How to Calculate Laytime

How to Calculate Laytime thumbnail
Ship readiness includes legal and physical factors.

Laytime is the time, determined by the charterer, allowed for loading and discharging cargo. The laytime is spelled out in the voyage charter, and the wording of the laytime clause in the voyage charter is critical, since delays associated with the voyage are borne exclusively by the ship owner, and delays in harbor may be distributed between the ship owner and the charterer. If delays occur in the acts of loading or discharge, the charterer must pay the owner a fee, called "demurrage," for time lost in port. If loading and discharge are completed early, the ship owner pays the charterer a fee called "despatch."

Things You'll Need

  • Calculator
  • Copy of the voyage charter
  • Copy of the vessel Master's log
  • Copy of the Notice of Readiness
  • Charterer's or Receiver's Inspection report
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Instructions

    • 1

      Read the laytime clause of the voyage charter. Note how the charter determines the ship to be an "arrived ship" and what Notice of Readiness must be given, if any.

    • 2

      Make a note of how much time, usually described in running hours or days, is allowed by the charter for loading or discharge of the cargo. Also make a note of any exceptions to this, such as work stoppages for weather or port holidays.

    • 3

      Record, from the voyage charter, the time that loading or discharge is to commence. Also, record who is to receive the Notice of Readiness to load or discharge--whether the shipper, receiver, charter or their agent.

    • 4

      Read the charter's laytime clause and determine the requirements for giving the Notice of Readiness. Do charter exclusions allow the Notice to be given before the loading or discharge berth is available? Must all port and customs clearances be completed before the Notice is given? If not, then the charterer will be liable for demurrage fees upon the Master's certification that the vessel is ready in all respects for loading or discharging.

    • 5

      Check the Charterer's (or Receiver's) Inspection report for evidence that the vessel was not ready to load or discharge in all respects. If it was not, laytime does not count.

    • 6

      Calculate the laytime. If the number of running hours or days spent loading or discharging the cargo, after the Notice of Readiness is properly given, varies from the contractually agreed amount of time, then the laytime is paid by the charterer as demurrage or the ship owner as despatch, at the hourly or daily rate specified in the voyage charter. For example, if the voyage charter specifies $416.76 an hour for demurrage or despatch and the unloading time varies from the time in the charter by 18 hours, multiply $416.76 by 18. The demurrage or despatch fee is $7,501.68.

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References

  • Photo Credit guroldinneden/iStock/Getty Images

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