Laytime and Demurrage Explained: NOR, SHINC/SHEX and Time-Bars

Laytime is the time a contract gives you to load or discharge a ship, and demurrage is the agreed daily charge for every hour you use beyond it. Most demurrage disputes are not about arithmetic. They come from a notice of readiness tendered at the wrong moment, a clause nobody read, or a claim that arrived late or without the right documents.

This guide explains the terms a buyer meets on a bulk or parcel shipment: laycan, notice of readiness, laytime, SHINC and SHEX, demurrage, despatch and time-bars. It then walks through a laytime statement using a clearly hypothetical example and ends with the contract habits that prevent disputes. It is general guidance, not legal advice; the governing law and the exact wording of your contract decide every point below.

Where laytime sits in a sale contract

Two contracts are in play on every seaborne shipment. The sale contract is between buyer and seller. The contract of carriage, usually a voyage charter party for full cargoes and parcels, is between the shipowner and whoever hires the ship. Laytime and demurrage are written into the charter party, and the sale contract passes the exposure along the chain.

Who hires the ship depends on the Incoterm:

• FOB. The buyer nominates and hires the vessel. The buyer deals with the shipowner at both ends, and the seller owes the buyer for delay at the loading port that the seller caused, for example cargo not ready when the ship is.
• CFR and CIF. The seller hires the ship and answers to the owner for demurrage at both ports. The sale contract should then pass discharge-port demurrage to the buyer, at the rate in the charter party, for time the buyer's side used.

Our Incoterms 2020 guide explains where risk and cost change hands. The point here is simpler: laytime terms in the sale contract should mirror the charter party. If the buyer agrees to a shorter laytime, or a higher rate, than the seller has with the owner, someone is left holding the difference.

Containers and ISO tanks work differently: delay is charged as detention or demurrage on the equipment under the carrier's or lessor's tariff, not as laytime. This article is about vessels.

Laycan: the window for the ship

Laycan stands for laydays and cancelling. It is a window with two dates. The first date is the earliest the ship may be presented ready to load. The last is the cancelling date: if the ship has not arrived and become ready by then, the charterer normally has the right to cancel.

In a sale contract the same idea usually appears as a shipment or delivery window. Three practical rules follow.

1. A ship that arrives before the window opens is usually not entitled to start laytime early. Laytime generally begins no earlier than the first date, unless the charterer agrees or starts loading anyway.
2. A ship that misses the window gives the charterer a choice: cancel, or accept the ship and negotiate. Decide in advance who has that option under the sale contract, and how fast they must exercise it.
3. A narrow window raises the cost of delay for both sides. Ships run late for weather, port congestion and earlier cargoes. Ask for a stated schedule of ETA updates in the contract so that you see slippage while there is still time to react.

Notice of readiness: the starting gun

A notice of readiness (NOR) is the master's, or the agent's, written statement that the ship has arrived and is ready to load or discharge. In most contracts it is the event that starts the laytime clock, so its timing and validity decide how much money changes hands.

A valid NOR generally needs the following:

• The ship must have arrived. What counts as arrived depends on the charter. Under a berth charter the ship must normally be at the berth. Under a port charter it must normally be within the port limits, at the charterer's effective disposal. Some contracts replace this with "whether in berth or not" (WIBON) or "whether in port or not" (WIPON) wording, so that the ship can tender from a waiting area.
• The ship must be ready in all respects. Holds or tanks clean and fit for the cargo, free pratique (health clearance) granted where the contract needs it, and any customs formalities the contract places on the ship completed.
• The notice must be tendered correctly. To the right party, by the right means (email counts only if the contract allows it), and within office hours if the contract limits tender to those hours.
• The notice must be tendered at the right time. Not before the laycan opens, unless the contract says otherwise.

Many contracts also give a notice time: laytime starts a stated number of hours after a valid NOR, or when operations begin if that is earlier. The period is a contract term, so read it rather than assuming.

What to do when a NOR arrives

Do not sit on it. Acknowledge receipt only, and reserve all rights. If you think it is invalid, say so in writing at once, with reasons. Depending on the governing law, silence followed by the start of cargo work can be treated as acceptance or waiver of the defect.

Laytime: how time is counted

Laytime can be expressed as a fixed period (for example, four days) or as a rate (tonnes per day, or per weather working day). For a rate, divide the cargo quantity by the rate to get the time allowed. Then the contract answers a series of questions about which hours count.

