Laytime & Demurrage

Laytime is the period a voyage charterparty allows the charterer to load and discharge cargo. If the charterer exceeds that time, demurrage accrues — a pre-agreed liquidated damages rate per day (or pro rata) that compensates the owner for the vessel being held beyond the agreed period. If the charterer finishes early, the owner may owe despatch. The financial sums involved can be very large: on a capesize bulk carrier at USD 15,000 per day demurrage, a week's delay costs over USD 100,000.

The sequence is: (1) vessel arrives at the agreed destination; (2) Master tenders a Notice of Readiness (NOR); (3) laytime commences after any agreed notice period; (4) cargo operations proceed; (5) on completion, the Statement of Facts (SoF) is reconciled against the laytime calculation; (6) any balance is claimed as demurrage or despatch. The Master's role at steps (1) and (2) is critical — a defective NOR can invalidate the entire laytime clock.

Notice of Readiness (NOR)

A valid NOR requires the vessel to have arrived at the contractual destination and to be ready in all respects to load or discharge. Under a berth charterparty, arrival means the vessel is at the berth; time at anchor waiting for a berth does not count as arrival. Under a port charterparty, arrival means the vessel is within the port area (including the customary anchorage) and is an "arrived ship." The distinction determines when the laytime clock can start.

"Always Accessible / Always Afloat" (AAAA) clauses — many charterparties include "always accessible" or "always afloat" warranties by owners, meaning the named berth must be one the vessel can always reach and lie at without risk of touching bottom. If the berth is inaccessible, any resulting delay is for the owner's account under the AAAA warranty.

The "Reachable on Arrival" concept — often found in WIBON (whether in berth or not) clauses — has generated significant case law. English courts (e.g. The Johanna Oldendorff [1974] AC 479) established that a vessel at the customary waiting anchorage of a port can be an arrived ship even before reaching the berth, provided the port charterparty definition is met.

Laytime calculation terms

Weather Working Day (WWD)
A day or part of a day during which weather permits the relevant cargo work to be carried out. If bad weather occurs during a working day, only the hours of weather interruption are excluded from laytime. 'Working day' refers to the days the port or terminal customarily works, not necessarily a 24-hour day.
Running Day
Every calendar day counts, including weekends, holidays, and any day on which weather prevents work. Once laytime commences, it runs continuously until it expires — this is the most favourable counting method for owners because almost nothing stops the clock.
SHINC
Sundays and Holidays INcluded. These days count as laytime even though no cargo work may take place. Owners prefer SHINC because the counter runs seven days a week.
SHEX
Sundays and Holidays EXcepted. Those days do not count against laytime, or (in the SHEX UU — 'unless used' variant) they count only if work actually takes place on them. Charterers prefer SHEX because it pauses the clock over non-working days.
Time Saved / Time Lost
The net laytime position at completion of cargo operations. Negative balance (charterer used more time than allowed) = demurrage due to owner. Positive balance (charterer finished early) = despatch due to charterer.
Commencement of Laytime
Usually begins at a set time after NOR is tendered and accepted — a common clause is 'laytime to commence 6 hours after NOR tendered or upon berthing, whichever is earlier.' The exact trigger depends on charterparty wording.

Demurrage & despatch

Demurrage is the daily (or pro rata) rate payable by the charterer once agreed laytime is exhausted. English law characterises it as liquidated damages, meaning actual loss need not be proved. The charterparty fixes the rate; once laytime ends, demurrage runs continuously — "once on demurrage, always on demurrage" under English law — subject only to exceptions expressly listed in the charterparty.

Despatch is the bonus paid by the owner to the charterer for completing cargo work in less than the allowed laytime. The despatch rate is customarily half the demurrage rate, though the charterparty may state otherwise. Despatch may be calculated on all time saved (including non-working periods) or working time saved — the distinction matters when laytime is expressed in weather working days.

Voylayrules 1993 & Laytime Definitions 2013

The Voylayrules 1993 (issued jointly by BIMCO, CMI, FONASBA and INTERCARGO) provide standard definitions that parties may incorporate by reference into a voyage charterparty. They cover terms such as "port," "berth," "dock," "in free pratique," "notice of readiness," "laytime," "weather working day," "demurrage," and "despatch money."

The Laytime Definitions for Charter Parties 2013 (published by BIMCO and CMI) updated and expanded on Voylayrules 1993, adding definitions for "accessible," "reachable on arrival," "virtual arrival," and electronic NOR. Where a charterparty states "Laytime Definitions 2013 apply," those definitions supersede any inconsistent wording in the printed form.

Common disputes

NOR validity challenges
Charterers frequently argue that the vessel was not 'in all respects ready' when NOR was tendered — tanks not gas-freed, holds not cleaned, certificates not current. If NOR is invalid, laytime does not commence and the clock does not run.
Weather and exceptional circumstances
What constitutes a 'weather working day' is frequently litigated. Rain that merely slows work vs rain that stops work entirely; dust storms; fog at a port where fog does not customarily stop work. Surveyors and time-sheets must be meticulous.
Holiday exceptions
Local and religious holidays that are not in the charterparty's laytime clause create disputes. Proof of local custom is needed. Some charterparties list holidays explicitly (e.g., official Philippine holidays for a Manila berth).
Shifting time
Time taken moving the vessel from anchorage to berth, or between berths, may or may not count as laytime. Voylayrules 1993 Rule 17 provides that shifting time at the request of the charterer counts; shifting at the owner's request does not.
Reachable on Arrival debate
Port charterparties often contain a 'reachable on arrival' (WIBON / whether in berth or not) clause. English courts have held that this requires the berth to be accessible without navigational obstruction, but congestion does not count — so laytime can run even if the vessel is at anchor waiting for a berth to clear.

Why the Master and cargo officer care

The Master tenders the NOR — timing and wording must be exact. An NOR tendered before the vessel is actually ready (holds not clean, inert gas system unacceptable, vessel not in free pratique) will be rejected or challenged, and the laytime clock will not run from the intended moment. The cargo officer maintains the Statement of Facts (SoF) — the contemporaneous port log recording when the vessel arrived, when NOR was tendered, when cargo work commenced and stopped and why, weather interruptions, shifting, and departure. The SoF is the primary evidence in any demurrage claim or dispute. Vague, unsigned, or unsigned-by-port SoFs are almost worthless in arbitration.