Laytime calculation is a crucial concept in the shipping and chartering industry, directly impacting freight costs and operational efficiency. It refers to the pre-agreed period during which a vessel must complete loading or discharging operations before incurring additional charges. Understanding laytime caclulations and concepts can help shipowners and charterers optimize turnaround times, reduce costs, and avoid disputes.
What is Laytime? Understanding the Basics
Laytime is the period allowed in a charter party for loading and discharging cargo. If the vessel exceeds this period, demurrage is charged; if operations finish early, despatch may be earned. Efficient laytime management is vital in voyage charters and contract negotiations.
Types of Laytime calculation in Chartering
Laytime can vary based on the specific charter party agreement:
- Fixed Laytime – A predetermined period, such as “10 days SHINC” (Sundays and Holidays Included).
- Calculated Laytime – Defined based on a formula, often considering loading or discharge rates.
- Indeterminate Laytime – Laytime is contingent on operational factors and requires case-by-case determination.
- Reversible Laytime – A combined laytime is allocated for both loading and discharge, allowing flexible usage.
- Non-Reversible Laytime – Different laytime allowances are specified for loading and discharge operations.
How to Calculate Laytime: Step-by-Step Guide
Step 1: Determine Allowed Laytime
- Refer to the charter party for the agreed laytime clause.
- Example: “5,000 MT per weather working day (WWD) of 24 hours SHINC.”
Step 2: Establish the Start of Laytime calculation
Laytime starts when the Notice of Readiness (NOR) is tendered, subject to:
- The vessel reached the agreed destination.
- The vessel is ready for loading or discharge.
- Charter party-specific clauses (e.g., “Laytime starts 12 hours after NOR“).
Step 3: Consider Laytime Exceptions
Laytime does not include periods affected by:
- Weather Delays (if WWD clause applies).
- Sundays & Holidays (if not included in SHINC terms).
- Force Majeure Events (as defined in the charter party).
- Shiftings (if not to count – from anchorage to berth or berth to berth shiftings)
- Draft Surveys (if to be discounted – Initial, intermediate, and final draft surveys)
Step 4: Calculate Time Used
- Track the actual time taken for loading/discharging.
- Deduct applicable stoppages and exceptions.
- Compare against the agreed laytime allowance.
Step 5: Apply Demurrage or Despatch
- If laytime is exceeded, demurrage (penalty charges) applies.
- If operations finish early, despatch (incentive payment) may be earned if stipulated.
Laytime Calculation Example
Scenario:
A vessel is chartered to load 25,000 MT of grain at a rate of 5,000 MT per WWD SHINC. The vessel tenders NOR on Monday at 08:00. Loading commences at 20:00 on the same day and is completed by Friday at 22:00.
Calculation Table:
| Step | Description | Calculation |
|---|---|---|
| 1 | Allowed Laytime | 25,000 MT ÷ 5,000 MT per WWD = 5 days |
| 2 | Laytime Start | NOR tendered on Monday at 08:00, laytime starts immediately |
| 3 | Time Used | Monday 08:00 to Friday 22:00 = 4 days, 14 hours |
| 4 | Final Result | Since used time (4 days, 14 hours) is within allowed laytime (5 days), no demurrage incurred, dispatch may apply |
Case Study: Laytime Dispute Resolution
Scenario:
A Panamax bulk carrier was contracted to discharge 60,000 MT of coal at a discharge rate of 10,000 MT per weather working day (WWD) SHEX (Sundays and Holidays Excluded). The vessel arrived at the discharge port and tendered its NOR at 10:00 AM on Monday. However, due to berth congestion, the vessel was kept at anchorage for 3 days before berthing. Discharge operations started on Thursday at 08:00 AM and were completed by the following Tuesday at 20:00.
Issues Raised:
- The charterer argued that laytime should only commence when the vessel berthed and discharge began.
- The shipowner contended that laytime should start per the charter party clause, which stipulated “Laytime to commence 12 hours after valid NOR is tendered, whether in berth or not” (WIBON clause).
Resolution:
- As per the WIBON clause, laytime started 12 hours after NOR was tendered, meaning it officially began at 10:00 PM on Monday, despite the vessel not being at berth.
- The total allowed laytime was 60,000 MT ÷ 10,000 MT per WWD = 6 days (excluding Sundays and holidays).
- The actual time used from Monday 10:00 PM to Tuesday 08:00 PM (excluding Sunday) was 6 days, 22 hours.
- Since the time used exceeded the allowed laytime by 22 hours, the charterer had to pay demurrage for the extra time.
Key Takeaways:
- Proper understanding of charter party laytime clauses (e.g., WIBON) is crucial to avoid disputes.
- Clear contractual terms ensure that waiting time is accounted for correctly.
- Timely and accurate record-keeping of vessel movements and weather interruptions is essential for fair laytime calculations.
Laytime in Different Charter Types
- Voyage Charter: Laytime is critical since delays result in financial penalties.
- Time Charter: While laytime isn’t a direct concern, loading/discharging delays may impact hire periods.
- Contract of Affreightment (COA): Laytime agreements cover multiple shipments under a single contract.
Common Laytime Calculation Mistakes and How to Avoid Them
- Misinterpreting Laytime Terms: Ensure clarity on SHINC, SHEX, WWD, and other clauses.
- Improper NOR Tendering: Delays in NOR submission can impact laytime commencement.
- Unaccounted Delays: Keep accurate records of stoppages and weather interruptions.
- Poor Charter Party Negotiation: Clearly define laytime clauses to prevent disputes.
Why Laytime Management is Crucial
Optimizing laytime usage can significantly improve operational efficiency and cost savings. By understanding laytime calculations, exceptions, and best practices, shipowners and charterers can enhance profitability and minimize risks.
Conclusion
Laytime plays a pivotal role in maritime logistics, influencing shipping costs, turnaround times, and contract compliance. A clear grasp of laytime clauses, accurate calculations, and proactive management can prevent costly disputes and maximize efficiency in global trade. Whether you’re a shipowner, charterer, or shipping executive, mastering laytime ensures smoother operations and better financial outcomes.
