BIMCO Training

TYPES OF LAYTIME
HOW IS LAYTIME CALCULATED?
PROFESSOR B. SOYER

I. INTRODUCTION

The precise time available to the charterer to load and/or unload the vessel is a matter of freedom of contract. In
other words, it is for the parties to determine. It is not governed by any rule of law or commerce. Once the parties
have decided, it thereafter becomes a question of interpreting the form of words embodied in the charter party.

If the charterer cannot keep within the agreed laytime agreement, then the charterer is in beach of contract and
pays damages according to the agreed demurrage rate or on the basis of the wrongful detention of the vessel.

In fixing the laytime period the parties may address the loading and unloading periods separately, and allocate
distinct periods to each; or they may treat the loading and unloading periods as one entity, and allocate a single
laytime period for loading and unloading. In the latter case it does not matter how much time the charterer takes in
loading and unloading ship as long as the aggregate total time does not exceed the agreed laytime.

The agreement of the parties in relation to the laytime period may give rise to difficult questions of contractual
interpretation. Such questions are addressed having regard to the general principles governing the interpretation of
commercial contracts generally. The process may be assisted by having regard to codes of definitions of words and
phrases relating to laytime and demurrage, formulated by various shipping and shipping related organisations.
These codes are –

a. Charter party Laytime Definitions 1980 – formulated by BIMCO, CMI, FONASBA and Chamber of Shipping.

b. VOYLAYRULES 93 (Voyage Charter party Laytime Interpretation Rules 1993) – formulated by BIMCO,
CMI, FONASBA and INTERCARGO.

c. Laytime Definitions for Charter Parties 2013- formulated by BIMCO, CMI, FONASBA, INTERCARGO and
Baltic Exchange.

d. Baltic Code 2000 Charter party and Laytime Terminology and Abbreviations – formulated by the Baltic
Exchange in London.

Any of these codes may be expressly or impliedly incorporated into a voyage charter party.

II. CALCULATION OF LAYTIME – GENERAL OVERVIEW

Laytime may be calculated/specified in various ways. The most common examples are the following –

a. fixed period of time – e.g. 72 or 96 hours; or 5 days;

b. by reference to rates of working the cargo

(i) fixed quantity of cargo to be loaded/discharged per hour or per day – e.g.1,000 mts per day

(ii) fixed quantity of cargo per [working] hatch [hook] per day - e.g. 5,000 mts per working hatch per day;

c. by reference to the custom of the port of loading and/or unloading;

d. by reference to such trade terms as – f.a.c. (fast as can); f.a.c.c.o.p. (fast as can and in accordance with the
custom of the port); c.q.d. (customary quick despatch); and u.d.c.o.p. (utmost despatch according to the
custom of the port).

III. FIXED PERIOD OF TIME

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Laytime may be agreed by reference to a fixed period of time measured in hours or days – for example, 72 or 96
hours, or 5 days.

The advantage of this system is that it clearly provides an advance statement of the period of time the vessel is
going to be engaged in loading and/or discharging cargo.

When this approach is adopted the agreed period of time runs continuously (unbroken) unless there is a contrary
provision in the charter party clause (e.g. Sundays and holiday excepted) or the delay is caused by the fault of the
shipowner.

Phrases such as ‘Running hours’ and ‘Running days’ and ‘Consecutive days’ are frequently encountered in practice
and are consistent with the rule that laytime runs continuously, subject to the express terms of the voyage charter
party. In Laytime Definition for Charter Parties 2013, the phrases Running Days and Consecutive days ‘shall mean
days which follow one immediately after the other’.

It is a question of contractual interpretation whether a ‘day’ includes a ‘broken day’, that is part of a day, and
whether a day is a ‘calendar day’ (midnight to midnight) or a ‘conventional day’ that is a 24 hour day. Traditionally,
such periods of 24 hours were regarded as calendar days running from midnight, but under modern forms of
charterparty they will be treated as artificial conventional days of 24 hours starting from the time when the notice
of readiness to load expires. Therefore, in charters which provide that laytime will commence at 1.00 pm when the
notice of readiness is given before noon, the ‘conventional day’ will run from 1.00 pm (obviously an appropriate
adjustment needs to be made when the commencement of the conventional day falls on a Sunday or holiday and
Sundays and holidays are excepted).

IV. A PERIOD OF TIME TO BE ASCERTAINED BY REFERENCE TO A CARGO RATE

Alternatively, the laytime period may be fixed by reference to a rate for working cargo. Under this system the
laytime period cannot be calculated until the amount of cargo to be or actually loaded is known.

There are various methods by which laytime may be computed by reference to the cargo loading and/or unloading
rate.

A. Laytime expressed as an overall daily/hourly loading rate

For example, cargo to be loaded and unloaded at a rate of 1000 tonnes per day.

The loading and discharging rate may differ to take account of the different loading and discharging capacities of
the loading and discharging port.

Sample clause:

The vessel shall be loaded at the rate of ….. tonnes per running day and at destination cargo to be received at …..
tonnes per weather working day.

On occasions the loading and reception rates as expressed as an ‘average’ rate.

B. Laytime fixed by reference to a loading/discharge rate per hatch

Sample clause:

at the average rate of ….. tonnes per hatch per working day.

This kind of clause is read literally and the adjective ‘working’ is not implied to qualify ‘hatch’ (see, The Tharaios
[1971] 1 Lloyd’s Rep 209). The total daily rate is computed by multiplying the average rate by the number of
hatches, and the contractual laytime is obtained by dividing this figure into the total amount loaded.

