Short answer
Most of the money a small ship owner loses is lost after the fixture, not in the freight rate: in idle days between employments, laytime that starts late, demurrage claimed late or never, hire paid late, and offers compared by rate instead of earnings per day. Each leak looks small, so nobody counts it; together they can cost more in a year than a few dollars a day on the rate.
- Idle days between fixtures are usually the biggest loss, because the ship costs money every day she waits.
- Demurrage is often lost to missing documents or a time bar in the charter party, not to the charterer refusing to pay.
- Compare offers by net earnings per day from a voyage estimate, never by the freight rate alone.
- The fix is ownership: one person or desk responsible from the fixture to the last payment.
Most of the money a small ship owner loses is not lost in the freight rate. It is lost after the fixture: in idle days between employments, in laytime that starts late, in demurrage that is never claimed or claimed too late, and in hire that arrives days after it is due. Each loss looks small on its own, so nobody counts them. Together they can cost more than a few dollars a day on the rate.
This article is for owners of one to five ships, dry bulk, container or tanker, who run the commercial side themselves or with one operator and a few brokers. It shows where the money goes, works through an example, and ends with a checklist you can use on your own ship this week.
You may be reading this after a year when the ship was busy but the account looked thin, or after a demurrage claim that was never paid. The goal behind this article is simple: a ship that earns on every day she can, with all of what she earns actually collected.
Why the losses happen after the fixture
When a ship is fixed, everyone relaxes. The broker has done his part. The charterer has his ship. The owner has a rate he can live with.
But a fixture is a promise, not money. The money arrives only if the voyage is followed step by step: the notice of readiness (NOR) is tendered on time and accepted, the statement of facts (SOF) is correct, laytime is calculated against the charter party, demurrage is claimed with the right documents before the time bar, and hire or freight is paid in full and on time. Then the next employment has to be ready before the ship comes open, or the cycle starts with idle days.
- FixtureRecap checked line by line against what was agreed
- Notice of readinessTendered on time and in the form the charter party allowslaytime starts here
- Statement of factsEvery time and remark checked against the charter party and the ship's log
- Demurrage claimSent with full documents before the time barmost often lost
- Hire and freightPaid in full and on time; deductions challenged
- Next employmentWorked before the ship comes open, not afteridle days start here
On a small fleet, this work often falls between people. The broker moves on to the next cargo. The operator, if there is one, has several ships and many other tasks. The owner has the ship, the bank, the crew and the technical manager to think about. The post-fixture work is done when someone has time. That is where the money leaks.
The six places money slips away
1. Idle days between fixtures
The next employment is looked for when the ship comes open, not before. The ship waits at the discharge port, or ballasts without a clear plan. Two days here, four days there.
Idle days are the most expensive loss, because the ship still costs money every day: crew, insurance, finance, maintenance. And they are the easiest to miss, because nothing goes wrong on an idle day. No one sends an invoice for a day that did not earn.
What helps: a position list that starts 30 to 45 days before the ship opens, and a plan for her next cargo that is ready before the current one is discharged.
2. Notice of readiness tendered late or rejected
Laytime usually starts from a valid NOR. If the NOR is tendered late, or in a way the charter party does not allow, laytime starts later than it could have. Every hour lost here is an hour less of demurrage later.
The common traps are simple. The charter party says NOR may be tendered “whether in berth or not”, but the master waits for the berth. Or it says office hours only, and the NOR goes in on a Friday evening. Or the ship is not ready in every respect, for example holds not passed, and the NOR is rejected and has to be tendered again.
3. Statements of facts nobody checks
The SOF from the port agent is the base of the laytime calculation. If it has gaps, wrong times or missing remarks, and nobody compares it with the charter party and the ship’s own log, the owner accepts a worse laytime result without knowing it.
Rain stoppages, shifting between berths, waiting for documents, shore breakdowns: each one may or may not count as laytime, depending on the wording. The agent writes what happened. Someone on the owner’s side has to read it against the clauses.
4. Demurrage claimed late, or not at all
A demurrage claim needs documents: the NOR, the SOFs, the laytime calculation, sometimes pumping logs or other records. Many charter parties have a time bar: if the full claim with documents is not presented in time, the right to claim can be lost. When the post-fixture work is done “when there is time”, the time bar sometimes comes first.
- Day 0ArrivalShip at the anchorage or pilot station
- Day 0NOR tenderedAs soon as the charter party allows
- + notice timeLaytime startsOften 6 or 12 hours after a valid NOR
- Laytime used upDemurrage runsEvery hour now earns the agreed rate
- Cargo doneSOF signedChecked before signing, with remarks
- Weeks laterClaim sentNOR, SOFs, laytime calculation attached
- Set in the charter partyTime barA claim not presented in full by now can be lost
Notice times and time bars differ between charter parties. Read the clauses in yours.
5. Hire and freight paid late or short
A charterer pays hire five days late. Then ten. Freight comes in short, with deductions nobody agreed. Someone has to notice, chase, and keep a clean paper trail. On a small fleet that someone is often the owner, in the evening, on WhatsApp.
Late hire is more than an inconvenience. It is the owner’s money financing the charterer’s business. And a pattern of late payments is information: it says something about the charterer you will want to remember at the next fixture.
6. Fixtures compared by rate alone
An offer with a higher rate can earn less per day than a lower one, once you count ballast days, port costs, bunkers, laytime terms and the charterer’s payment history. Without a voyage estimate for each option, the owner compares the wrong numbers.
