Cargo Operations, Laytime and Demurrage

Types of charter party and the role of laytime

Module objectiveDistinguish contractual forms and mechanisms for pricing time.

This course addresses the commercial aspects of cargo operations: charter parties, NOR, laytime and demurrage. It is not a complete technical cargo-handling course. Case-law examples concern English law; identify the applicable law and clauses for each contract.

Before addressing the mechanics of laytime and demurrage, it is necessary to place them within the correct type of charter contract: their relevance changes radically depending on the contractual form chosen by the parties.

Laytime is central to the voyage charter; under a time charter, time is normally governed by hire and off-hire, and the two systems are not equivalent.

Table 1.1 — The role of laytime in different forms of charter party.

Notice of Readiness and the start of laytime

Module objectiveCheck NOR validity and the commencement of laytime.

The Notice of Readiness is the notice required by the charter party by which the vessel states that she has arrived at the contractual destination and is ready to load or discharge. To be effective, it must be tendered to the required recipient, at the required place, time and in the required form, while the vessel is physically and legally ready. A valid NOR does not necessarily start laytime at that instant: time begins in accordance with the contractual notice period and commencement formula.

From the Notice of Readiness to the final laytime calculation (indicative diagram).

NOR validity requirements

• The ship must have arrived at the place specified by the charter party (port, anchorage area, berth, depending on the agreed clause).
• The vessel must be physically ready (suitable holds and necessary equipment operational) and legally ready under the charter and applicable formalities. Check any free-pratique and customs-clearance clauses.
• The NOR must be delivered according to the manner and timing set out in the contract (often subject to office hours constraints).

Waiting time: turn time

Between delivery of the NOR and the actual start of the laytime count, a waiting period (turn time) may elapse, whose duration depends on the contractual clauses: some formulas provide that laytime begins a fixed number of hours after the NOR, regardless of when the ship actually manages to berth.

The arrived ship: who pays for congestion

Module objectiveAssess arrival location and allocation of waiting risk under the contract.

Where the vessel has «arrived»: port charter against berth charter, and the three limits of the WIBON clause.

This section uses English-law examples. The contractual destination and additional clauses determine when the vessel is an arrived ship and how waiting is treated. Congestion alone does not automatically start laytime.

Port and berth charters

In a berth charter the destination is the specified loading/discharging place: normally it must be reached, subject to clauses allowing earlier NOR or counting. A port charter may allow the relevant waiting place within the port, with the vessel at the charterer’s immediate and effective disposition. Readiness, NOR and notice time still require checking.

The Johanna Oldendorff [1974] AC 479 establishes the disposition test; The Maratha Envoy [1978] AC 1 and The Arundel Castle [2017] EWHC 116 (Comm) address port limits. These interpret the contracts concerned: an expressly incorporated PORT definition, such as the 2013 Definitions, may have a different scope.

WIBON is not WIPON

WIBON allows, on its agreed terms, NOR from the usual waiting place when the berth is unavailable. It does not remove readiness requirements. The Kyzikos [1989] AC 1264 distinguishes berth unavailability from inability to reach an available berth because of fog or access conditions. WIPON also addresses waiting outside port in the circumstances covered by its wording. Check any “time lost waiting for berth” provision separately: it is not synonymous with WIBON.

Premature NOR

The Mexico 1 [1990] 1 Lloyd’s Rep 507 rejects automatic maturation of a premature NOR. The Happy Day [2002] EWCA Civ 1068 and The Sebat [2026] EWHC 950 (Comm) require examination of facts supporting agreement, waiver or estoppel: cargo operations are not a free-standing commencement rule. Where necessary re-tender a valid NOR while preserving the position on earlier notices.

The most common laytime clauses

Module objectiveRead definitions, abbreviations and contractual amendments together.

How laytime is counted depends largely on the specific clauses negotiated in the charter party. Understanding the most widespread formulas is essential to anticipate the practical impact of every event on the count.

The most common laytime clauses in the charter party (indicative diagram; the exact text must always be checked in the contract).

