Case study: how a Handysize owner got steady income and every demurrage claim paid

12 min read12 November 2026

A Handysize owner came to AVS unsure what to do with the fleet. We took over the commercial side of the ship, put her on time charter at market rates because the owner wanted steady cash flow, and followed every demurrage claim until it was paid. The results: 100% of demurrage collected, 9 months of uninterrupted time-charter employment, and an owner who now wants to buy more ships.

There was no trick behind these results. There was a clear goal set by the owner, an employment chosen to fit it, and post-fixture work done the same way on every claim. This article explains each part, so you can check the same things on your own ship, whether she is a bulk carrier, a container ship or a tanker.

If you own one or two ships and are unsure whether to fix them on time charter or keep them trading spot, or whether your demurrage is really being collected, this case is close to your situation.

Why we do not name the owner or the ship

Privacy matters in shipping. A ship’s name opens her history to anyone, and an owner’s name tells competitors and charterers more than the owner may want. So we do not publish client names, ship names, rates, dates, ports, fixture counts or tonnes. We explain how we handle ship data in Who sees my ship’s data when a commercial manager runs her?

What we can say: the ship is a Handysize bulk carrier, a dry bulk ship of roughly 25,000 to 40,000 tonnes deadweight, the size that carries grain, fertilizers, steel and other minor bulks into ports where bigger ships cannot go.

Where the owner was at the start

The owner came to us unsure what to do with the fleet. That is a common place for an owner of one to five ships to be, and it rarely starts with one big problem.

It usually builds up. The commercial side lands on the owner, on top of the bank, the crew and the technical manager. Finding the next cargo, checking each voyage, chasing hire and freight, and preparing claims are done when there is time. Income comes in unevenly. Some months are good, some are thin, and it is hard to say why. Over time the question changes from “how do I make the ship earn more?” to “is the ship worth the effort at all?”

We describe the usual leaks in Where a small ship owner loses money after the fixture: idle days between employments, laytime that starts late, demurrage claimed late or not at all, and payments that need chasing.

What did AVS do?

The work had four parts. None of them is unusual. What made the difference is that each was owned and done every time.

1. Took over the commercial side

Commercial management means running a ship’s employment and the money that comes with it: finding cargoes or charters, negotiating them, following each voyage, and collecting hire, freight and demurrage. It does not include the crew or repairs; those stay with the owner and the technical manager.

Before any fixture, the owner set the parameters: the minimum rates, the trades, the charterers, and the longest period the ship could be committed for. Anything outside those limits comes to the owner before it is fixed. The parameters are reviewed with the owner every month. We explain how this keeps the owner in charge in Will I lose control of my ship with a commercial manager?

2. Chose the employment the owner asked for

The owner wanted income that could be planned more than the chance of a strong spot voyage. So, at the owner’s request, we put the ship on time charter at market rates. She then had 9 months of uninterrupted time-charter employment.

This is the part of the case most worth noting. The “best” employment is not always the highest rate of the day. It is the employment that fits what the owner needs. The next section explains why a time charter fits that need.

3. Followed every demurrage claim to payment

Every demurrage claim on the ship was followed to payment, in the same order each time. The result was 100% of demurrage collected. We go through the method below.

4. Kept the money visible

Hire and freight were paid through AVS, and the owner saw every payment in the monthly report. Nothing depended on the owner checking the bank account and wondering which charterer had paid what.

Time charter or voyage charter: which gives steady cash flow?

There are two main ways to employ a ship, and they spread risk and cash very differently.

A voyage charter is a contract for one voyage. The charterer pays freight, a price per tonne of cargo or a lump sum, and the owner pays the voyage costs: bunkers (the ship’s fuel), port costs and canal dues. Time in port is governed by laytime, the time the charter party allows for loading and discharging. If the charterer takes longer, it owes demurrage, a daily rate for the extra time.

A time charter hires the ship for a period. The charterer pays hire, a daily rate, usually in advance in instalments such as every 15 days. The charterer also pays for bunkers and port costs and decides where the ship goes within the agreed trading limits. The owner keeps paying the ship’s running costs: crew, insurance, maintenance. Waiting time in port is the charterer’s problem, because hire runs anyway.

Why a time charter steadies income

Look at the rows of Fig. 3 and the reason is clear. On voyage charters, income arrives voyage by voyage, the owner pays bunkers before the freight comes in, a delay in port turns into a claim that may take months to collect, and every voyage ends with the question of the next one. Each of these makes income uneven.

On a time charter, the same daily amount arrives on a schedule. The owner can plan crew wages, loan payments and dry-docking against it.

