Demurrage Danger: Why Misunderstanding Laytime Can Sink Your Profits

 ⏳ Demurrage Danger: Why Misunderstanding Laytime Can Sink Your Profits

❓ Three Questions to Spark Curiosity

• Can misinterpreting a single clause in your charter party really cost you thousands in demurrage?
• Are your vessel operations aligned with the laytime allowed under the contract?
• Do you know how weekends, holidays, and notice time affect your laytime calculations?

 

🧾 Clause Breakdown: Laytime and Its Operational Impact

Clause Reference Example:

"Laytime shall commence at 1400 hours on the next working day after Notice of Readiness is tendered, unless sooner commenced. SHEX EIU applicable."

 

🔍 What Does It Mean?

• Laytime is the time allowed to load or discharge cargo without extra payment.
• Notice of Readiness (NOR): The ship declares it is ready. But this clause delays the clock until 1400 the next working day.
• SHEX EIU: Sundays and Holidays Excepted, Even If Used – means those days don’t count against laytime, even if operations happen.

 

⚠️ Common Pitfalls

• Ignoring tendering times: If NOR is given after office hours, the next working day clock might move forward by 24+ hours.
• Assuming “Even If Used” adds time: It doesn't. Sundays/holidays are excluded, no matter if you work or not.
• Lack of clarity in port customs: Some ports accept NOR only during certain hours—know the local rules.

 

💡 Real-World Example

At Port A, NOR was given at 1530 hrs on Friday. Under this clause:

• Laytime starts at 1400 on Monday (next working day), not Friday afternoon.
• That’s a delay of ~3 days, potentially wasting valuable turnaround time.

 

⚖️ Legal Reference

In The Agamemnon [1998] 1 Lloyd's Rep 675, the court clarified that the interpretation of laytime hinges on exact wording, especially around NOR and exceptions.

BIMCO guidance notes warn: "Operators must distinguish between ‘working day’ definitions and local port regulations to avoid miscalculations."

 

✅ Actionable Steps for Operators/Managers/Owners/Charterers

1. Audit your charter party clauses before voyage planning.
2. Train your captains and agents on correct NOR tendering procedures.
3. Maintain precise port logs—disputes are often settled on timing proof.
4. Engage P&I clubs or chartering managers early for ambiguous clauses.
5. Use voyage planning tools to simulate laytime under different clause scenarios.

 

📌 Conclusion & Call-to-Action

Understanding laytime clauses isn’t just legal housekeeping—it’s an operational priority that directly impacts your bottom line. One overlooked day can turn into thousands lost to demurrage.

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📄 Disclaimer

This blog post is for educational purposes only and does not constitute legal or operational advice. Readers are advised to consult chartering professionals, P&I clubs, or maritime lawyers before making decisions based on this content.