LaycanDeskVoyage Charter: FIOST, Laytime & Demurrage
The terms a cargo owner meets on a first fixture: FIOST, laycan and cancelling, NOR, SHINC and SHEX, laytime by rate or by days, demurrage and half despatch. How a voyage charter is priced and settled: freight per tonne on FIOST or liner terms, a laycan with a cancelling date, notice of readiness and when time starts counting, laytime by a daily rate or a fixed number of days on SHINC or SHEX terms, demurrage when the time runs out and despatch when it does not, all recorded on the statement of facts, on a BIMCO form such as GENCON.
Under a voyage charter the owner carries one cargo from a named load port to a named discharge port for a freight per tonne or a lumpsum, and keeps the ship's running costs, bunkers and port dues for his own account. Who pays for cargo handling is the first term: FIOST means the charterer pays loading, discharge, stowing and trimming and the freight covers the sea passage only, which is the dry bulk norm; FIOS and FIOT drop trimming or stowing respectively; FILO and liner terms move some or all of the handling cost into the freight. The ship must present ready within the laycan, the laydays and cancelling window; if she is not ready by the cancelling date the charterer may cancel, and under GENCON 2022 an owner who sees he will miss it must give a new readiness date and the charterer has 48 hours to accept it or cancel. On arrival the master tenders notice of readiness, in writing under GENCON 2022 and at any hour; laytime, the time the charterer has for loading or discharging without paying more than the freight, starts after the agreed notice time, or on the first layday if the notice was tendered early, unless work starts sooner. WIBON lets the notice be tendered from the usual waiting place when the berth is occupied. Laytime is written either as a rate, so many tonnes per weather working day, or as a fixed number of hours or days, and the calendar terms decide what counts: SHINC counts Sundays and holidays, SHEX excludes them, SHEX UU counts them if used and SHEX EIU never counts them. Weather working day means a day on which the weather actually allows the work, and under GENCON 2022 weather is an exception to a clock that otherwise runs continuously.
When laytime is used up the ship goes on demurrage, an agreed amount per day, pro rata, payable to the owner for every further hour, and once on demurrage the laytime exceptions no longer apply; if the charterer finishes early the owner pays despatch, almost always at half the demurrage rate. Reversible laytime lets the time saved at one port be used at the other. The arithmetic is simple. A 50,000 tonne cargo loading at 10,000 tonnes per weather working day SHINC has five days of laytime; if notice of readiness is accepted at 08:00 on the 1st with twelve hours' notice time, laytime starts at 20:00 on the 1st and expires at 20:00 on the 6th. If loading completes at 14:00 on the 8th the ship has been on demurrage for 1 day 18 hours, 1.75 days at the agreed rate; if it completes at 08:00 on the 5th, 1.5 days were saved and despatch is 1.5 days at half the rate. Every figure in that sum comes from the statement of facts, the port log the agent and the master sign at each port with the times of arrival, notice, berthing, each shift worked, each stoppage and its cause, and completion. We work voyage charters from the charterer's side. Before an enquiry reaches owners it carries the cargo and stowage factor, the load and discharge ports with their draft, the load and discharge rates with the calendar terms, the notice time, the laycan, whether demurrage and despatch are per port or reversible, the commission and the charterer's name; owners price the port time those terms imply before they price the distance, and a stem without rates or a charterer cannot be quoted. After the fixture we read the statement of facts against the recap before either side's laytime statement goes out.
The terms in the recap
- Freight per tonne or lumpsum, and on what terms: FIOST, FIOS, FIOT, FILO or liner
- Laycan: the laydays and the cancelling date
- Load and discharge rates per weather working day, or fixed laytime in days
- Calendar terms: SHINC, SHEX UU, SHEX EIU; WIBON or berth terms
- Notice time after NOR, and whether time before laydays counts
- Demurrage per day pro rata; despatch, usually half demurrage; per port or reversible
How the clock runs
- NOR tendered in writing when the ship is arrived and ready; laytime starts after notice time
- Time counts by the calendar terms; weather stops it only when it actually stops the work
- Laytime expires: demurrage runs continuously, exceptions no longer apply
- Cargo finished early: despatch on working time saved or all time saved, as agreed
- Statement of facts signed by master and agent is the record both laytime statements are built from
What we check before owners see it
- Cargo, stowage factor and any IMSBC schedule
- Draft at both ports on the laycan dates
- Rates and calendar terms match what the terminals actually work
- Who the charterer of record is, and whether FOB or CFR puts the freight on him
- Commission basis
Ships that carry it
The cargo itself, on Commbril
Questions charterers and owners ask
What does FIOST mean in a freight quote?
Free in, out, stowed and trimmed: the charterer pays for loading, discharging, stowing and trimming, and the freight per tonne pays for the sea carriage only. FIOS and FIOT leave trimming or stowing with the owner respectively; FILO puts the discharge cost into the freight; liner terms put some or all handling into the freight according to the port's custom. Dry bulk is quoted FIOST almost without exception, which is why the load and discharge rates matter so much: the charterer is buying the time, not the stevedores.
When does laytime start counting?
After the master has tendered a valid notice of readiness, the ship being arrived at the agreed place and ready in all respects, and after the notice time in the charter has run. If the notice is tendered before the first layday, time does not start before that day unless cargo work begins sooner, which is the GENCON 2022 position. WIBON lets the notice be tendered from the usual waiting place when the berth is occupied; without it the ship may have to reach the berth first.
What is the difference between SHINC and SHEX?
Whether Sundays and holidays count as laytime. SHINC counts every calendar day; SHEX stops the clock on Sundays and holidays. SHEX UU, unless used, counts a Sunday if the terminal actually works it; SHEX EIU, even if used, never counts it. Weather working day means a day on which the weather allows the work: time is lost only for the hours the weather actually stopped loading or discharging, which is why the rain entries on the statement of facts are recorded to the minute.
How are demurrage and despatch calculated?
Laytime is quantity divided by the rate: 50,000 tonnes at 10,000 tonnes a day is five days. Time from the start of laytime to completion, less any excepted periods, is set against it; every hour over is demurrage at the daily rate pro rata, and every hour under is despatch, almost always at half the demurrage rate, on working time saved or all time saved as the charter says. Once on demurrage the laytime exceptions stop applying. Both sides build the sum from the same statement of facts, and most disputes are about what that document records rather than about the arithmetic.