When a shipowner and a charterer agree on chartering terms, all of the important information such as laytime, volume, and commodity, among various other data are noted in a charter party. Laytimes can have different terms, one of them being SHEX.
SHEX = Sundays and Holidays Excluded
SHEX stands for Sundays and Holidays Excluded and is a method that shipowners use to calculate the total laytime of a vessel. With this method, the total laytime calculation excludes Sundays and public holidays.
The term laytime in a charter party refers to the allocated time the charterer has, to load and/or unload the cargo to or from a vessel. A SHEX term implies that during the calculation, only working days and Saturdays are counted, whereby Sundays and any public holidays are excluded.
SHEX is the reverse of SHINC, which stands for Sundays and Holidays Included. This article aims to share detailed information on the liner term SHEX and who it favors. We’ll also go through a detailed case study with you to better understand this concept.
Who Does SHEX Favor?
Liner terms typically favor either the charter or the shipowner, depending on the nature of the term and what it entails. The laytime term SHEX generally favors the charterer for the following reason.
As SHEX excludes Sundays and holidays, the charterer essentially has more time to load the cargo onto the vessel or offload cargo from the vessel. This is because the total laytime mentioned in a charter party typically lasts for a few days.
Therefore, the charterer may load the cargo over the specified amount of time, whereby Sundays and public holidays are not included in the calculation of the total number of laytime days mentioned in the charter party.
Having sufficient laytime is important as any excess is generally charged with vessel demurrage from the shipowner. If the charterer finishes loading activities before maximum laytime, they are compensated with a dispatch fee.
SHEX Case Study & Example
In the next section, we’ll take a closer look at the concept of SHEX using a case study. This example illustrates a scenario where a charterer plans to charter a vessel to transport grains in bulk from Bangkok, Thailand to Jebel Ali in the United Arab Emirates.
Below, you’ll be able to find an excerpt of the charter party between the charterer and the shipowner, where most of the important information such as laytime, laycan, and other details are recorded.
- Shipper: Asia Grains Corporation
- Vessel: ABC Starship
- Owners: Breakbulk Owners Inc.
- Laycan: May 20 – 30, 2022
- Laytime: 10 days AFSPS ATDN SHEX Thailand (At the First Sea Pilot Station, Anytime of Day and Night, Sundays and Holidays Excepted)
- Cargo: Bulk grain
- Quantity: 10,000MT
- Port of Loading: Bangkok, Thailand
- Port of Discharge: Jebel Ali, United Arab Emirates
- Hire rate: $10,000 pdpr (per day pro data)
Under this charter party agreement, the laytime is a total of 10 days. This means that the charterer has 10 countable days to load the grains into the chartered vessel before it departs.
Keeping in mind that the laycan has a SHEX term, the charterer is not required to count Sundays or public holidays into the calculation. While they are not required to load on these days, they may use this opportunity to do so and not have these days counted as laytime.
Does It Make Sense To Negotiate Laytime SHEX Terms?
Negotiating a SHEX term is favorable if the shipper or charterer requires more time to load cargo into the vessel, especially when their operation teams are not working on Sundays and public holidays.
This gives the charterer a little bit more flexibility and reduces the risk of vessel demurrage. However, it must be noted that shipowners typically factor this into the charter rates when providing a quotation.