Demurrage is generally the agreed amount payable when cargo operations use more than the allowed laytime. Despatch is the amount payable for laytime saved when the charter party expressly provides for it. The arithmetic may be simple, but deciding which periods count is often the difficult part.
Required inputs
- Signed recap, charter party and relevant rider clauses
- Statement of Facts for each port or berth
- Notice of Readiness and evidence of tender and acceptance
- Cargo quantity and contractual loading/discharging rates
- Laytime basis, including reversible or non-reversible treatment
- Working-time qualifications and exceptions
- Demurrage rate and any agreed despatch basis
Step 1: determine allowed laytime
Where laytime is based on a rate, divide the relevant cargo quantity by the agreed daily rate. For example, 12,000 MT at 3,000 MT per weather working day produces four laydays before applying the contractual definition of a day and any separate treatment between loading and discharge.
If laytime is reversible, time saved at one end may offset time used at the other. If it is non-reversible, loading and discharge are calculated separately. Terms such as "average rate", "per hatch", "per workable hatch" or a fixed number of hours require their own interpretation.
Step 2: build time used chronologically
Start from the contractual commencement point after valid NOR. Work line by line through the Statement of Facts. Mark each period as counting, excepted, partially counting or disputed, and record the clause supporting the treatment.
| Event | Question to resolve |
|---|---|
| NOR tendered | Was the vessel at the required place and legally and physically ready? |
| Waiting for berth | Is the fixture berth or port charter, and what does the waiting-time clause say? |
| Bad weather | Does the weather exception apply before and after demurrage? |
| Weekend or holiday | Is the term SSHEX, SSHINC, FSHEX or FSHINC, and is there an "unless used" qualification? |
| Breakdown | Which party or equipment caused the interruption? |
Step 3: calculate the financial result
Subtract allowed time from counted time. Positive excess time is multiplied by the daily demurrage rate on a pro-rata basis where applicable. If time is saved and despatch is agreed, apply the specified despatch rate and basis. "Half demurrage" is common but should never be assumed.
Control checks
- Keep loading and discharge time zones consistent.
- Check daylight-saving changes and midnight boundaries.
- Do not count overlapping periods twice.
- Separate factual events from the contractual interpretation.
- Retain source documents and calculation revisions.
- Identify disputed periods rather than hiding them in totals.