What the owner gives up

A time charter is not free. If the market rises during the period, the charterer keeps the gain. The owner also stays responsible for the ship’s performance: if she breaks down or cannot work, the charterer may put her off-hire, which means hire stops for that time. And the owner depends on one charterer paying on time, so the charterer’s record matters a great deal.

So the question an owner should ask is not “time charter or spot?” in general. It is “what do I need from this ship in the next year?” Steady income to service a loan points one way. Room to catch a rising market points the other. Many owners mix the two across a fleet. In this case the owner was clear, and the employment followed.

How is a demurrage claim followed to payment?

Demurrage is money the owner has already earned. The ship waited beyond the laytime, and the charter party says the charterer pays for that time. Yet it is often the money owners lose most easily, because collecting it is paperwork with a deadline.

A few terms first. The notice of readiness (NOR) is the master’s notice that the ship has arrived and is ready to load or discharge; laytime usually starts from it, after any notice time. The statement of facts (SOF) is the port agent’s record of what happened in port and when. The time bar is the deadline in the charter party for presenting a claim with its documents; a claim that misses it can be lost.

Where claims usually go wrong

Most claims are not lost because a charterer refuses to pay. They are lost earlier, in small ways:

• The NOR was not valid. It was tendered outside office hours when the charter party required them, or before the ship was ready in every respect. Laytime then starts later, or the charterer argues it never started.
• The SOF was signed without remarks. If the agent’s times are wrong and the master signs without comment, the owner’s own document works against the claim.
• Stoppages were counted the wrong way. Rain, shifting between berths, waiting for documents or a shore breakdown may or may not count as laytime. It depends on the exact wording, and a charterer’s laytime calculation will read the wording in the charterer’s favour.
• Documents were missing. A claim needs the NOR, the SOFs from each port, the laytime calculation and sometimes pumping or other records. If one is missing when the time bar arrives, the claim may be out.
• Nobody followed up. A claim is sent, the charterer asks a question, and the reply waits for weeks. Silence is a common way for a claim to die.

What “followed to payment” means in practice

In this case, each claim was handled by the same routine. The NOR was checked against the charter party at the time it was tendered, not months later. Each SOF was compared with the clauses and the ship’s records. Laytime was calculated by the owner’s side, not taken from the charterer’s figure. The claim went in with full documents, well before the time bar. Every question from the charterer got an answer backed by the clause and the document. And the claim stayed open on the list until the money arrived and matched the claim.

There is no special skill in any single step. The result comes from doing all of them, on every claim, without exception. That is what 100% of demurrage collected means: no claim lost to a time bar, a missing paper or a quiet charterer.

What changed for the owner

The figures matter, but the largest change was in the owner’s question. When the commercial side is a daily worry, a fleet feels like a burden. When the ship earns month after month, the claims are collected, and every payment shows in one monthly report, the owner can think about the next step again. In this case the next step was buying more ships.

That shift is worth more than any single fixture. An owner who trusts the commercial side can plan, borrow and grow. An owner who does not tends to sell.

What can you learn from this case for your own ship?

Every ship is different, and we do not promise the same numbers for yours. But the method does not depend on the size of the ship or the trade. You can check your own position with these questions, using the last 12 months of one ship.

If the answers come easily and look good, the commercial side of your ship is in good hands. If they do not, the gap is usually ownership: nobody is responsible for the work from the fixture to the last payment.

About AVS Shipbrokers

AVS Shipbrokers LLC is a chartering and commercial management firm in Dubai, in Churchill Tower, Business Bay, on the market since 2020. We work with owners of one to five ships, dry bulk, container and tanker, trading anywhere on the range from China to Europe, including Africa, the Persian Gulf and everything in between. The owner sets the parameters; anything outside them comes to the owner first; parameters are reviewed monthly, and the owner gets one report a month. Hire and freight are paid through AVS. We are paid by the owner only, a share of earnings plus a fixed daily fee, and take no commission from charterers on the ships we manage. The minimum term is 12 months with 60 days’ notice.

The work in this case is the work described on our commercial management page, with a short version of the case in its case section. How the fees are built is explained in How much does commercial ship management cost?

The first step

To see whether the same approach fits your ship, start with a conversation. You do not need to send documents or sign anything. Send us the ship’s name or IMO. We look at what public data shows about her last 12 months, such as her trading pattern and idle periods, and a broker calls you to talk it through. It is free, with no obligation. If you later want a deeper look, the charter party and statements of facts let us go into laytime, demurrage, hire and freight.