How Much Laytime does Deadfreight Buy You?
In the deep sea tanker trade laytime is normally agreed as x number of hours for loading and discharging. ‘x’ is frequently 72 hours and would be if fixed on the basis of Worldscale Hours Terms and Conditions but of course it can be much more or much less depending on the size of the vessel, the type of voyage and the agreement of the Owners and Charterers.
Once agreed it generally doesn’t matter where the laytime is used as it is reversible and spread across as many load and/or discharge ports as the vessel visits in accordance with the limits placed in the fixture.
In the chemicals and lubes trades in particular laytime is often agreed on the basis of a loading and/or discharge rate. For example this may be 600 tonnes per hour (tph) loading/400 tph discharging so for a vessel loading 12,000mt cargo the time for loading would be 20 hours (12,000/600) and for discharging would be 30 hours (12,000/400).
It is normal for this laytime to be reversible so that any unused time at the loadport could be offset against the discharge port or vice versa so that in this case a total of 50 hours laytime would apply. A word of warning – reversibility must be expressly agreed in the charter party otherwise you could end up with demurrage payable at one port despite time saved at the other.
This is all well and good but consider this scenario. The vessel is fixed for a minimum of 12,000mt but charterers cannot provide more than 9,600mt. Under the terms of the charter party the charterer has to pay freight on 12,000mt – how much laytime is he entitled to?
The Cargo Quantity of 9,600mt gives rise to 16 hours (9,600/600) at the loadport and 24 hours (9,600/400) at the discharge port – a total of 40 hours for the voyage compared to 50 hours if based on 12,000mt.
The question is – is the charterer entitled to 50 hours because he has effectively paid for it in the freight and deadfreight, or only 40 hours because he has not loaded the full quantity envisaged.
I don’t think I have seen a case on this and I’m not aware of an arbitration but I suspect this has come up before. I think there are arguments to interpret it both ways but if I were to decide I would say that having paid freight on 12,000mt I believe the charter should be entitled to laytime on 12,000mt and get the full 50 hours.
What do you think? Have you had a case like this and how was it solved? Have you seen a court case or arbitration on this type of dispute that you can share with us?
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