Laytime handover: pass on the allowance basis

Key takeaways

• Identify whether the allowance is fixed or derived under the agreed method.
• Preserve the quantity source and the rate's exact commercial basis.
• Separate the allowance from the calculation of time actually counted.
• Carry qualifications and unresolved quantity questions into the handover.
• Recalculate only on a supported change to the relevant input or method.

Transfer the method as well as the number

BIMCO's published FERTIVOY form illustrates that a charter can specify a particular quantity basis for laytime. Do not import that form's arrangement into another fixture. Check the current text of the actual charter and amendments to identify the method that applies.

The receiving desk needs to know whether it is using a fixed allowance or deriving one from stated inputs. A figure copied into the recap summary may conceal that distinction. If the quantity changes, the team must understand whether and how that fact affects the agreed calculation.

Record the allowance basis in plain language with its source. Identify the quantity reference, the rate and any qualifications requiring attention. Avoid substituting the planned cargo quantity simply because it is readily available in the voyage estimate.

Where the basis remains disputed, state the alternatives and the decision required. The handover should not convert an internal provisional assumption into an agreed term merely by presenting the resulting allowance without explanation.

Keep quantity evidence and contractual quantity separate

Several quantity records may exist during a voyage, each serving a different purpose. The commercial question is which record or basis the charter uses for the allowance being calculated. Selecting that basis requires the agreed wording, not a preference for the most recent or most convenient figure.

The operations team should identify the source and status of the quantity supplied. Is it a planning figure, a reported operational figure or an issued document figure? Preserve material qualifications and avoid silently reconciling differences.

The contract reviewer determines the relevant basis where interpretation is needed. The account preparer then implements the reviewed method. This division helps prevent a factual update from becoming an unintended contractual change.

A later quantity correction may require a new allowance calculation if it affects the adopted basis. It may have no effect if it concerns a different measurement used for another purpose. The handover should make that relationship clear enough for the receiving desk to recognise the difference.

Worked fictional quantity-based allowance

This ILLUSTRATIVE example expressly assumes an agreed quantity basis of 23,000 tonnes and a rate of 12,000 tonnes per day. For the arithmetic only, a day is assumed to contain 24 hours and no other modifier applies.

The handover should carry the quantity, rate and assumed day basis, not merely “46 hours.” The unrounded quotient is used to obtain the hour result. This example establishes neither the quantity basis nor the treatment of elapsed time under any actual charter. It calculates no demurrage or despatch entitlement.

In practice, a rate description may include qualifications that require specialist interpretation. Do not remove those words when converting the agreed terms into an internal calculation instruction. The worked example is deliberately simple so that its arithmetic and limitations are visible.

Distinguish allowance from counted time

The allowance is not the same as the elapsed duration of the port call or the time counted under the charter. A receiving operator should not compare a raw port-stay figure with the allowance and immediately describe the difference as an agreed claim.

The counted-time calculation requires its own event evidence, commencement analysis and treatment of interruptions. The allowance calculation supplies another component of the comparison. Both need review, and neither can repair an unsupported assumption in the other.

This separation is commercially useful when information arrives in stages. The team may be able to confirm the allowance basis while a particular interruption remains disputed. Conversely, the port chronology may be clear while the quantity basis remains unresolved. The handover should describe each status separately.

Do not mark the whole account complete because one component has been checked. A principal needs to understand which conclusion is ready for use and which still depends on missing information or advice.

Assign responsibility for the inputs and decisions

A live handover should name the responsible people, but the functions remain distinct even where a small team combines roles. A cargo source can confirm a reported figure without deciding which figure the contract requires.

Identify the event that should trigger a review. This might be a corrected relevant quantity document, clarification of a negotiated term or a newly identified qualification. The receiving desk should not recalculate reflexively whenever any cargo number changes.

Fictional case: a forecast allowance survives the final cargo figure

In a fictional fixture, the chartering team prepares a provisional allowance using the enquiry quantity. The calculation is useful for planning and is clearly provisional in the original estimate. During handover, only the resulting hour figure is copied into the operations summary.

Later, the relevant quantity information becomes available. The receiving desk updates the cargo record but leaves the allowance unchanged because it does not know that the allowance was derived from the earlier figure. The account now combines an updated cargo description with an unexplained historical calculation.

The reviewer retrieves the agreed basis and establishes which quantity should be used. It then recalculates the allowance where appropriate, preserving the earlier planning assumption as part of the history. The revised handover states the method and source so a future correction can be assessed intelligently.

The fictional case does not assume that every final quantity replaces an enquiry figure under every charter. Its lesson is that the receiving desk needs the calculation's dependency, not merely its output.

Common mistakes

Copying an allowance without its method hides the effect of later changes. Another mistake is assuming that any new quantity should replace the existing input. Check the contractual basis and source status first.

Avoid rounding intermediate results unnecessarily when the account requires a more precise final value. Preserve the agreed rate's qualifications. Finally, do not treat a verified allowance as a completed laytime account: the counted-time side still requires its own evidence and contractual analysis.

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