness was accepted at 0500 on Tuesday 5 April, and loading was
completed at 1800 on 27 April. The 8 and 11 of April were public holidays and
rain prevented work from 1100 until 1500 on Tuesday 12 April.
Normal office hours are from 0800 to 1700 hours.
Make out a laytime statement and calculate the amount of demurrage or
despatch; state also to whom payable.
