This section assumes that you have a knowledge of Ship Chartering as covered in the Grade 11 modules. In most voyage charter parties, loading and discharge times are stipulated (e.g. 72 hours or 38 hours, etc.). This time period is called laytime. If the cargowork takes more time than the time stipulated, demurrage is paid by the charterer to the owner at a rate that has been agreed in the charter party (e.g. $2100 per hour). If the cargowork takes less time than the time stipulated, dispatch is paid by the owner to the charterer at a rate that has been agreed in the charter party (e.g. $2000 per hour).

Example :

A ship is loading grain. It was agreed that cargowork would take 27 hours but it has taken 36 hours. More time is spent loading than expected. Demurrage is payable on the difference in time according to the agreed rate (e.g. $2 000 per hour) :

36 hours – 27 hours = 9 hours more (i.e. demurrage is payable)

9 hours x $2 000 = $18 000 (charterer pays shipowner)

If the same ship managed to load the grain cargo in 22 hours, less time is spent loading than expected. Dispatch is payable on the difference in time according to the agreed rate (e.g. $2 000 per hour).

27 hours – 22 hours = 5 hours less (i.e. dispatch is payable.)

5 hours x $2 000 = $10 000 (owner pays charterer)

Some delays to loading or discharging cargo are not subject to demurrage. These include :

• Rain during cargo operations when weather-sensitive cargo is involved (e.g. bagged cement; rolls of newsprint; grain; some minerals; bulk fruit, and others);
• Very strong wind can sometimes disrupt cargo operations
• Circumstances beyond the control of the charterer such as a shoreside strike, civil unrest.
• Ship’s machinery malfunctioning (e.g. crane breaking down,; ship having a power blackout; hatchcover jammed; etc.) In such a case, the charterer will place the ship off hire until normal loading car resume