Laytime and demurrage comprise one aspect of maritime law, in particular the law relating to

voyage charters. ‘Laytime’ shall mean the period of time agreed between the parties during
which the owner will make and keep the vessel available for loading and discharging without
payment additional to the freight. ‘Demurrage’ shall mean an agreed amount payable to the
owner in respect of delay to the vessel beyond the laytime, for which the owner is not
responsible. If loading or discharging is not completed within the agreed laytime, then the
shipowner is entitled to be compensated for the extra time taken. The demurrage rate fixed by
the parties is intended to cover the vessel’s daily running costs, plus the profit the shipowner
would have been able to earn, had his vessel been released timeously.
Laytime is a term used in maritime law that refers to the period of time allowed by a
shipowner to a carrier to carry out cargo loading or discharging operations. It is a crucial
aspect of voyage charters, and its proper understanding is essential for all parties involved in
maritime trade. In this essay, we will provide a detailed explanation of laytime, including its
definition, calculation, and the factors that affect it.
Definition of Laytime
Laytime is the period of time agreed between the parties during which the owner will make
and keep the vessel available for loading and discharging without payment additional to the
freight. It is a contractual term that is agreed upon by the shipowner and the charterer. The
laytime is prescribed in a contract, which is an exchange of obligations and an allocation of
risks between the shipowner and the charterer. Each party agrees to accept the risk of certain
foreseen circumstances.
Calculation of Laytime
The calculation of laytime is a complex process that involves several factors. The most
important of these factors are the type of charter, the type of cargo, and the terms of the
contract. laytime commences when three conditions are satisfied. First, the vessel must have
arrived at the agreed destination. Second, the vessel must be ready to load or discharge her
cargo. Third, the vessel must tender a valid NOR. Once these conditions are met, the laytime
clause is triggered, and the clock starts ticking. It is important to note that the beginning of
laytime may change in proportion with the clauses of the contract. It is also important to
distinguish between port and berth charters. In the case of a berth charter, the vessel is
considered to have arrived when she is at the berth. Thus, if there is congestion within or
outside the port, the owner bears the cost of the delay. On the other hand, in the case of a port
charter, the laytime clause is triggered as soon as the vessel has arrived at the port, and the
charterer is responsible for paying any demurrage charges if loading or discharging is not
completed within the agreed laytime. The following are some of the key factors that affect the
calculation of laytime:

1. Type of Charter
The type of charter is an essential factor in the calculation of laytime. There are two types of
charters: port charters and berth charters. In a port charter, the laytime clause is triggered as
soon as the vessel has arrived at the port, and the charterer is responsible for paying any
demurrage charges if loading or discharging is not completed within the agreed laytime. In a
berth charter, the vessel is considered to have arrived when she is at the berth. Thus, if there
is congestion within or outside the port, the owner bears the cost of the delay.
2. Type of Cargo
The type of cargo is another factor that affects the calculation of laytime. Different types of
cargo require different amounts of time to load and discharge. For example, bulk cargo such
as coal or grain may take longer to load and discharge than containerized cargo. The type of
cargo also affects the loading and discharging procedures, which can impact the time required
to complete the operation.
3. Terms of the Contract
The terms of the contract are the most critical factor in the calculation of laytime. The
contract will specify the amount of laytime allowed, the rate of demurrage, and the conditions
under which demurrage will be charged. The contract will also specify the time allowed for
loading and discharging, including any exceptions or extensions. The terms of the contract
will vary depending on the type of charter, the type of cargo, and the specific requirements of
the parties involved.