The paying party prefers terms that exclude more time: SHEX or FHEX over SHINC, and weather exceptions over none. A shipowner favours the reverse. These terms are priced into the freight and the sale price, so a buyer who wins a generous term usually pays for it somewhere else.

Three further points decide most statements:

• When laytime ends. The contract names the event: completion of loading, hoses disconnected for liquid cargoes, or documents on board. If the clause is silent, expect an argument.
• What interrupts it. Typical exceptions are weather, and sometimes strikes or shore breakdowns. A stoppage only stops the clock if the contract lists it. A shore breakdown is a common case where each side assumes the other bears the risk.
• Pumping and discharge rates on liquid cargoes. Many tanker charters include a warranty that the ship will discharge within a stated time at a stated pressure at its manifold. If the ship misses it, time may be deducted. Ask for pumping logs.

Demurrage and despatch

Demurrage is the agreed daily rate payable by the charterer for time used beyond laytime, normally pro rata for part of a day. It is treated as the owner's agreed compensation for the ship's delay, which has two consequences. The owner cannot usually claim more for the same delay, and the charterer cannot reduce the rate by showing that the owner's actual loss was smaller.

Remember the maxim "once on demurrage, always on demurrage". When laytime has expired, the exceptions that paused it (weather, for instance) generally stop helping you unless the contract says they continue to apply. A buyer who is already late and then loses time to rain normally still pays for the rain.

Despatch is the reward for finishing early. Where it applies, it is payable by the owner to the charterer for time saved. It is commonly agreed at half the demurrage rate, but that is a negotiated term, not a rule. The clause should also say whether it is paid on all time saved or only on working time saved.

Check how the rate is expressed. A figure "per day or pro rata" means each hour or part-hour is paid. A clause that does not say pro rata invites argument about whether a part-day counts as a full one.

Time-bars: the deadline that kills good claims

A time-bar is a contractual deadline. If a demurrage claim is not presented in writing, together with the documents the contract lists, within the stated period, the claim is lost however sound it was. Periods differ from form to form and contract to contract, so do not assume any figure. Find it in the charter party and in your sale contract.

Because claims pass down a chain, the time-bars must fit together. The owner claims against the charterer under one deadline, and the charterer then claims onward under another. If the second deadline is too short for the charterer to receive and check the first claim, it can lose its recovery while still owing the owner.

What a claimant normally has to attach to a claim:

• The NOR and evidence of when it was tendered and accepted.
• The statement of facts (SOF), a time log signed by the master and the agent or terminal.
• Port or terminal logs, pumping logs and any weather records relied on.
• The bill of lading and cargo quantity documents.
• A laytime statement showing each period and its treatment.
• The demurrage invoice.

If you receive a claim, check it against the contract's document list on the day it arrives. A claim missing a required document may not be validly presented, but do not build your whole defence on that point. Claimants often re-present within the period.

A worked example (hypothetical)

The figures below are invented round numbers to show the method. They are not typical rates, and no real vessel or port is described.

Assumed terms. A 12,000 tonne bulk cargo is discharged at 3,000 tonnes per weather working day, Sundays and holidays included (SHINC). Laytime starts six hours after a valid NOR, or when discharge begins if that is earlier. Waiting for a berth counts (WIBON). Only weather stops the clock; a shore breakdown does not. Demurrage is USD 24,000 per day pro rata, so USD 1,000 per hour. Despatch is half that rate on all time saved.

Laytime allowed. 12,000 ÷ 3,000 = 4.0 days = 96 hours.

Events. NOR is tendered and accepted at Day 1, 08:00. The ship waits for a berth, goes alongside, and discharge starts at Day 2, 08:00. Rain stops work for 8 hours on Day 3. A shore conveyor breakdown stops work for 6 hours. Discharge is completed at Day 6, 14:00.

Time used. 16 + 20 + 6 + 70 = 112 hours.

Result. 112 − 96 = 16 hours on demurrage. At USD 1,000 per hour, demurrage is USD 16,000.

Three lessons follow.