The authoritative definitions: the Laytime Definitions 2013

Before discussing clauses it helps to know a shared vocabulary exists. The Laytime Definitions for Charter Parties 2013, published jointly by BIMCO, the CMI, FONASBA and the Baltic Exchange, are the reference in this field: they replaced the Voylayrules 1993, which in turn followed the 1980 Definitions.

Table 4.1 — Four key definitions from the Laytime Definitions 2013.

Abbreviations should not be read in isolation. A period may be excluded because it falls on a SHEX Sunday and, separately, be affected by a weather qualification. Each qualification must be applied in the order and with the effect provided by the charter party.

Why the choice of clause changes everything

SHINC includes Sundays and holidays; SHEX excludes them subject to qualifications such as unless used. These abbreviations do not by themselves exclude Saturday. Check hours, local holidays and all further exceptions.

WWD variants need not use the same deduction method: the 2013 Definitions distinguish WWD, WWD of 24 consecutive hours and WWD of 24 hours. The short table definition does not replace the complete formula.

Exceptions to laytime: what counts and what does not

Module objectiveSeparate laytime exceptions from those applicable to demurrage.

Not all time spent in port counts for laytime purposes: the charter party defines which events interrupt the count (exceptions) and which continue to let it run.

What stops the laytime count and what does not, and how the rule reverses once laytime expires.

The most delicate areas

Table 5.1 — Typical situations and their interpretive complexity.

The supercargo's role

Module objectiveDefine the supercargo’s mandate and coordination with the master.

The supercargo is the figure, often sent by the charterer, who follows loading and discharging operations on behalf of commercial interests, in a role distinct from but complementary to that of the Master and crew.

What a supercargo actually does

• Supervises loading/discharging operations to verify compliance with commercial instructions.
• Verifies the quantity and quality of the cargo, often in coordination with independent surveyors.
• Documents any delays or inefficiencies attributable to the terminal, useful in the event of a demurrage dispute.
• Acts as a communication channel between ship, terminal and the charterer's office during operations.

The relationship with the Master

The supercargo acts within a mandate from the owner, charterer or other commercial interest. Specific commercial authority does not replace the master’s safety authority. Clarify who may issue instructions, sign documents or bind the principal; company and crew responsibilities remain.

The Statement of Facts

Module objectiveBuild a verifiable SOF that distinguishes facts from contractual interpretation.

The Statement of Facts (SOF) is the document that chronologically records every relevant event during the ship's stay in port: arrival, NOR, start and end of operations, interruptions, causes of delays. It is the factual basis on which the laytime calculation, and in the event of disagreement the entire dispute, is built.

What a good SOF must contain

• The exact date and time of every event, indicating the source (deck log, agent's communication, direct observation).
• Specific, not generic, causes for every interruption (not «bad weather» but «heavy rain from 14:20 to 16:45, operations suspended to protect the cargo»).
• Signature or countersignature of the parties present (agent, terminal, supercargo), with an explicit note if a party refuses to sign or signs with reservations.
• Consistency with other onboard documents (deck log, cargo operations record).

The SOF is evidence of facts, not automatic agreement on counting. State time zone and UTC offset, clock changes, record authors and disputed entries. A signature may have effects depending on wording and circumstances: read reservations. Preserve the original and correction history; do not erase disagreements to obtain a signature.

Demurrage and despatch: the economic mechanics

Module objectiveCalculate demurrage and despatch using the agreed formulas.

Demurrage and despatch have opposite economic effects, but they are not symmetrical remedies. Demurrage is normally the agreed amount payable to the owner for delay after laytime has expired, where the delay is not for the owner’s account. Despatch is payable only if the charter party provides for it and rewards time saved under the agreed formula.

The deviation from the allowed laytime and the two despatch formulas of the Laytime Definitions 2013 (illustrative values).

Table 8.1 — Definitions of demurrage and despatch.

The half: a convention, not a rule

DHD — despatch half demurrage is a common commercial formula, not a default rule: the rate and calculation basis apply only if provided by the charter party.

Damages for detention are not the automatic consequence of the absence of a demurrage clause. They may arise from culpable delay falling outside the period or remedy covered by laytime and demurrage, but the claimant must identify the breached obligation, causation and recoverable loss under the contract and applicable law. Despatch, by contrast, is payable only where agreed.

