Two invoices that use almost identical vocabulary describe two completely unrelated commercial arrangements, and confusing them costs money on the wrong shipment. If a shipping line is charging you for a container sitting at a terminal past its free time, that is container demurrage or detention: a tariff fee the carrier sets and publishes unilaterally, and in the United States it is regulated by the Federal Maritime Commission, covered in our guides to demurrage and detention billing rules and avoiding detention on empty container returns. If instead you, or the forwarder acting for you, have chartered a whole ship, or a substantial part of one, to move bulk grain, steel coils or an out of gauge piece of project cargo, and that ship sits at berth longer than the contract allows, the charge is charter party demurrage: a figure two parties negotiated and wrote into a specific contract before the vessel ever sailed. Same word, two unconnected systems, two different sets of rules, two different documents to read. This guide is about the second one.
Voyage, time and bareboat charter, in plain English
A charter party is the contract between a shipowner and a charterer for the use of a vessel. There are three basic shapes, and which one applies changes almost everything about how laytime and demurrage work, or whether they apply at all.
| Charter type | What is actually hired | Who runs the ship | Does laytime/demurrage apply? |
|---|---|---|---|
| Voyage charter | The ship's capacity for one voyage, port to port | Owner (crew, fuel, running costs stay with the owner; freight is usually per tonne or lump sum) | Yes. This is the classic laytime and demurrage arrangement |
| Time charter | The ship itself for a fixed period, for any lawful trade within the agreed terms | Owner crews and maintains the vessel, but the charterer directs where it sails and what it carries | Not in the same sense. The charterer pays daily hire the whole time, including while the vessel loads or discharges, so a slow port call is an "off-hire" question, not a demurrage one |
| Bareboat (demise) charter | The vessel with no crew, no master, nothing but the hull and machinery | Charterer, who crews, insures and operates the ship as if it were their own for the charter period | No. There is no cargo operation built into the charter itself; a bareboat charterer who then carries cargo does so under its own separate contracts |
For a shipper or forwarder moving bulk or breakbulk freight, the relevant one is almost always the voyage charter, because that is what a single cargo parcel actually needs. Laytime, Notice of Readiness, demurrage and despatch, the four concepts in this guide, are voyage charter mechanics. Under a time charter, port time and any congestion delay simply run against the hire clock the charterer is already paying, unless an off-hire clause specifically excludes it; there is no separate demurrage figure to negotiate. This guide covers general principles only and is not legal advice on a specific fixture.
Laytime: the time you are actually paying for
The industry's own reference definitions come from BIMCO's Laytime Definitions for Charter Parties 2013, agreed jointly with FONASBA, the Comite Maritime International and the Baltic Exchange, and they apply only when a charter party expressly incorporates them. That document defines laytime as "the period of time agreed between the parties during which the owner will make and keep the Vessel available for loading or discharging without payment additional to the freight." In other words, the freight rate already includes a set number of days or hours to get the cargo on and off the ship. Use less than that, and under many fixtures you may be owed despatch. Use more, and you owe demurrage.
How much laytime a specific fixture allows, and how it is calculated, is set out in Box 16 of the widely used GENCON 1994 form (BIMCO's general-purpose voyage charter), either as separate loading and discharging time or as one combined total. There is no universal default: the number is negotiated per fixture based on cargo quantity, port productivity and custom of the trade.
How laytime is fixed: WWD, SHEX, SHINC and the exceptions
Laytime is rarely just "five days." It is usually qualified by a short string of abbreviations that decide which days, and which hours within a day, actually count.
- WWD, Weather Working Day. BIMCO's 2013 definitions define it as "a Working Day or part of a Working Day during which it is or, if the Vessel is still waiting for her turn, it would be possible to load/discharge the cargo without interruption due to the weather," with the interrupted period excluded from laytime if bad weather actually stops work.
- SHEX, Sundays and Holidays Excepted. Sundays and public holidays do not count toward laytime, favouring the charterer.
- SHINC, Sundays and Holidays Included. Sundays and holidays do count, favouring the owner.
- Unless used. A common qualifier meaning that even on an excepted day, if cargo work actually happens, that time counts anyway. GENCON 1994's own loading clause reads: "The cargo shall be loaded within the number of running days/hours as indicated in Box 16, weather permitting, Sundays and holidays excepted, unless used, in which event time used shall count," which is a WWD SHEX "unless used" clause in the form's own words.
None of this is exotic legal drafting; it is the small print that decides whether a Sunday spent alongside the berth actually cost the charterer any of their allowance. Whatever clause combination a specific fixture uses, it should be read literally rather than assumed from habit, because the same three letters, WWD, mean nothing without the SHEX, SHINC or similar qualifier that follows them, and different qualifiers on the same tonnage can be worth real money over a single port call.
Notice of Readiness: when the clock actually starts
BIMCO's 2013 definitions describe Notice of Readiness, NOR, as "the notice to the charterer, shipper, receiver or other person as required by the Charter Party that the Vessel has arrived at the Port or Berth, as the case may be, and is ready to load or discharge." Tendering NOR is what starts the laytime clock, but it does not start immediately: most standard forms build in a notice period. GENCON 1994's own commencement clause is specific about the timing: "Laytime for loading and discharging shall commence at 13.00 hours, if notice of readiness is given up to and including 12.00 hours, and at 06.00 hours next working day if notice given during office hours after 12.00 hours." A NOR tendered at 11 a.m. starts the laytime clock at 1 p.m. the same day; one tendered at 2 p.m. does not start it until 6 a.m. the next working day, not 2 p.m. the next day. That gap is deliberate: it gives the charterer's agents a realistic window to prepare before time starts running against them.
