3 Errors in Demurrage Clauses that Cost Thousands
Errors in calculating laytime are the most common reason for disputes between the shipowner and the charterer in the port of Gdynia. In the last six months, we analyzed 43 contracts where unclear free time clauses led to losses of around 12,400 PLN on a single call. Facts matter, not general assurances.
Incorrect Definition of the Moment of Vessel Readiness (NOR)
We start with the Notice of Readiness (NOR). In theory, it's simple: the captain reports readiness, the clock starts. In quayside practice in Gdynia, the case falls apart right at the start. We encountered a case in March 2024 where the NOR was sent by email at 16:47, but the charterer's office only worked until 16:00. The contract clause mentioned 'office hours', which is too general a term. Due to these 47 minutes of delay, laytime only started ticking at 08:00 the next morning. The shipowner lost 16 hours of time, which at a demurrage rate of 2200 USD per day resulted in a loss of nearly 1460 USD.
There is also often a lack of clarification on whether the ship must be physically at the quay or if reaching the Gdynia port roads is enough. If the contract does not include a 'WIPON' (Whether In Port Or Not) clause, the shipowner risks the charterer rejecting the NOR due to lack of space at the quay. In one of our projects from October 2024, a ship waited at the roads for 3.2 days, and laytime stood still because the captain could not effectively deliver the documents. This is a classic example where hard charter terms are more important than mutual trust.
A 47-minute delay in sending an email can cost the shipowner 1460 USD in penalties for one day of laytime.
Failure to Account for Terminal Working Specs on Holidays
November in Gdynia is a specific time due to two statutory holidays. If your clause has the standard 'SHINC' (Sundays and Holidays Included), the case is clear – time flows without breaks. The problem arises with 'SHEX' (Sundays and Holidays Excluded) clauses. Many operators forget to check the local port calendar. November 11th is a holiday in Poland, which for a ship loading at the Polish Quay meant 24 hours excluded from the laytime calculation. The charterer who did not oversee this had to pay the full rate for a day of unproductive standing.
Frankly, we've seen situations where the dispute was over Saturdays after 13:00. Some general cargo terminals in Gdynia finish work then, but the contract had a clause about 'working days of the week'. For the shipowner, Saturday is a working day; for the forwarder, not necessarily. The discrepancy in interpreting 7 hours of work resulted in a corrective invoice for 3100 PLN. Without unnecessary talk: always check the regulations of the specific terminal where your vessel is mooring before you sign the charter-party.
Lack of Precision in Weather Exclusions
Autumn and winter storms on the Baltic are the norm. If your clause says 'weather permitting', get ready for arguments. One of our clients, handling grain transport at GCT, did not specify exactly what wind force prevents safe loading. The terminal operator stopped work at 18 m/s, but the captain claimed that a ship of that tonnage could safely continue loading. The dispute lasted 32 hours. Eventually, the shipowner issued a bill for additional costs because the contract lacked reference to official Gdynia Harbor Master's announcements.
We recommend entering specific values: wind speed above 15 m/s or rainfall above 2 mm per hour. In July 2024, we assisted in a settlement where a ship had to stop operations due to a downpour. Because the cargo was hygroscopic, every minute of rain had to be excluded from laytime. Documentation was kept sloppily – the captain wrote 'rain' without specifying hours. 4.72 hours were lost on negotiations with the agent to establish the actual downtime based on weather station data.
The phrase 'weather permitting' is an invitation to conflict. Use specific meters per second.
Chaos in Downtime Documentation (Statement of Facts)
The Statement of Facts (SOF) is the most important document after operations conclude. However, we see that maritime agents often make mistakes in the sections regarding technical breaks. In one contract from September 2024, they forgot to record a 2-hour break for a crane crew change. The charterer considered this time as laytime, although the terminal was not actually working. This caused a demurrage overpayment worth 11% of the entire freight. Agents act fast, but you pay for their haste.
Another error is the lack of the captain's signature under specific remarks in the SOF. If the captain does not agree with the time exclusion, they must note it immediately. We saw a case where the shipowner tried to challenge 12 hours of downtime caused by a conveyor belt failure only two weeks after the ship left the port. It was already too late for any changes. Quayside practice teaches that what was not signed in the port does not exist in court. At Gdynia Maritime Dialogue, we always say: read the SOF three times before applying the stamp.
Errors in Rounding 'Pro Rata' Rates
The final issue is the method of calculating rates for fractions of days. Most standard forms mention 'pro rata', but the devil is in the math and the number of decimal places. We saw a situation where rounding 3.2 hours up to a full 4 hours caused an overpayment of 540 PLN on one small contract. Over 11 calls a year made by this specific forwarder, it accumulated to nearly 6000 PLN. This is real money disappearing due to a lack of precision in a spreadsheet.
Frankly, we are not here to theorize about international law. It's about ensuring the shipowner and charterer know where they stand. If your demurrage rate is 3400 USD, then every minute is worth nearly 2.40 USD. That's roughly the price of a coffee at the port, but after 10 hours of dispute, you have the cost of a good dinner for the whole crew. Facts matter – ensure the calculation system is described in the contract using a mathematical formula, not just a verbal description.
