Laytime
In a voyage contract, a vessel’s earning for the voyage is fixed once negotiated. The ship owner can therefore maximize profit by completing the voyage as soon as possible. There are three distinct legs in a voyage contract. These are the loading, discharging and sailing legs. The ship owner is in control of time only on the sailing leg of a voyage charter. Loading and discharging a vessel is the responsibility of the charterer and therefore time used for these operations is limited and as negotiated. This is to ensure that the charterer completes loading and discharging of a vessel in reasonable time, so that a ship owner can maximize revenue earned.
Loading and discharging time in a voyage charter is called laytime. Laytime is normally fixed and if the charterer exceeds the laytime given, he will have to pay a penalty – the demurrage; however, the charterer could get a reward for completing loading and/or discharging before laytime expires – the despatch.
In some contracts laytime is not fixed, in which case there are clauses to ensure that the charterer completes loading and discharging in reasonable time; if the charterer does not do so, he will be liable to detention charges.
The Laytime CalculationThe basis of laytime calculation is the voyage contract. Standard voyage contracts have clause(s) which detail when laytime commences, when it ends and when time counts and does not count towards laytime and so on. Laytime calculations are done after the completion of a voyage contract. Demurrage or despatch monies payable are determined after completing laytime calculations. A detailed Laytime calculation methodology is given in the next chapter.
Clauses in voyage contracts mention several documents and milestones that are required in the calculation of laytime. These are given below The Notice of Readiness (NOR)
The notice of readiness is a document given in writing by the Master to the charterer or their representatives, stating that the vessel is in all respects ready to load or discharge cargo as the case may be.
A voyage contract will specify the terms and conditions under which an NOR is to be tendered, and these are as follows:
- The vessel must be an arrived ship.
- NOR must be tendered according to the terms of the contract.
- The vessel must in all respects be ready to load or to discharge.
- NOR can be tendered under WIBON, WIFPON, WIPON or WCCON terms .
- Laytime starts only after NOR is tendered and accepted and will begin as per the terms of the contract.
The Statement of FactsThe statement of facts is a tabulated form illustrating, in a chronological order, recorded milestones of a vessel’s stay in port. Milestones recorded in the statement of facts are extracted from a vessel’s logbook.
The Laytime Duration
To calculate laytime one must know the amount of allowable laytime. There are two laytime types – namely ‘time that is fixed’ and ‘time that is not fixed’.
‘Time fixed’ would mean that laytime is to be completed in a fixed amount of time; this is called definite laytime. When ‘time is not fixed’ laytime must be completed in customary time (that is, according to what is customary at the port in question). Time not fixed is also known as indefinite laytime.
In some contracts fixed time is calculated. This is done by dividing the total cargo loaded or discharged by the negotiated loading or discharging rates. When laytime is calculated it is called calculable laytime.
When the contracted cargo amount is not fully loaded, calculable laytime is calculated by dividing the amount of cargo loaded or discharged by the loading and/or discharging rates; this applies when deadfreight is payable.
In some voyage contracts a negotiated fixed amount of time is given for loading and/or discharging. This type of laytime is called non-calculable laytime.
Fixed time could be reversible or irreversible.
The Laytime Duration (Tankers)
Laytime in tanker contracts is as per World Scale and is 72 hours, reversible. This may be subject to other terms as applicable in the tanker charter party.
The Cessation of Laytime
In dry cargo voyage contracts, laytime ceases when all cargo operations have been completed; these operations will include time taken for lashing, trimming and the securing of cargo.
The hoses and sea terminals clause specifies clearly when tanker laytime ceases. Tanker laytime, as per this clause, ceases when the hoses have been disconnected or when ballasting begins (only for discharge port(s)), whichever occurs first.
Laytime Terms
We will now discuss some common terms used for laytime calculation.
Turn Time
Turn time occurs when ships have to wait their turn to commence loading/discharging. Turn time could be limited, but laytime will not count during turn time.
Time Sheets
Time sheets are used in voyage charters to keep track of the utilization of laytime, as they illustrate how much laytime has been used and how much is left.