Neptune Atlas
Laycan: laydays and cancelling
A laycan is two dates and they do opposite jobs. The first is the earliest date the charterer has to accept the ship. The second is the latest date after which they may refuse her. Reading it as one thing, “the window the ship must arrive in”, gets both the obligation and the remedy wrong.
Two dates, two jobs
Laydays is the opening. Before that date the charterer is not obliged to take the ship. An owner whose vessel is ready a week early has simply arrived early: there is no cargo owed to a ship that turned up ahead of the agreed period, and the charterer’s obligations do not move forward to meet her.
Cancelling is the closing. If the ship is not ready by the cancelling date, the charterer may cancel the charter. May, not must. The date does not terminate anything on its own. It hands the charterer an option and leaves the decision entirely with them.
| Date | What it does | Who holds the power |
|---|---|---|
| Laydays | Earliest date the charterer must accept the ship and start the machinery of loading | Protects the charterer from a ship arriving before the cargo, the berth or the stock is ready. |
| Cancelling | Date after which the charterer may declare the charter cancelled | An option in the charterer’s hands. The owner has no matching option and cannot force a decision except as the charterparty allows. |
The asymmetry is the whole point. Nothing obliges a charterer to cancel a late ship. If the market has moved against them, a ship arriving two days after cancelling is a ship they will very happily keep, and the owner is still bound. If the market has moved the other way, the same two days are a free exit. The cancelling date is best understood as an option that the charterer buys in the negotiation and pays for in the rate.
Readiness, not arrival
What has to happen by the cancelling date is that the ship is ready, usually at the first load port and usually meaning arrived, in all respects ready to load, and in most trades with her holds passed. A ship anchored off the port with a hold that fails inspection has not made her cancelling. Whether a specific hour applies, and whether readiness has to be accompanied by a valid notice, are matters the individual form decides, and the forms do not agree.
The run-up: asking the charterer to declare
When it becomes clear a ship will not make her cancelling date, the owner is left holding an uncertainty they cannot resolve alone. They do not know whether they are still steaming towards a fixture or towards nothing.
Most standard forms answer this with an interpellation mechanism. The owner gives notice as soon as they are able that the ship will be late, states the date she now expects to be ready, and asks the charterer to declare whether they will cancel. The charterer then has a stated period to answer, commonly a short one counted in running hours, and if they do not answer within it the option is treated as having lapsed, with the new readiness date substituting for the original cancelling date. The exact notice period and the effect of silence vary by form, and some charterparties have no such clause at all, in which case the owner can ask but cannot compel an answer.
An owner wants that declaration as early as possible for reasons that have nothing to do with law. A ship released on the tenth is a ship that can be offered elsewhere while there is still a market for her. A ship released on the eighteenth, at the load port, having burned the bunkers to get there, is a ballast leg with nothing at the end of it. Brokers push for early declarations because the value of the answer decays fast.
Narrowing a laycan
A cargo agreed months ahead, or a lifting under a contract of affreightment, is often fixed with a wide spread and a mechanism to narrow it: one side declares a shorter window a stated number of days before, and that declaration becomes the operative laycan. Which side narrows, by how much and with how much notice is negotiated, and it is negotiated because it is worth money.
Work out who each version helps. A wide spread is flexibility for the owner: more room to finish the previous voyage, to pick up an intermediate stem, to absorb weather or a slow discharge. The same spread is a cost to the charterer, who has to hold cargo, keep a berth available and carry the stock across a longer period of not knowing. A narrow spread reverses both. The party asking for it should expect to pay for it in the rate, and the party granting it should price it rather than concede it as a formality. A laycan is a commercial term, not an administrative one.
A laycan is not a position
Tonnage is circulated as an open position: a name, a deadweight, a place and a date range, for example open Singapore 18-21. That range is where the ship becomes free. It is not the range of laycans she can hold, and treating the two as the same is how a broker offers a ship that cannot possibly perform.
A ship open Singapore 18-21 cannot hold a laycan on the 12th, whatever the enquiry says. Working out what she can hold means adding the steaming time from the open port to the load port, allowing for the previous fixture running late, and checking against anything that takes her out of service. Drydock and special survey dates are the constraint most often missing from a position list, and they do not negotiate.
Positions also age. An open date circulated ten days ago has usually moved, and the ship is either firmer or gone. This is the point at which someone reasonably asks whether a live position feed solves it, and it does not.
How many AIS destinations resolve to a real port: 47,399 of 94,337 fixes. Destination is free text keyed by the crew, so abbreviated, stale or plain wrong. And even a destination that does resolve is where she says she is going. An AIS track tells you where a ship is, never when she is next free. A laycan is negotiated against a declared open position and the fixture behind it, not against a map.
Missing the cancelling date is not automatically a breach
This is the part most often stated backwards. A ship that fails to make her cancelling date has not, by that fact alone, breached the charter and does not, by that fact alone, owe damages. The charterer’s remedy is the option: cancel, or do not. If they cancel, both sides walk away from the fixture. Recovering losses on top of that requires a separate breach to point at.
The usual candidate is the approach voyage. Most charters carry an obligation on the owner to proceed to the load port with reasonable or utmost despatch, and an owner who dawdled, or who took a fixture the ship never had a realistic chance of performing, may be answerable for the loss that follows. That is a breach of the despatch obligation, not of the cancelling date. The distinction matters when the numbers are counted: one produces a cancelled fixture, the other produces a claim.
The mirror image also holds. A charterer who cancels a ship that was in fact ready in time has purported to exercise an option they did not have, and that is a repudiation the owner can act on. Cancelling is not a thing to do in irritation. It is a right that exists only once its conditions are met.
Where the laycan stops and laytime starts
The two are adjacent and separate. Laydays fixes the earliest date the ship can be pressed on the charterer; the notice of readiness and the charterparty’s counting rules fix when laytime actually begins. An owner who arrives before laydays and tenders notice early does not thereby start time running earlier: the usual treatment is that laytime cannot begin before the first layday whatever the notice says, though forms differ on whether an early notice is valid at all, valid but held over, or has to be retendered. Get that wrong and the demurrage calculation is out by days at the front end, which is where the money is.
In a time charter the same pair of dates governs delivery: the charterer may reject a ship not delivered by the cancelling date, and again that is an option rather than an automatic termination.
Whether the cancelling date carries an hour, how long the charterer has to declare, what silence means, who narrows a spread: every one of those is written differently across the standard forms and rewritten again in the riders. The shape holds everywhere. The details are decided by the charterparty in front of you.
References
- West of England P&I Club, Defence Guide: Cancellation in a Nutshell, 2018. westpandi.com
- BIMCO, GENCON 2022 voyage charter party, 2022. bimco.org
- BIMCO, CMI, FONASBA and the Baltic Exchange, Laytime Definitions for Charter Parties 2013, 2013. fonasba.com
- IMO, AIS transponders, on the carriage requirement in SOLAS regulation V/19. imo.org
Related
Neptune Atlas
A position in Neptune Atlas carries an open range and an area, and a cargo enquiry carries its laycan, so matching tonnage to a cargo is a search over both rather than a squint at a spreadsheet. When the fixture is recorded the agreed laycan travels with it into the laytime calculation. Every paid plan starts with 7 free days. A card is needed to start them, and cancelling before they end costs nothing.
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