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Thursday, December 10, 2009

Another interactive chartering question!

A laycan is the window of time, allocated by the charterer to the shipowner, for the arrival of a ship.

So if an agreed laycan is 01-10 December then the ship must arrive within these dates in order to avoid a possible penalty.
Consider this:

The ship in question is missing the cancelling date and looks like arriving on the 11th of December. But far from being mad the charterer is very happy...



  1. No matter under t/c or v/c. Owner retain full control of operation of a vsl. Once a c/p is form, shipowner has a duty to deliver a vsl to l/p. Usually, the vsl will arrive before the cancellation date. If a vsl miss her laycan, charterer has the right to cancel the charter. Owner is still bound to send her vsl to l/p even the vsl can't arrive by cancellation date.
    The charterer will be happy since a vsl miss her laycan. It leaves an option for charterer to choose whether to cancel the charter and seek for alternative.


  2. The Charterer must have been looking for a reason to fail the vessel incase he has another vsl interested with a lesser frt, provided LC dates are flexible..Else in order to extend the laycan Chrts can re-negotiate the same biz asking Owners to reduce frt, which Owners may agree being aware that they will not get any other cargo in that limited time.

    With Rgds

  3. I drove a hard bargain as ship owner with the charterer , got a high freight rate , now she obviously makes not so easy long journey 11 days, to arrive , looks like a problem ship or company .so she's come a longway into a new land with her business terminated , so whats the best option for her now ? sit idle till new business comes up ? head for another port ? daily capital ,voyage and operating costs are ticking by !!

    Well i guess this its time for a super discount on freight rate , start begging with charters

  4. The commentators assume that obtaining another cargo would be difficult, and also they mention renegotiating frt. In my humble opinion this would depend on the frt rate to have gone down, from the time the vsl was fixed to the time the vsl arrived into port missing her laycan. Therefore if the frt has risen considerably, then the vsl owner may be on a winner, if he can pay the penalty and still make a higher profit margin than he would have done, if he caught the laycan. If the vsl owner knew re the inability to meet laycan, then they might have already lined up cargo, at a higher rate(if frt has risen considerably), and they could have the upper hand in renegotiating with the original charterer. It may be time for a super premium for the owners. (also there may be other issues in the contract, whereby the owner may have protection, ie force majeure. What if the captain had to take a different route than planned, maybe due to for eg. sighting pirates in his telescope, or engine probs etc...)
    Also there is the question of strength of relationship between the two parties. Does one party feel that they could milk the other party as the market forces dictate, or should they be more softer in renegotiating, as this may not be a one off fix between the 2 parties, but more of a long working relationship. To summarize, the charterer can pull out the hammer, but then the owner will also do the same to get revenge when the time is right, and vice versa.
    They lived happily thereafter....


  5. Hi guys

    Good answers everyone.

    Zubair - unfortunatley the shipowners cannot walk away if they are missing cancelling. Only the charterers can. So the owners dont really wanna be late. Plus if the market does rise - why would the charterer not accept the ship a little late? 99 percent of the time they will.

    In the above situation the charterers could be happy for a number of reasons...

    1. The market has dropped. But alas - this is not enough. For this to be good for the charterers we need the market to drop but we also need another ship! On many occassions when a ship does miss cnacelling - there are no alternative ships due to the prompt nature of the situation.

    2. Maybe the charterer has had trouble accumulating cargo at the loadport. There may also be congestion at the loadport...for all these reasons it is advantageous for the charterer is the ship runs late. They will still accept the ship but they will limit possible demurrage claims due to making the ship wait before loading.

    Hope this makes sense.

    Thanks to all for the contributions.


  6. There are many possibilities.

    Charterers didn't move the cargo from the warehouse to the port;
    Charterers have another vessel loading at the same berth but due to rain vessel is delaying in sailing;

    However, if the market dropped, is the laycan we're talking here and not the freight. As as long as this has been already agreed, then Charterers will have to pay anyway. Furthermore, owners can always ask for extention of the laycan if they see that something can go wrong.