«All time saved» or «working time saved»: the same ship, two different invoices

Despatch is paid on time saved, but «time saved» has two distinct contractual meanings, both defined in the Laytime Definitions 2013 — and the choice between them changes the invoice substantially.

Table 8.2 — The two despatch formulas of the Laytime Definitions 2013.

The practical calculation of laytime

Module objectiveBuild a calculation timeline and verify allowance, exceptions and rates.

From contract to timeline

1. Identify allowance and units: fixed time or quantity divided by a handling rate, with any per-hatch rules.
2. Check NOR and the commencement formula, including early work.
3. Build intervals with source, cause, elapsed time and counted time.
4. Locate the instant laytime expires. Apply demurrage rules thereafter rather than indiscriminately deducting earlier exceptions.
5. Apply the agreed rate and pro rata, or despatch where provided.

Reproducible example

Assume commencement Monday 00:00; 72 hours allowed; no exclusions before expiry; completion Thursday 18:00; demurrage USD 18,000 per 24-hour day pro rata. Laytime expires Thursday 00:00. The following 18 hours give 18 ÷ 24 × 18,000 = USD 13,500. Six hours of rain during that period still count unless a demurrage exception or another legally relevant ground excludes them. All times use the same time zone.

Reversible and averaging

Reversible laytime permits the charterer, where agreed, to combine loading and discharging allowances. Averaging calculates each operation separately and offsets saved time against excess time. This does not automatically mean adding two independent demurrage and despatch invoices: settlement, rates and the meaning of time saved depend on the contract.

Have a second person check each interval against the contract and evidence. Identify disputed items instead of hiding them in a single “net time” figure.

How a good demurrage claim is lost

Module objectivePreserve a claim by checking its scope, deadlines and contractual documents.

The SHELLVOY 6 and BPVOY4 time bars from completion of discharge, and the documents to collect while the vessel is in port.

Scope of the claim: The Eternal Bliss

In K Line v Priminds (The Eternal Bliss) [2021] EWCA Civ 1712 the English Court of Appeal held that, absent contrary agreement, demurrage liquidates losses arising from failure to complete within laytime. Additional loss is not recoverable merely because it is of a different kind: a separate breach must be identified. The 2021 decision reversed the 2020 decision; read the judgment with the applicable charter.

Contractual deadlines

A claim valid on its merits may be barred by a contractual deadline. There is no universal 90-day period. Distinguish initial notification, documented submission and the deadline for commencing arbitration or litigation.

• SHELLVOY 6, cl. 15(3): notification within 30 days after discharge completion and receipt of the documented claim within 90 days, under the applicable wording.
• BPVOY4, cl. 20.1: 90 days after discharge completion for the claim and required documents.
• ASBATANKVOY: check the 1977/2025 edition, recap and riders; do not import SHELLVOY or BPVOY deadlines.

These examples do not replace the signed clause. The effect of omissions, total or partial preclusion, extensions, waiver and estoppel depends on wording, facts and applicable law. Do not assume every missed deadline automatically extinguishes every right.

Documents, recipients and receipt

Build a contractual checklist: NORs, SOFs, time sheets, pumping records where relevant, protests, calculation and invoice. The Eagle Valencia [2010] EWCA Civ 713, The Adventure [2015] EWHC 318 (Comm) and The MTM Hong Kong [2020] EWHC 700 (Comm) illustrate the importance of documents required by the actual contract; they do not create one list for every claim. The Maria [2021] EWHC 2565 (Comm) also highlights time-zone issues for the notification deadline.

Collect evidence on board and assign a shore owner for the deadline diary. Submit promptly, supplement missing items within the deadline and by permitted methods, retaining proof of receipt by the correct recipient. Do not wait until the last day to send everything together. A Letter of Protest is not necessarily contractual notification of the claim.

Standard forms and typical clauses

Module objectiveIdentify the agreed form, edition, recap and riders.

The maritime chartering market relies largely on standard charter party forms, developed by industry associations, which are then modified with specific clauses (rider clauses) negotiated case by case.

Table 11.1 — The most widespread standard forms, with the editions discussed.

