Neptune Atlas
Laycan: laydays and cancelling
A laycan is two dates, and they do opposite jobs. The first date is the earliest day the charterer (the party that hires the ship) must accept the ship. The second date is the day after which the charterer may refuse the ship. Many people read a laycan as one thing: “the window the ship must arrive in”. That reading gets both the duty and the remedy wrong.
Two dates, two jobs
Laydays is the first date. Before that date, the charterer does not have to take the ship. If a ship is ready a week early, it has simply arrived early. The charterer owes no cargo to a ship that comes before the agreed period. The charterer’s duties do not start earlier because the ship is there.
Cancelling is the last date. If the ship is not ready by the cancelling date, the charterer may cancel the charter. They may cancel, but they do not have to. The date does not end the contract by itself: it gives the charterer a choice, and the decision is theirs alone.
| Date | What it does | Who holds the power |
|---|---|---|
| Laydays | The earliest date the charterer must accept the ship and start the loading process | Protects the charterer from a ship that arrives before the cargo, the berth or the stock is ready. |
| Cancelling | The date after which the charterer may cancel the charter | A choice that belongs to the charterer. The owner has no matching choice and cannot force a decision, except where the charterparty (the charter contract) allows it. |
This imbalance is the key point. Nothing forces a charterer to cancel a late ship. If freight rates have moved against the charterer, the charterer will want to keep a ship that arrives two days after cancelling, and the owner is still bound. If rates have moved the other way, the same two days let the charterer leave the deal at no cost. So think of the cancelling date as a choice that the charterer gets in the negotiation and pays for in the freight rate.
Readiness, not arrival
By the cancelling date, the ship must be ready. This usually means ready at the first load port. It usually means the ship has arrived, is ready in every way to load, and in most trades has passed hold inspection. A ship at anchor off the port with a hold that fails inspection has not met its cancelling date. Each charterparty form decides two further points: whether a specific hour applies, and whether the ship must also give a valid notice of readiness. The forms do not agree on these points.
The run-up: asking the charterer to declare
Sometimes it becomes clear that a ship will miss its cancelling date. The owner then has a problem they cannot solve alone. They do not know whether the ship is sailing towards a fixture (an agreed deal) or towards nothing.
Most standard forms solve this with an interpellation clause, which is a clause that lets the owner ask the charterer to decide early. It works like this. The owner gives notice, as soon as possible, that the ship will be late. The owner states the new date when the ship expects to be ready. The owner asks the charterer to say whether they will cancel. The charterer then has a set period to answer. This period is often short and counted in running hours. If the charterer does not answer in time, the choice to cancel is treated as lost, and the new readiness date replaces the original cancelling date. The notice period and the effect of silence differ between forms. Some charterparties have no such clause at all. In that case the owner can ask, but cannot force an answer.
The owner wants that answer as early as possible, for practical reasons, not legal ones. If the charterer releases the ship on the tenth, the owner can still offer it to other charterers while the market has work for it. If the charterer releases the ship on the eighteenth, the ship is already at the load port and has used fuel to get there. It has made an empty (ballast) voyage with no cargo at the end. Brokers push for an early answer because a late answer is worth much less.
Narrowing a laycan
Some cargoes are agreed months ahead. Some are shipped under a contract of affreightment, which is a contract to carry a set amount of cargo over a period. These are often fixed with a wide date spread and a way to narrow it. One side names a shorter window a set number of days before. That shorter window then becomes the laycan that applies. The parties negotiate which side narrows, by how much, and with how much notice. They negotiate it because it is worth money.
Consider who each version helps. A wide spread gives the owner flexibility: more time to finish the previous voyage, to load a small extra cargo on the way, or to absorb bad weather or a slow discharge. The same spread costs the charterer. The charterer has to hold the cargo, keep a berth free, and carry the stock for a longer period without knowing when the ship will come. A narrow spread reverses both effects. The side that asks for a narrow spread should expect to pay for it in the rate. The side that agrees to it should put a price on it, not give it away as a formality. A laycan is a commercial term, not an administrative one.
A laycan is not a position
Owners and brokers send out tonnage (available ships) as open positions. An open position gives a ship name, a deadweight (how much weight it can carry), a place and a date range, for example open Singapore 18-21. That range tells you where and when the ship becomes free. It is not the range of laycans the ship can meet. If a broker treats the two as the same, they may offer a ship that cannot possibly do the job.
A ship open Singapore 18-21 cannot meet a laycan on the 12th, whatever the enquiry says. To work out which laycan it can meet, add the sailing time from the open port to the load port. Allow for the previous voyage running late. Check for anything that takes the ship out of service. Drydock and special survey dates are the limits most often missing from a position list, and they cannot be moved.
Positions also go out of date. An open date sent out ten days ago has usually changed. By now the ship is either more firmly placed or already fixed. At this point people often ask whether a live position feed solves the problem. It does not.
How many AIS destinations match a real port: 47,399 of 94,337 fixes. The crew types the destination as free text, so it is often shortened, out of date or simply wrong. Even a destination that does match a port only shows where the ship says it is going. An AIS track tells you where a ship is, never when it 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
People often state this part the wrong way round. A ship that misses its cancelling date has not, for that reason alone, broken the charter. For that reason alone it does not owe damages. The charterer’s remedy is the choice: cancel, or do not cancel. If the charterer cancels, the fixture ends for both sides. To recover losses as well, the charterer must point to a separate breach.
The usual example is the voyage to the load port. Most charters require the owner to sail to the load port with reasonable or utmost despatch, which means without unnecessary delay. An owner who sailed too slowly, or who agreed a fixture the ship never had a real chance of meeting, may be liable for the loss that follows. That is a breach of the despatch duty, not of the cancelling date. The difference matters for the money: one leads to a cancelled fixture and the other leads to a claim for damages.
The reverse is also true. Suppose a charterer cancels a ship that was in fact ready in time. The charterer has tried to use a choice they did not have. That is a repudiation, a refusal to perform the contract, and the owner can act on it. Do not cancel only because the ship is causing problems. The right to cancel exists only once its conditions are met.
Where the laycan stops and laytime starts
The laycan and laytime are closely linked, but they are separate. Laytime is the time the charterer is allowed for loading and discharging. The laytime and demurrage calculator works that time out from the terms and the times in port. Laydays fixes the earliest date the owner can make the charterer take the ship. The notice of readiness and the charterparty’s counting rules fix when laytime actually starts. Suppose an owner arrives before laydays and gives notice early. That does not make time start earlier. The usual rule is that laytime cannot start before the first layday, whatever the notice says. The forms differ on whether an early notice is valid at all, valid but held until laydays, or must be given again. If you get this wrong, the demurrage calculation is wrong by days from the start, and those days decide the amount paid.
In a time charter, the same two dates control delivery of the ship. The charterer may reject a ship not delivered by the cancelling date. Again, that is a choice, not an automatic end to the contract.
The standard forms, and the riders (extra clauses) added to them, all handle the details differently. These details include whether the cancelling date has an hour, how long the charterer has to declare, what silence means, and who narrows a spread. The basic shape is the same everywhere. The details depend on the charterparty you are working with.
If you are a cargo owner setting a laycan for the first time, see how to charter a ship for your cargo for the rest of the process. The page for cargo owners and charterers answers common questions about posting a stem (a cargo to be shipped).
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, not a manual check of 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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