1. The six-hour breakdown cost USD 6,000. Had the contract excepted shore breakdowns, the bill would have been USD 10,000. The wording of the exceptions matters as much as the rate.
2. Waiting for a berth counted. Sixteen hours at anchor were charged because the clause said WIBON.
3. The NOR carries the whole result. Suppose the buyer's agent had validly rejected the NOR on Day 1 because the ship was not ready in all respects, and a valid NOR was tendered at Day 2, 06:00. Under the same clause, laytime would start when discharge began at Day 2, 08:00. Time from then to Day 6, 14:00 is 102 hours, less 8 hours of rain, so 94 hours used against 96 allowed. The charterer would have saved 2 hours, and despatch at USD 500 per hour would be USD 1,000 in its favour. The swing between the two outcomes is USD 17,000, all of it from the date of one notice.

Whether a rejection is justified in real life depends on the facts and the governing law. The example shows why the NOR matters so much, not that rejection is a tactic to use freely.

Routing, ETAs and berth windows

Laytime counts from arrival, but arrival depends on the route. A change of routing alters the passage time, and with it the ETA that the seller gave when the ship was nominated. For the route choice between Suez and the Cape, see our Red Sea shipping guide. When Chemineral quotes delivered terms it prices Suez and Cape routing side by side, so the buyer can see the time difference behind the number.

For a buyer, the laytime consequences are practical:

• Ask for the revised ETA in writing whenever the route changes, and check it against the laycan or the discharge window.
• Re-confirm berth, storage, transport and labour for the new date. A ship that arrives to a port that is not ready is a common source of buyer-side demurrage.
• Confirm in writing whether the laycan or delivery window changed. "A few days late" is a poor basis for a later argument.

How buyers avoid disputes

Most disputes are cheaper to prevent than to win. Work through this list before the offer is accepted.

1. Put laytime terms in the offer. State the rate or period, SHINC, SHEX or FHEX, weather exceptions, notice time, when laytime starts and when it ends. An offer that says only "laytime as per charter party" leaves you buying a clause you have not seen.
2. Ask for the relevant charter party clauses. Check the demurrage rate, the despatch rate, the NOR rules and the time-bar. Make sure the sale contract passes through the same figures.
3. Prepare the discharge port before the ship sails: berth, customs, storage, transport, labour and documents. A delayed original bill of lading can delay discharge; see our export shipping documents guide.
4. Run the NOR on a fixed timetable. Name who receives it, how fast you respond, and who decides on validity. A late reply is the most avoidable weakness in a defence.
5. Have someone independent log the time. A port agent or inspector who records each stop and its cause.
6. Never sign a statement of facts you disagree with. Add remarks and protests at the time; later corrections carry far less weight.
7. Agree the claims procedure. Which documents, which period, who receives it, and how fast the other side must reply. State the time-bar in the sale contract.
8. Agree the arithmetic. Hours and minutes, pro rata, and the method of dealing with part-days. Ask for the laytime statement line by line.
9. Choose governing law and forum on purpose.
10. Put everything in writing. Telephone agreements about NORs, extensions and waivers are the hardest to prove.

Frequently asked questions

What is the difference between laycan and laytime?

Laycan is the window in which the ship must arrive and be ready to load. Laytime is the time allowed to load or discharge once the ship is ready. One concerns when the ship turns up; the other concerns how long the cargo work may take.

Does laytime start as soon as the ship arrives?

Not necessarily. It normally starts when a valid NOR has been tendered, plus any notice time, or when cargo operations begin if that is earlier. The ship must have arrived as the charter defines it and be ready in all respects.

Is SHEX better than SHINC for the buyer?

For the party paying demurrage, yes, because fewer days count against laytime. Shipowners price that in, so the ship's freight or the sale price may reflect it. Check which days are the weekly rest days at your port and whether "unless used" applies.

Is despatch always half of demurrage?

No. Half the demurrage rate is common, but it is a negotiated term. Read the clause for the rate and for whether it applies to all time saved or only working time saved.

How long do I have to dispute a demurrage claim?

The contract decides. A time-bar sets the claimant's deadline to present the claim, and the contract may also set a period for you to respond. Check your sale contract and the charter party, and reply in writing promptly.

Next step

If you plan a bulk or parcel purchase from Sohar or Salalah and want laytime, notice and demurrage terms written into the offer before you commit, send your quantity, discharge port and handling rate through the Chemineral trade desk on our contact page. Firm offers are valid for 72 hours.