Market Trends in Laytime and Demurrage

In our previous post on laytime and demurrage, we explored the shifting landscape of claims management in shipping and provided actionable steps for adaptation. Today, we’ll continue that discussion with a data-driven focus, examining the latest market trends in laytime and demurrage through the lens of Veson’s Shipfix solution. By analyzing proprietary data on supply and demand (orders and tonnages), we’re able to uncover powerful correlations between freight rates and laycan times, offering actionable insights into market behavior.

Market lead time data insights

One of the key advantages of this data is its pre-emptive nature. Unlike traditional data sources, the data we’re going to show is captured before AIS trade flows, bills of lading, and even before cargoes are loaded. This early-stage data enables a unique perspective on market direction, allowing for a more informed approach to laytime and demurrage management.

In this example, we’re examining agricultural product demand in the Gulf of Mexico region, which reveals a positive correlation with the Baltic Exchange rates for Handymax vessels. This relationship provides an advanced signal of potential freight rate shifts, giving operators critical lead time to adjust strategies.

The role of laycan time in predicting freight rate volatility

In addition to supply and demand correlations, laycan time—the timeframe in which a charterer must load the cargo—also provides predictive value. In our analysis, we observed a strong positive correlation between laycan time in the Gulf of Mexico and freight rate volatility. When the length of the average laycan window changes significantly, it often heralds a period of freight rate volatility. Decreasing market lead times typically weigh on the short-term tonnage supply, supporting freight rates, while a lengthening of the laycan window has bearish qualities. 

This insight offers shipping professionals a valuable tool for anticipating market volatility. By monitoring laycan trends, operators can better manage their risk exposure and make informed decisions regarding contract negotiations, resource allocation, and cost optimization.

2023 retrospective: A bullish market with positive correlations

Historical analysis provides additional context for these findings. When examining the same data points from 2023, we observed similar positive correlations between supply and demand, freight rates, and laycan time in the Gulf of Mexico. However, the 2023 period was marked by a more bullish market, with freight rates experiencing an upward trend.

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This comparison underscores the cyclical nature of market behavior while highlighting the value of early indicators for navigating these cycles. By staying attuned to trends in laycan time and demand, operators can position themselves advantageously, regardless of market sentiment.

Making data-driven decisions in laytime and demurrage management

For companies in the maritime sector, insights like these can be practically applied in several impactful ways, like:

• Risk mitigation – By identifying potential freight rate volatility in advance, operators can adapt their strategies to reduce exposure to unfavorable rate changes.
• Operational efficiency – Understanding patterns in laycan time can aid in resource planning, helping to avoid delays and control demurrage costs.
• Strategic decision-making – Early indicators from supply, demand, and laycan trends empower companies to make proactive, well-informed decisions ahead of broader market shifts.

In an industry where the pace of change and complexity continue to grow, data-driven insights provide a valuable advantage. By incorporating these early signals into their planning, operators can navigate market trends in laytime and demurrage with greater confidence, ultimately supporting smoother operations and more resilient decision-making. If you’re curious, we welcome you to learn more about Shipfix here and read more about the IMOS-Shipfix integration here.