GENCON 1994 also addresses the common case where no berth is available on arrival: the vessel can still tender NOR from the anchorage or a usual waiting place (a WIBON, Whether In Berth Or Not, arrangement), and laytime then runs as though she were already berthed, provided the master's readiness warranty holds up, though time spent actually shifting from the waiting place to the berth does not count. This is the clause that most often intersects with port congestion: a vessel queued outside a busy port because berths are full can still start the laytime and demurrage clock running against the charterer well before she is physically alongside.
Demurrage: what happens when the charterer overstays
BIMCO 2013 defines demurrage as "an agreed amount payable to the owner in respect of delay to the Vessel once the Laytime has expired, for which the owner is not responsible," and specifies that demurrage is not subject to the same exceptions that reduce laytime (a Sunday that was excepted from laytime does not automatically stop the demurrage clock too, unless the charter says so). Under English law, courts have generally treated demurrage as liquidated damages: an agreed, pre-fixed compensation for the owner's loss of the ship's earning capacity while she sits idle past laytime, rather than a penalty the owner must separately prove. Recent English case law has also clarified that demurrage liquidates that specific loss of use and does not automatically cover every other cost the delay might cause the owner; this is a developing area of case law and worth a maritime lawyer's read on a specific dispute rather than a general guide.
Mechanically, GENCON 1994's demurrage clause is straightforward: demurrage accrues "per day or pro rata for any part of a day," falls due day by day, and is payable on the owner's invoice; if it goes unpaid, the owner must give 96 running hours written notice before the more serious remedies, including terminating the charter, become available. The actual daily rate is filled in per fixture, in Box 20 of the form, and can run from a few thousand dollars a day on smaller tonnage to tens of thousands on larger bulk carriers; there is no standard figure and any number you see quoted for "typical" demurrage should be treated as illustrative only, not a rate to expect on your own cargo.
Despatch: the reward for finishing early, if the charter includes it at all
Despatch, or despatch money, is demurrage's mirror image. BIMCO 2013 defines it as "an agreed amount payable by the owner if the Vessel completes loading or discharging before the Laytime has expired." Commercially, the despatch rate is very often set at half the demurrage rate, a convention widely known as DHD, despatch half demurrage, though this is a market convention rather than a rule of law or a figure any charter is obliged to use; the actual rate, if any, is whatever the fixture states.
The important point for a shipper or forwarder to check is not the ratio, it is whether despatch is offered at all. Despatch is not automatic under a voyage charter; GENCON and similar standard forms leave the figure to be filled in, struck out, or agreed separately, and some fixtures are agreed on "free despatch" terms, meaning the owner pays no despatch regardless of how quickly loading or discharging finishes. Despatch provisions are also far more commonly seen in dry bulk fixtures than in tanker or gas chartering, where they are often absent altogether. Do not assume a charter includes despatch just because the laytime and demurrage terms are otherwise standard; read Box 20, or its equivalent, for the specific fixture.
One wording distinction is worth knowing once despatch is confirmed to apply: despatch "on all time saved" pays for every hour between finishing early and laytime's original expiry, including hours that would otherwise have been excepted (a Sunday, say); despatch "on all working time saved" pays only for the working hours saved. The two produce materially different payouts on the same early finish.
Before you fix a charter, or ask your forwarder who is fixing one
A shipper moving bulk or breakbulk cargo rarely negotiates a charter party directly; more often a forwarder, NVOCC or chartering broker fixes the tonnage on the shipper's behalf. Either way, these are the terms worth confirming before anyone signs, because they are the ones that turn into a dispute after the ship has already sailed.
- How much laytime is allowed, and for what. Confirm whether it is separate loading and discharging time or one combined total, and whether it is stated in days, hours or a rate per tonne or per hatch per day.
- What qualifies the laytime. WWD, SHEX or SHINC, and whether "unless used" applies, because that combination decides which calendar days actually count against the allowance.
- The demurrage rate, and how it is invoiced. A per-day figure with a defined payment window, and what happens if it goes unpaid.
- Whether despatch is included at all, and if so, at what rate and on what basis (all time saved or all working time saved). Do not assume it mirrors the demurrage rate automatically.
- The Notice of Readiness mechanics: where and to whom NOR must be tendered, whether a WIBON or similar clause lets the clock start before the vessel reaches a berth, and the notice-time gap before laytime actually begins.
- Who bears the cost of port congestion. Under a WIBON voyage charter, time waiting for a berth can already run against the charterer once NOR is validly tendered; under other wordings it may not. This single point of drafting decides who pays for a congested port, and it is worth confirming before fixing on a route with known berth queues.
Related reading on cargo that does not move in a standard container: our guides to breakbulk and project cargo and RoRo versus container shipping cover the equipment and routing side of the same shipments that most often move under a voyage charter.
If your cargo needs chartered tonnage, working with a forwarder or agent who actually fixes bulk and breakbulk business regularly is worth more than any single clause here, because reading a fixture correctly comes from doing it often. You can search logistics companies by country and service in the CargoLinked directory, or post your shipment on the public requests board and let eligible forwarders quote directly.
This guide explains general charter party terminology as commonly used in voyage chartering and is not legal advice. Laytime, demurrage and despatch terms are individually negotiated in every fixture; confirm the actual clauses, rates and exceptions in your own charter party with a maritime lawyer or chartering broker before relying on any figure or convention described here.