Factors Affecting Laytime

Several factors can affect the amount of laytime allowed, including weather conditions, port
congestion, and labor disputes. These factors can cause delays in loading and discharging,
which can result in additional costs for the charterer. The following are some of the key
factors that can affect laytime:
1. Weather Conditions
Weather conditions can have a significant impact on the amount of laytime allowed. Adverse
weather conditions such as high winds, heavy rain, or rough seas can make it difficult or
impossible to load or discharge cargo. In such cases, the laytime may be extended, or the
charterer may be required to pay demurrage charges.
2. Port Congestion
Port congestion is another factor that can affect the amount of laytime allowed. Congestion
can occur due to a variety of factors, including the number of vessels waiting to load or
discharge, the availability of berths, and the efficiency of the port operations. In cases of port
congestion, the laytime may be extended, or the charterer may be required to pay demurrage
charges.
3. Labor Disputes
Labor disputes can also affect the amount of laytime allowed. Strikes or other labor actions
can cause delays in loading and discharging, which can result in additional costs for the
charterer. In such cases, the laytime may be extended, or the charterer may be required to pay
demurrage charges.
There are three basic laytime methods used to determine whether or not demurrage or
dispatch is due. These methods are:
1. Reversible Laytime
Reversible laytime is a method that allows the charterer to use the laytime for loading and
discharging in any order. This means that if the charterer completes loading before the
laytime expires, the remaining time can be used for discharging. If the charterer completes
discharging before the laytime expires, the remaining time can be used for loading. If the
charterer exceeds the laytime, demurrage charges will be applied.
2. Average Laytime
Average laytime is a method that calculates the average time required for loading and
discharging. The total laytime is divided equally between loading and discharging, and any
time saved during loading can be used for discharging, and vice versa. If the charterer
exceeds the average laytime, demurrage charges will be applied
3. Consecutive Laytime
Consecutive laytime is a method that requires the charterer to complete loading and
discharging within a specified period. If the charterer completes loading or discharging before
the specified period expires, the remaining time cannot be used for the other operation. If the
charterer exceeds the specified period, demurrage charges will be applied.
There are several interruptions to laytime that can occur during the loading or discharging of
cargo. The most common interruptions to laytime are:
1. Bad Weather
Bad weather is one of the most common interruptions to laytime. If the weather conditions
are such that it is unsafe to load or discharge cargo, the laytime clock will stop running until
the weather improves. The specific terms of the contract will determine what constitutes bad
weather and the length of time allowed for interruptions due to bad weather.
2. Port Congestion
Port congestion can also cause interruptions to laytime. If there are too many vessels waiting
to load or discharge cargo, the laytime clock may stop running until a berth becomes
available. The specific terms of the contract will determine the length of time allowed for
interruptions due to port congestion.
3. Labor Disputes
Labor disputes, such as strikes or other labor actions, can also cause interruptions to laytime.
If the loading or discharging of cargo is delayed due to a labor dispute, the laytime clock may
stop running until the dispute is resolved. The specific terms of the contract will determine
the length of time allowed for interruptions due to labor disputes.
4. Customs Inspections
Customs inspections can also cause interruptions to laytime. If the cargo is held up due to
customs inspections, the laytime clock may stop running until the inspections are completed.
The specific terms of the contract will determine the length of time allowed for interruptions
due to customs inspections.
5. Equipment Failure
Equipment failure, such as a breakdown of the loading or discharging equipment, can also
cause interruptions to laytime. If the equipment failure is beyond the control of the parties
involved, the laytime clock may stop running until the equipment is repaired or replaced. The
specific terms of the contract will determine the length of time allowed for interruptions due
to equipment failure.

