Demurrage and Laytime, Explained

Demurrage is the cost of a ship waiting, and on a petroleum cargo it accumulates fast enough to erase a trade’s margin in a couple of days. It turns on one question that sounds simple and rarely is: when did the clock actually start?

By MarineCraft Journal  · 
8 September 2026  · 
9 mins read

Two Different Clocks

Under a voyage charter, the owner is paid freight to carry a cargo and, as part of that bargain, allows the charterer a defined period to load and discharge. That allowance is laytime. It is not a target or an estimate; it is a contractual quantity of time, purchased as part of the freight. If the charterer uses less, the owner may owe despatch under some charters. If the charterer uses more, the ship is detained beyond the bargain and the charterer pays demurrage.

The critical point, and the one that generates most disputes, is that these are two distinct concepts rather than one continuous meter. Laytime is time allowed. Demurrage is liquidated damages for detaining the vessel after that allowance runs out. The distinction matters legally, because the exceptions that interrupt laytime frequently do not interrupt demurrage, a principle captured in the old maxim that once on demurrage, always on demurrage.

The Sequence That Decides the Money

Almost every demurrage dispute is really an argument about one of four steps in a fixed sequence. Understanding the sequence is what allows a trader or operator to see, in advance, where their exposure sits.

The berth-or-port distinction in step one is worth pausing on, because it is where large sums quietly change hands. Under a berth charter, the vessel generally has not arrived until it reaches the berth, so waiting for a congested berth is the owner’s time. Under a port charter, arrival at the port can be sufficient, so the same congestion becomes the charterer’s exposure. A single word in the fixture allocates the risk of a busy terminal.

Notice of Readiness: Small Document, Large Consequences

The notice of readiness is where more claims fail than anywhere else, because its validity depends on conditions that are easy to get wrong under operational pressure. A notice tendered before the vessel is genuinely ready, sent to the wrong recipient, delivered outside permitted hours, or transmitted by a method the charter does not allow can be invalid. If it is invalid, laytime may not start when the owner believes it did, and days of claimed demurrage can disappear.

Readiness has both a physical and a legal dimension. The ship must be in a fit condition to receive or deliver the cargo, and it must be legally free to do so, which can involve free pratique, customs clearance, and the outcome of any inspection the terminal requires. A vessel physically ready but held on an inspection failure is not ready in the sense the charter means.

The Exceptions That Stop the Clock

Charters routinely exclude periods from laytime, and this is the second great source of argument. Common exclusions include weather preventing cargo operations, time waiting for the charterer’s own instructions, shifting between berths, and periods attributable to the vessel rather than the shore. Some charters exclude Sundays and holidays unless used; others do not.

Where these exceptions bite is in their interaction with demurrage. Because demurrage is damages rather than allowed time, many charter exceptions expressly apply only to laytime, so a weather delay that would have paused laytime may not pause demurrage once the vessel is already on it. Whether that holds depends entirely on the wording, and it is a clause worth reading before the fixture rather than after the claim.

Why the Statement of Facts Is the Real Battleground

All of this ultimately turns on evidence, and the evidence is the statement of facts: the chronological record, signed at the port, of what happened and when. Arrival, NOR tender, commencement of operations, stoppages and their causes, hose connection and disconnection, and completion all appear there, and a demurrage claim is essentially a reading of that document against the charter terms.

That final item deserves emphasis because it defeats otherwise valid claims. Many charters impose a time bar requiring the demurrage claim, with specified supporting documents, to be presented within a set period after completion of discharge. Miss it, or submit without a required document, and a perfectly good claim can be extinguished on a procedural point regardless of its merits.

Managing the Exposure

For a trader or operator, demurrage is manageable to a degree that surprises people who treat it as bad luck. The exposure is set at fixture: berth or port charter, the laytime allowed, the demurrage rate, which exceptions apply and whether they extend to demurrage, and the time bar and documentation requirements. Those terms are negotiated once and then govern every delay that follows.

Operationally, the controllables are readiness before tendering notice, a rigorous statement of facts, and prompt claim handling within the time bar. Where a cargo is sold on terms that place the voyage with the buyer, the exposure may sit with the counterparty rather than with you, which is why demurrage sits so close to the bills of lading and Incoterms questions that govern who is carrying what risk in the first place.

None of this makes port congestion go away. It does determine whether a delay becomes a recoverable claim, an unrecoverable cost, or a dispute that runs for a year over whether a notice tendered at 0700 was valid.

Frequently Asked Questions

Sources: BIMCO, CMI, FONASBA and INTERCARGO, Laytime Definitions for Charter Parties 2013 (definitions of laytime, demurrage, notice of readiness, and arrived ship) · BIMCO standard voyage charter party forms and demurrage clauses · ASBATANKVOY and related tanker voyage charter forms (laytime, NOR and time bar provisions) · ICC, Incoterms 2020 (allocation of carriage responsibility between buyer and seller)