The importance of rider clauses

The standard form text is rarely used unmodified: the parties negotiate additional clauses (rider clauses) that can significantly alter how the standard clauses, including laytime clauses, operate. A common mistake is reasoning on the basis of the standard form while ignoring that a specific rider clause has modified it.

Letters of Protest and dispute management

Module objectiveDraft factual protests without assuming automatic legal effects.

The Letter of Protest is the formal instrument by which the Master, or the company, communicates a disagreement to the counterparty over a specific event during operations, preserving its position for a possible subsequent dispute.

When to issue a Letter of Protest

• Delays attributable to the terminal or receiver that the Master considers unjustified.
• Refusal by the counterparty to countersign the Statement of Facts or certain entries in it.
• Damage to the cargo or the ship attributable to operations conducted incorrectly by the terminal.
• Discrepancies between declared cargo quantities and quantities actually loaded/discharged.

How to write an effective Letter of Protest

The document must be specific, factual and timely: generic and late is almost useless in a subsequent dispute. It must state the date, time, facts directly observed (not assumptions), and be formally delivered to the counterparty with a request for receipt, even in the event of refusal to sign.

Dispute resolution

Module objectiveIdentify the seat, law and procedure for the dispute.

When the parties fail to reach agreement on the laytime or demurrage calculation, the charter party typically provides for a resolution path that culminates, in most cases, in maritime commercial arbitration rather than ordinary court litigation.

From the protest to the award, the three LMAA procedures and what the Arbitration Act 2025 changed.

Why arbitration is the preferred route in the industry

• Check the agreed seat and rules: London/LMAA and New York/SMA are distinct examples, not interchangeable procedures.
• Arbitrators specialising in maritime matters understand industry commercial practice better than a generalist ordinary court.
• Duration and cost depend on the dispute and procedure. The 1958 New York Convention facilitates recognition and enforcement of awards, subject to conditions and grounds for refusal.

LMAA procedures depend on agreement

The applicable procedure depends first on the arbitration clause and the parties’ agreement, not on the value of the claim in isolation. The LMAA Terms 2021 govern the standard procedure; the parties may incorporate the Small Claims Procedure 2021 or Intermediate Claims Procedure 2021 and agree the relevant thresholds. USD 100,000 is a commonly used SCP threshold and USD 400,000 is often used as the upper ICP limit, but the contractual wording remains decisive.

Table 13.1 — LMAA 2021 procedures: application and thresholds depend on the clause or the parties’ agreement.

The role of documentation in the dispute

The quality of the documentation gathered during operations — Statement of Facts, Letters of Protest, correspondence with the agent — largely determines the outcome of an arbitration dispute. A technically correct position that is not documented promptly is difficult to sustain months or years later.

The 2025 Act amends the arbitration framework for England, Wales and Northern Ireland. Sections 1–14 do not apply to arbitrations commenced before entry into force or related court proceedings; check the remaining transitional provisions. Where SCP or ICP is incorporated without different thresholds, also check that procedure’s default limits, treating claims and counterclaims separately.

Emerging trends in commercial voyage management

Module objectiveConnect digital evidence and environmental clauses with voyage management.

The management of laytime and demurrage is also evolving, driven by digitalisation and greater standardisation of documentary processes.

Digitalisation of the Statement of Facts

An electronic SOF can improve access to events but does not guarantee accuracy. Record author, source, time zone, changes, acceptances and disputes; retain verifiable exports and data access under the agreements.

Greater contractual standardisation

Industry associations continue to update standard forms to reduce interpretive ambiguity in the most contentious clauses (particularly those relating to bad weather and port congestion), in an effort to reduce the volume of arbitration disputes.

Interaction with decarbonisation

Speed and consumption warranties, already present in charter parties, have gained new relevance in light of CII and FuelEU Maritime obligations (seen in the dedicated decarbonisation course): managing speed for environmental compliance can conflict with contractual obligations towards the charterer.

What has changed in the last few years is that the market is no longer waiting: BIMCO has already produced the clauses by which the parties divide these obligations, and anyone negotiating a fixture today finds them on the table.

Table 14.1 — The BIMCO clauses that allocate environmental obligations between the parties.