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What is laytime and lay day in shipping?

Laytime and demurrage

Estimated reading time: 4 minutes

Laytime and demurrage

Laytime and demurrage

 

Laytime and lay days are two shipping terms that often get mixed up as having the same meaning. Although they sound similar, they differ greatly in meaning. Read more below to find out the different definitions of these 2 shipping terms.

 

What is laytime?

Laytime or lay time, is defined as “the period of time agreed between the parties during which the Owner will make and keep the vessel available for loading or discharging without payment additional to the freight”. If a ship fails to complete the work during the allotted time and the ship is required to stay at a port for a longer time, then demurrage (fine) is incurred to the ship owner.

Port authorities can also specify their laytime and charge ships when they exceed their allotted laytime.

Demurrage is defined as “an agreed amount payable to the Owner in respect of delay to the vessel beyond the laytime, for which the Owner is not responsible. Demurrage shall not be subject to laytime exceptions”.

 

What is lay day?

Lay day is defined as “days stipulated for the loading or unloading of cargo from a ship.” In other words, the time a ship must reach the charterer for cargo operations.

Lay days are determined by 2 factors, the type and amount of cargo. The terms are specified in the contract and are determined prior to ensure that all required shipping operations can be carried out on time, without incurring any additional fees.

Lay days generally start when the ship issues a certificate of readiness to load or unload. In general, larger loads require several lay days.

Lay days are defined according to these 3 types:

  1. Running days
  2. Working days
  3. Weather working days

 

  1. Running days

Includes consecutive days including weekends and holidays

  1. Working days

Includes consecutive days excluding weekends and holidays

  1. Weather working days

Includes days on which the weather permits to continuous work of cargo loading and unloading

 

Laytime starts only after three conditions have been fulfilled:

  1. The vessel has become an “arrived ship” within the terms of the charter party;
  2. The vessel is in all respects ready to load/discharge
  3. Notice of readiness has been served on the charterers or their agent in accordance with the charter party.

 

Laytime normally runs until completion of loading (or discharging). However, some charter parties provide that if, after completion of loading, there is a delay of one hour or more for the charterer’s purposes (e.g. testing of samples, preparation of documentation), time will be deemed to run until termination of the delay.

 


Practical A-Z Guide to Laytime & Demurrage is a 3-day training course held from 19– 21 August 2019 (Kuala Lumpur), designed to provide insights on how to navigate the complexities of laytime and demurrage for maximum charter party advantage. At the end of the course, shipowners will be able to maximize their collection of demurrage, and charterers will be able to reduce their potential exposure to demurrage claims and save substantial costs.

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