Laycan is a term used in the shipping industry. It stands for "Laydays Commence and Cancelling date". It refers to a specific period during which a vessel is allowed to arrive at the loading port for a particular charterparty.
Laycan defines a range of dates during which the vessel can be on site and ready to load a cargo or go on time charter. The duration of the laycan period can vary substantially in the different shipping markets, from 48 hours in the maritime tanker market to up to 15 days in other sectors.
The laycan period consists of two key dates:
Laydays commence is the earliest date within the laycan period when the vessel can arrive at the port and begin loading a cargo.
Laydays are determined by the terms of the charterparty, and are agreed upon by the shipowner and charterer. The charterer can refuse to load the cargo if the vessel arrives before the Laydays as - very often - the cargo will not be available.
Cancelling date is the final date within the laycan period by which the vessel must arrive at the loading port. Otherwise, the charterparty may be canceled or subject to penalties.
If the vessel fails to arrive by the cancelling date, the charterer may have the option to terminate the contract or seek compensation for any delays incurred.
Laycan is a critical aspect of charterparty agreements because it helps ensure that both the shipowner and the charterer can plan their operations and logistics effectively. It provides a window of time during which the vessel should be available for loading, taking into account factors like weather conditions, berth availability, and cargo readiness.
The punctuality of the vessel is critical for the planning of operations in the port as it can impact storage, production and subsequent shipments. If the vessel arrives outside the laycan period, it can lead to disputes and financial consequences, so adhering to these dates is important in the shipping industry.
The Charterparty will stipulate that the shipowner on a regular basis has to give honest and accurate ETAs (Estimated Time of Arrival). If the vessel is delayed while en route to the loading port, the charterer has the option to cancel the voyage and find another vessel.
The charterparty will specify the amount of time that charterers have to decide whether to cancel the ship or maintain the contract. If the contract is maintained, the shipowners and charterers will agree on a new Laycan reflecting the delay of the vessel.
The laycan period is also used to determine the commencement of laytime, which is the period during which the owner of a vessel will make and keep the vessel available for loading or discharging without payment additional to the freight.
