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Laytime calculation in a voyage charter party agreement for cargo ships employment

Purpose, stages in calculations

The purpose of laytime calculations is to determine whether on completion of loading or discharge operations despatch is payable to the charterers or demurrage is due to the owners.

The port agent is normally responsible for calculating the sum due and rendering accounts, but the master should also keep a tally of laytime used as he may be required to confirm the agent’s figures. The master should also be aware, at any given moment, of whether laytime has commenced, is still running, is interrupted or has expired. Laytime calculations are recorded on a laytime statement.

There are seven stages in a laytime calculation:

1. Read relevant clauses in the charter party.
2. Obtain Statement of Facts from agent.
3. Determine duration of laytime allowed.
4. Establish time of commencement of laytime.
5. Allow for interruptions to laytime as per the charter party.
6. Establish time of expiry of laytime.
7. Calculate despatch or demurrage payable.

The Statement of Facts is an extract from the port operations log kept by the charterer’s agent, and contains times of all relevant events, including:

• arrival of ship;
• tendering of Notice of Readiness;
• commencement of laytime;
• commencement of cargo operations;
• periods of suspension of laytime, with reason in each case (so that risk of stoppage can be apportioned);
• termination of cargo operations;
• termination of laytime.

The Statement of Facts should be approved by all parties involved (master, stevedore, agent, etc.), and will normally be presented by the agent to the master for his signature and return; the master should retain a copy. It is important before signing to compare the times stated with those recorded on board the ship, since the charterer’s agent may have obtained inaccurate times from his terminal supervisor, or may, for example, have recorded a period of rain in the vicinity of his office that did not affect the ship for the same period. For a ship on a demurrage rate of USD24,000 per day, 6 minutes of time on demurrage is worth USD100; it is therefore important that all times are accurately recorded.

The Statement of Facts is used by the agent in drafting up the Laytime Statement, from which any amount of demurrage or despatch money payable will be calculated.

The duration of the laytime allowed depends on whether the laytime is:

• definite, e.g. “2 running days”;
• calculable, e.g. where there is a given tonnage of cargo and a given rate of loading or discharging; or
• indefinite, e.g. on “FAC” (“fast as can”) terms - which are unusual.

Where calculable, the allowed laytime for the operation involved (loading or discharging) should be calculated to the nearest minute.

Interpretation of the contract laytime terms should be in accordance with the law governing the contract (which is determined from the Jurisdiction Clause), or, if expressly provided for, the internationally recognised Voyage Charter party Laytime Interpretation Rules 1993 . As a result of court rulings, definitions of certain laytime expressions under English law differ from those given in the Laytime Interpretation Rules.

Read more on : Voyage charter party clauses

Summarized below seagoing cargo ship various employment guide:
  1. Charty party forms

  2. defines the obligations, rights and liabilities of the shipowner and charterer. Recognised standard form (e.g. GENCON, BALTIME, NYPE)
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    Nature of a time charter
    The charterers agree to hire from the shipowner a named vessel, of specified technical characteristics, for an agreed period of time, for the charterer’s purposes subject to agreed restrictions.
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  3. Voyage charter advantages

  4. contract for the carriage by a named vessel of a specified quantity of cargo between named ports or places.
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  5. Terms of Bareboat charter and lease arrangement

  6. The vessel owners put the vessel (without any crew) at the complete disposal of the charterers and pay the capital costs, but (usually) no other costs.
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  7. Seaworthiness of vessel

  8. A vessel must be fit to encounter the “ordinary perils of the sea” (e.g. bad weather) and other incidental risks to which she will be exposed on the voyage..
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  9. International trade terms (INCOTERMS) in sea transportation

  10. INCOTERMS is a set of rules, published by the International Chamber of Commerce, for the uniform interpretation of the most commonly used trade terms used in international trade contracts.
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  11. Money transfer procedure in sea transport

  12. Money transfer system commonly used in overseas trade to enable sellers to obtain early payment, i.e. soon after shipment of the goods.
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  13. Contract between cargo seller and buyer

  14. The contract of sale between the seller and the buyer of the goods is separate from the contract of carriage which one party or the other, or a third party (such as a freight forwarder), will make with the carrier .
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  15. Parties involved in sea transportation of goods

  16. Forming links in the transport chain- Sea carrier, Freight forwarder, shipper, consignee,agent & banks
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  17. Carriage of goods by sea act 1992 (COGSA 92)

  18. Section 3 of COGSA 92 lays down guidelines establishing when liabilities under a bill of lading, sea waybill or ship’s delivery order will be transferred to a party who is not an original party to the contract of carriage (i.e. an endorsee or transferee). The party who takes or demands delivery of the goods to which a bill of lading, sea waybill or ship’s delivery order relate becomes subject to the same liabilities as the original shipper..
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  19. Laytime interpretation rules

  20. Rules, which were issued jointly by BIMCO, CMI, FONASBA and INTERCARGO, replace the Charter party Laytime Definitions 1980.
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  21. CIF ( Cost, Insurance and Freight ) used in international trade terms (INCOTERMS)

  22. “CIF” means Cost, Insurance and Freight (paid to a named place), e.g. CIF London.- is a contract based on the discharge port
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  23. FOB ( free on board ) used in international trade terms (INCOTERMS)

  24. “FOB” means Free On Board (named port of shipment), e.g. “FOB Newcastle NSW”. It is one of the most commonly used term (INCOTERMS) in sales contracts involving sea transportation of goods.
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  25. Ships employment baltic exchange

  26. Baltic Exchange members undertake to abide by a strict code of business practice, enshrined in the famous Baltic motto “Our Word Our Bond”.
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  27. Ships charter market place

  28. Most ships employed in the charter markets are dry bulk carriers, tankers, combination carriers (e.g. OBOs), or reefer vessels, although there is also a charter market for container ships and for vessels of various special purpose types
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  29. Common Chartering abbreviations

  30. Many terms commonly used by shipbrokers and others involved in ship chartering, mainly to save time and effort in communications. Shipmasters may come across many of the acronyms and abbreviations in documents relating to charters, e.g. in telexed voyage orders and market reports..
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  31. Tanker freight worldscale

  32. "Worldscale" is the code name for the “New Worldwide Tanker Nominal Freight Scale”, published by the Worldscale Association (London) Limited and the Worldscale Association (NYC) Inc
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