Laytime = Quantity of Cargo = Days

Daily Rate x Number of Hatches

This formula is followed in the Charter party Laytime Definitions 1980, Voylayrules 1993 and Laytime Definitions for
Charter Parties 2013.

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A difficulty which may arise from using this formula is to ascertain the precise meaning of ‘hatch’. For example, a
hold may have more than one hatch, and, also, a single hatch may be capable of being worked simultaneously.
Some of the problems are solved by adopting the following provisions –

Laytime Definitions for Charter Parties 2013– A hatch that is capable of being worked by two gangs simultaneously
shall be counted as two hatches.

Voylayrules 1993 – Each pair of parallel twin hatches shall count as one hatch. Nevertheless, a hatch that is capable
of being worked by two gangs simultaneously shall be counted as two hatches.

C. Laytime fixed by reference to a loading/discharge rate per hook

‘150m.t. per Hook PWWD of 24 Consec. hrs’

London Arbitration 30/92 – the reference to ‘hook’ did not allude to the number of hooks that could be suspended
over the hatches, nor to the number of hooks actually used. It was a reference to the maximum number of gangs
that could be worked on board the ship. With reference to the ship in question, she had three holds, but one hold
was capable of being worked by two gangs. She was. Therefore, worked by four gangs in total, and a ‘four-hook’
ship was the same as saying a ‘four-gang’ ship. In the result the laytime was based on loading/discharging at 600
m.t. per day.

D. Laytime fixed by reference to a loading/discharge rate per working hatch (or available workable hatch).

‘ at an average rate of …. tonnes per working hatch per day’

A working hatch is a reference to a hatch which on any particular day is, in relation to the cargo in question, capable
of being worked. Once the hold served by a hatch is full or empty, according to the case, the hatch ceases to be a
working hatch. The total quantity of cargo to be loaded or discharged on any particular day is the sum of the rates
of the hatches still working. On the assumption that the hatches are being worked equally, the working hatches will
reduce steadily until only one hatch remains working. Accordingly the laytime is calculated by reference to the hold
which is to receive or did receive the most cargo – which will be the last hold to continue working – and divide the
quantity it contains or did contain by the agreed working rate.

The calculation is expressed in the following formula –

Laytime = Largest quantity in One Hold = Days

Daily rate per hatch x Number of Hatches Serving that Hold

This is the formula found in the Laytime Definition for Charter Parties 2013, Voylayrules 1993 and the Baltic Code
2000. These codes further provide –

Each pair of parallel twin hatches shall count as one hatch. Nevertheless, a hatch that is capable of being
worked by two gangs simultaneously shall be counted as two hatches.

In the case of loading, the exact amount of laytime will not be known until the precise quantity of cargo loaded into
each hold is known.

Beyond a ‘per day’ provision, the time element may be expressed as ‘per working day’ or ‘per weather working day’
or indeed any other time formulation.

Where the word ‘available’ is added, so that the words read ‘per available working hatch,’ the calculation of laytime
is not affected. The unavailability of a hatch acts as an exclusion, provided it interferes with the loading and/or
discharging operation.

E. It may be difficult to decide which method of calculation the parties have agreed.

Note the following provision-

Cargo to be discharged …..at the average rate of 1000 metric tonnes basis 5 or more available working
hatches, pro rata, if less number of hatches per weather working day.

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What kind of provision is this? Is laytime calculated on the basis of an overall rate or does the clause invoke the
‘available workable hatch’ approach?

The General Capinpin [1987] 2 Lloyd’s Rep 354.

V. A PERIOD OF TIME FIXED BY THE CUSTOM OF THE PORT

Sample clause:

‘with all due despatch according to the custom of the port’

This will depend on the established and settled practice of the port in question, and such practice may vary with the
particular trade and the category of vessel in question.

Rule consistent with the general principle that in the absence of a term to the contrary in the charter party the
loading and unloading of the chartered vessel will be performed according to the custom at the loading and
discharging port.

It is obviously a very imprecise method of fixing the laytime, and it may give rise to substantial difficulty in
discovering whether there does exist a custom of the port and, if so, the terms of the custom.

For a port practice to be recognised as a custom it must be –

(i) universally acted upon (notorious)

(ii) in existence for a period of time
(iii) the practice must be reasonable
(iv) the practice must be certain

A custom of a port does not cease to exist merely because it is reduced into writing. Also, the fact that parties on
occasions may contract out of a custom of a port does not terminate the custom.

A reference to the custom of a port may be a reference to the method or manner cargo is loaded and/or
discharged, and to the time available for the loading and/or discharge of cargo. Most frequently the time element is
secondary and is to be ascertained from the customary manner of loading and/or discharge.

VI. OTHER FORMULATIONS

In the trade other formulations may be agreed, such as fac, faccop, cqd and udcop, the meanings of which have
been explained earlier in the text.

As with custom of the port, these formulations give rise to a substantial amount of uncertainty and are best avoided
whenever possible.

Professor B. Soyer
June 2016

No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including
photocopying, scanning, recording or by any information storage or retrieval system, without the prior written permission of the
author

The information contained in this paper is based on English law and has been gathered as carefully as possible. However, the
author does not assume responsibility for the accuracy of this information.

Nothing in this paper constitutes legal advice.

For information on any specific legal matter, readers must always consult a lawyer qualified to give advice on the specific issues
under the applicable law.

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