A cargo can be bought well and lost on waiting time. Laycan, laytime and demurrage are agreed before a vessel is fixed — or they are argued about afterwards, at a daily rate.

Laycan is the window within which the vessel must present at the load port: the laydays open on one date and the charterer may cancel if the vessel has not tendered notice of readiness by the other. It is a commitment in both directions. A seller who agrees a laycan they cannot supply into has given the buyer a cancellation right, and a buyer whose vessel arrives outside it has no berth waiting.

The mistake that costs most is agreeing a laycan against a supply position that is not confirmed. Laycan should be set with the terminal, not around it. Where the loading programme is not yet firm, a wider window with a narrowing mechanism is honest; a narrow window agreed to win the business is a demurrage claim scheduled in advance.

Laytime, notice of readiness and the clock

Laytime is the time the charterer is allowed for loading or discharge, and it is bought within the freight. When it runs out, demurrage begins at the rate stated in the charterparty. The whole of a laytime dispute usually reduces to one question: when did the clock start?

It starts on tender of a valid notice of readiness, subject to whatever turn time the contract allows — commonly six hours, or berth availability, whichever comes first. A notice tendered before the vessel is genuinely ready, or outside the hours the contract permits, may not start it at all. Getting the NOR clause right is worth more than negotiating the demurrage rate down.

Interruptions and exceptions decide the rest. Weather working days, time lost through the terminal's own fault, shifting time between berths and time for the vessel's own operations are treated differently by different clauses. Read them together with the terminal's standard terms rather than in isolation, because the terminal is where the time will actually be spent.

• Laycan agreed with the terminal before it is offered.
• Notice of readiness conditions stated precisely.
• Turn time and berth availability terms written in.
• Demurrage rate and time bar agreed at the contract stage.
• Statement of facts signed by vessel and terminal.
• Pumping rate and back pressure warranties confirmed.

Settling on evidence, not recollection

Demurrage is settled from documents: the notice of readiness, the statement of facts signed by both the vessel and the terminal, the pumping log and the timesheet. A claim assembled from these is normally paid. A claim assembled from emails and memory is normally argued over for months and then discounted.

Watch the time bar. Most contracts require a fully documented demurrage claim within a fixed period — often 90 days from completion of discharge — and a claim that misses it is extinguished no matter how strong it was. Diarising the bar at the moment the vessel completes is a one-minute task that protects the whole amount.

Where we charter or nominate tonnage for a counterparty, the laycan is confirmed with the terminal before the vessel is fixed, and demurrage terms are agreed in the contract rather than left to the charterparty alone. It removes the most common late surprise in the trade: a price that was competitive at fixture and is not by the time the vessel sails.

About the author

Regi Atlantic Trading Desk

Regi Atlantic Energy Limited

Notes from the people who source, trade, store and ship the cargo — written to answer the questions counterparties actually ask us before a contract goes firm.