The table below is an example with made-up figures for one Handysize cargo of 30,000 tonnes. It is not from a real fixture.
| Item | Offer A | Offer B |
|---|---|---|
| Freight rate | USD 24.00 / t | USD 21.50 / t |
| Gross freight, 30,000 t | USD 720,000 | USD 645,000 |
| Ballast to load port | 8 days | 1 day |
| Voyage days in total | 34 | 26 |
| Port costs | USD 90,000 | USD 80,000 |
| Bunkers | USD 230,000 | USD 170,000 |
| Commissions | USD 36,000 | USD 32,250 |
| Net result | USD 364,000 | USD 362,750 |
| Net per day | USD 10,706 | USD 13,952 |
Illustrative figures, not AVS or market data. Offer B also frees the ship 8 days earlier for her next employment.
The two voyages leave almost the same money. But B does it in eight fewer days, so it earns about USD 3,200 a day more, and the ship is ready for her next cargo more than a week sooner. Looking at the rate alone, most owners would pick A.
A worked example: one ship, one year
These numbers are made up to show the arithmetic. They are not from any real ship.
Say a ship earns USD 10,000 a day when she is employed. Start with the largest line, idle days. The calculation is simple enough to do for your own ship in a minute:
Illustrative. Use your own ship's idle days and her average earnings per day.
Now add the other leaks from the same year.
- 5 idle days between two fixtures50,000
- One demurrage claim lost to the time bar30,000
- Laytime started 12 hours late at one port5,000
- Hire paid 10 days late, six times a year (cost of money)4,000
- Total for the year89,000
USD. Made-up figures to show the arithmetic, not data from any ship. Late hire: USD 300,000 a month at 8% a year cost of money.
None of these lines would make anyone panic. Together, in one year, on one ship, they come to about USD 89,000, which is close to nine days of the ship’s earnings. On two or three ships the number is bigger. And the owner’s own time is not even on the list.
Checklist: find the leaks on your own ship
Take the last 12 months of one ship and answer these questions. You can save this list and use it for every ship.
- How many days was the ship not employed and not off-hire for repairs? Where did each gap come from?
- For each fixture: did the search for the next employment start before the ship came open, or after?
- For each port call: when was NOR tendered, and when did laytime start? Was there a gap, and why?
- Was every SOF checked against the charter party and the ship's log before it was signed?
- Which demurrage claims were submitted with full documents, and when? Which are still open?
- Which open claims are close to the time bar today?
- Which hire or freight payments came late or short, and from which charterers?
- Was there a voyage estimate comparing each fixture with the other options at the time?
- How many hours a week do you spend on this yourself?
If you cannot answer some of these questions quickly, it usually means the work is not owned by one person. That, more than any single mistake, is the root of the losses above.
What owners can do about it
There are three common answers, and each can be right for some owners.
Do it yourself
- Works with one ship on a long time charter
- Needs a fixed weekly routine
- Your evenings pay for it
Hire an operator
- One person in your office owns the voyage
- Salary, visa and office cost every month
- Gap when they are away or leave
Commercial manager
- A desk finds employment within your targets
- Follows NOR, SOF, laytime, demurrage, hire
- One report a month to you
- Do it yourself, with a clear routine. Possible if you have one ship on a long time charter with a good charterer, and time for the paperwork.
- Hire an operator. One person in your office who owns the post-fixture work. We compare this option in Outsource commercial management or hire an operator.
- Hand the commercial side to a commercial manager. A desk that finds employment within targets you set, follows each voyage, handles laytime, demurrage, hire and freight, and reports to you once a month. We explain the role in What a commercial ship manager does.
The point is not who does the work. The point is that someone owns it from the fixture to the last payment.
How AVS works on this
At AVS Shipbrokers LLC, a desk in Dubai on the market since 2020, commercial management means exactly this chain. We start working the next position before the ship comes open. We follow the voyage: NOR, SOF, laytime and demurrage, checked against the charter party. We handle hire and freight and chase late payers. You get one report a month.
On the ship we have managed longest, 100% of demurrage has been collected. 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. How the fees work is explained in How much does commercial ship management cost.
We work with owners of dry bulk, container and tanker ships trading anywhere on the range from China to Europe, including Africa, the Persian Gulf and everything in between. Read more on the commercial management page, or see how charterers use the same desk on the dry bulk chartering page.
The first step
The checklist shows where to look, and we can look with you. On the ship AVS has managed longest, 100% of demurrage was collected (read the case). 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 the ship, such as her trading pattern and idle periods, and a broker calls you to talk it through. It is free, and it is a starting point for a conversation, not a full study. If you later want a deeper look, the charter party and statements of facts let us go into laytime, demurrage, hire and freight.
Questions owners ask
What is the most common loss for a small ship owner?
Usually idle days between fixtures, because the ship costs money every day she waits. The second is often demurrage that is claimed late, without full documents, or not at all.
What is a time bar on a demurrage claim?
A deadline in the charter party for presenting a demurrage claim with its supporting documents. If the claim is late or incomplete, the owner may lose the right to it. Periods differ between charter parties and are often between 60 and 90 days, so check the clause in yours.
How do I count idle days for my ship?
Take the last 12 months. Count the days the ship was not on a voyage or time charter and not off-hire for repairs or dry-docking. Then look at where each gap came from: waiting for cargo, a long ballast, or late planning of the next employment.
Why can a lower freight rate earn more?
Because earnings depend on days and costs as well as the rate. An offer close to where the ship opens, with cheaper ports, less bunkers and better laytime terms, can leave more per day than a higher rate that needs a long ballast.
Can a commercial manager recover old demurrage claims?
Sometimes, if the claim is still inside the time bar and the documents exist. A commercial manager checks open claims against the charter party and the statements of facts and follows them up with the charterer.
What does the free first look by AVS involve?
You send the ship's name or IMO. AVS looks 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. No documents and no cost.