SHEX stands for "Sundays and Holidays Excluded". This means that the laytime allowed
for loading or discharging cargo does not include Sundays or public holidays. For example, if
a charter party specifies a laytime of 5 days SHEX, this means that the laytime clock will
only run on weekdays (Monday to Saturday) and will stop running on Sundays and public
holidays.
SHINC stands for "Sundays and Holidays Included". This means that the laytime allowed
for loading or discharging cargo includes Sundays and public holidays. For example, if a
charter party specifies a laytime of 5 days SHINC, this means that the laytime clock will run
continuously, including on Sundays and public holidays.
The choice between SHEX and SHINC will depend on the specific requirements of the
parties involved and the nature of the cargo being transported. For example, if the cargo is
perishable and needs to be loaded or discharged as quickly as possible, SHINC may be
preferred to ensure that the laytime clock runs continuously. On the other hand, if the cargo is
not time-sensitive and the parties involved prefer to have weekends and public holidays off,
SHEX may be preferred.
It is important to note that the specific terms of the contract will determine whether SHEX or
SHINC applies and the length of time allowed for loading or discharging cargo. The contract
may also specify the conditions under which demurrage charges will be applied if the laytime
is exceeded.
Demurrage is a term used in maritime law to refer to the charges that are incurred when a
vessel is delayed in port beyond the agreed laytime. Laytime is the period of time agreed
between the parties during which the owner will make and keep the vessel available for
loading and discharging without payment additional to the freight. Demurrage is an agreed
amount payable to the owner in respect of delay to the vessel beyond the laytime, for which
the owner is not responsible.
The purpose of demurrage is to compensate the shipowner for the extra time taken to load or
discharge cargo beyond the agreed laytime. The demurrage rate fixed by the parties is
intended to cover the vessel’s daily running costs, plus the profit the shipowner would have
been able to earn, had his vessel been released timeously. Demurrage is usually calculated on
a daily basis and is charged for each day that the vessel is delayed beyond the agreed laytime.
The specific terms of the contract will determine the length of time allowed for loading or
discharging cargo and the conditions under which demurrage charges will be applied. The
contract may also specify the demurrage rate and the conditions under which demurrage
charges will be waived or reduced. Demurrage charges can be a significant expense for the
charterer, especially if the cargo is delayed due to factors beyond their control, such as bad
weather or port congestion. In some cases, the charterer may be able to negotiate a reduction
or waiver of demurrage charges if they can demonstrate that the delay was caused by factors
beyond their control. It is important to note that demurrage charges are separate from other
charges that may be incurred during the loading or discharging of cargo, such as port fees or
stevedoring charges. Demurrage charges are also separate from laytime exceptions, which are
events that are within the definition of laytime but are excluded by an additional clause.
Reasons for demurrage:
1. Delay due to incorrect documentation
2. Due to late receipt of documents
3. Due to loss of documents
4. Due to customs and cargo inspections
5. Due to receiver being unreachable
To calculate laytime, the first step is to determine the start and end times of the laytime
period. Laytime commences when the vessel has arrived at the agreed destination, is ready to
load or discharge, and has tendered a valid NOR (Notice of Readiness). The laytime clock
will then start running and will continue to run until the cargo is loaded or discharged, or until
the laytime period expires. The length of the laytime period will be specified in the charter
party agreement and may be expressed in terms of days, hours, or other units of time. The
specific terms of the agreement will also determine whether the laytime period is calculated
on a SHEX (Sundays and Holidays Excluded) or SHINC (Sundays and Holidays Included)
basis. Once the laytime period has been determined, the next step is to calculate the
demurrage charges if the laytime is exceeded. Demurrage is the agreed amount payable to the
owner in respect of the delay to the vessel beyond the laytime, for which the owner is not
responsible. The demurrage rate will be specified in the charter party agreement and may be
expressed in terms of a daily rate or other units of time. The specific terms of the agreement
will also determine the conditions under which demurrage charges will be applied, such as
the length of time allowed for loading or discharging cargo and the conditions under which
demurrage charges will be waived or reduced. To calculate the demurrage charges, the
number of days or other units of time that the vessel is delayed beyond the laytime period is
multiplied by the demurrage rate.
For example, if the laytime period is 5 days and the demurrage rate is $1,000 per day, and the
vessel is delayed for an additional 2 days, the demurrage charges would be $2,000 (2 days x
$1,000 per day). It is important to note that the specific terms of the charter party agreement
will determine the calculation of laytime and demurrage charges. The parties involved should
carefully review the terms of the agreement and ensure that they understand their respective
obligations and liabilities.
To prevent demurrage charges, there are several steps that can be taken:
1. Plan Ahead: Proper planning is essential to avoid delays in loading or discharging cargo.
This includes ensuring that all necessary documentation is in order, that the cargo is properly
packed and labeled, and that any necessary permits or approvals have been obtained.
2. Communication: Effective communication between all parties involved in the shipment is
critical to avoid delays. This includes communication between the shipper, the carrier, the
port authorities, and any other relevant parties.
3. Flexibility: Being flexible and willing to adjust plans as needed can help to avoid delays.
This may include adjusting the loading or discharging schedule to avoid peak periods of
congestion or bad weather.
4. Monitoring: Regular monitoring of the loading or discharging process can help to identify
potential delays early on and take corrective action before they become a problem.
5. Contingency Planning: Having contingency plans in place for unexpected events, such as
bad weather or equipment failure, can help to minimize delays and avoid demurrage charges.
6. Negotiation: If delays are unavoidable, negotiating with the carrier or port authorities for a
waiver or reduction of demurrage charges may be possible.
Dispatch is a term used in shipping to refer to the amount of money that is paid to the
charterer by the shipowner if the loading or discharging of cargo is completed before the
laytime period has expired. In other words, dispatch is the opposite of demurrage, which is
the amount of money that is paid by the charterer to the shipowner if the loading or
discharging of cargo takes longer than the agreed laytime period. The purpose of dispatch is
to incentivize the charterer to complete the loading or discharging of cargo as quickly as
possible, thereby minimizing the amount of time that the vessel spends in port and reducing
the risk of demurrage charges. Dispatch is typically calculated on a pro-rata basis, meaning
that the amount of dispatch paid is proportional to the amount of time saved.
The specific terms of the dispatch clause will be set out in the charter party agreement and
may vary depending on the type of cargo, the size of the vessel, and other factors. Some
common dispatch clauses include:
1. Fixed Rate: Under a fixed rate dispatch clause, the amount of dispatch paid is a fixed
amount per day or per hour. This type of clause is typically used for smaller vessels or for
cargoes that can be loaded or discharged quickly.
2. Graduated Rate: Under a graduated rate dispatch clause, the amount of dispatch paid
increases as the amount of time saved increases. For example, the first hour of saved time
may be paid at a lower rate than the second hour, and so on.
3. Lump Sum: Under a lump sum dispatch clause, a fixed amount of dispatch is paid
regardless of the amount of time saved. This type of clause is typically used for cargoes that
can be loaded or discharged very quickly, such as bulk cargoes.
It is important to note that the specific terms of the dispatch clause will be negotiated between
the shipowner and the charterer and will depend on a variety of factors, including the type of
cargo, the size of the vessel, and the expected laytime period. The parties involved should
carefully review the terms of the agreement and ensure that they understand their respective
obligations and liabilities.