Time-chartering

Most of the seafarers consider shipping business as a difficult subject.

Not that it is so much difficult. But because it is not something we deal with day in day out.

We know how much we need to know to get the days to go on.

And this was perfectly Ok until a few years back.

But now, each minute matters and each hour of off-hire need explaining.

That makes it so much important for we seafarers to understand shipping business.

Today in this blog, we will discuss about time charter and what seafarers need to be aware of when the vessel is under a time charter.

Ship Charter

Shipowner buys a ship to earn a hire by letting someone (the shipper) use the space on their ship to carry cargo from one place to other.

In the ideal world, the shipper has the cargo and should directly contact a shipowner for transporting their cargo.

In the real world, it is difficult.

Why?

When we need to buy land, it is difficult to find a direct seller. Same goes for the seller for whom it is difficult to find a direct buyer.

We approach a property dealer who has a number of sellers as well as buyers for different properties.

Middleman is required quickly and easily find what we need.

In the shipping business, that middleman is called “Charterer”.

charterer-role

Of course, charterer does not just make the shipper meet shipowners.

In fact, they themselves hire the ship and arranges to fill the space of the ship with cargoes from one or many shippers.

And if a shipper manages to find a ship on its own then the shipper becomes the charterer too.

Different types of ship chartering

Irrespective of who the charterer is, there are different ways a ship can be hired.

  • The ship can be hired for one voyage
  • The ship can be hired for a particular time
  • The ship can be owned for a particular time period

type-of-ship-charterers

Every stakeholder has different responsibilities under each type of charter. Let us discuss each type of charter.

Time charter

Under a time charter, the charterer hires the vessel for a particular period of time.

The time could be in years, days or months.

The shipowner receives the freight on per day basis which is settled every month or every quarter.

The time charter can be compared with the hiring a cab on per hour basis.

In this type of charter…

  • The fuel cost is borne by the charterer
  • The ship is managed by the shipowner
  • The maintenance of the ship is shipowner’s responsibility
  • The crew costs are paid by the shipowner
  • Port dues are paid by the charterer
  • Agents at ports are appointed by the charterer

time-charter-responsibilities

Time charter party agreement

Similar to the voyage charter party agreement, for time charter the shipowner and charterer would have a time charter party agreement.

In most of the case, this time charter party agreement would be provided to the ship.

In the agreement copy provided to the ship, the figures and data like freight rate, etc may have been deleted to maintain confidentiality.

Alternatively, the ship may be provided with a different document which may be called “Charterer’s instructions to Master”.

The master must read these instructions carefully and highlight the key instructions for follow up.

At the minimum, the key instructions to look for are…

  • The charter party speed as per time charter party agreement.
  • Instructions for notification in case of ship-shore cargo discrepancy
  • percentage of ship-shore cargo figure discrepancy allowed
  • Instructions for notifications in case of an incident

Off-Hires

Under a voyage charter, the vessel has been hired for the voyage.

The charterer would not be concerned about any delay because of the vessel as it is the vessel and shipowner that would lose that time.

Consider the case of hiring an Uber.

If you have hired the cab at a pre-agreed rate, you would not be so much worried about the time the cab takes to reach the destination.

But what if you have hired the cab on per hour basis?

You do not want the cab to stop in between unnecessarily.

Same goes for the time charter.

The charterer is paying the shipowner per day basis (pro-rata) and any delay by the ship is a loss for the charterer.

This loss of time because of the ship is called “off-hire”. This is the time for which the vessel is not on hire and so the name “off-hire”.

off-hire

The off-hire time would be for

  • any deviation from the original track (For example for a crew change, picking up stores or for some repairs, etc)
  • Any stoppages at sea (For example for machinery breakdown etc)
  • Cargo tanks failed by the cargo surveyor and declared not fit for loading

Off-Hires

Our responsibility as seafarers is to keep the off-hires to as close as possible to the zero hours.

For any off-hire, the vessel needs to send the off-hire report which lists the total off-hire time and fuel consumed during this off-hire time.

Sometimes time charter party agreement may allow certain hours of off-hour per instance which will not be charged to the shipowner.

For example, it could be something like this in a time charter party agreement…

If the owners manage to keep the off-hire time for one instance to less than 3 hours, this would not count as off-hire and no reimbursement need to be paid to the charterers by the shipowner…

For example, if the cargo tanks were failed by the cargo surveyor and after corrective action by the ship staff if the tanks were passed within 3 hours then there would not be any off-hire.

In any case, the master needs to create an off-hire report for all the off-hires and send it to the shipowner/ship manager for approval.

Off hire calculation for deviation

Ship managers would then forward (or ask the master o forward) the off-hire report to the charterers.

Speed of the ship

If you hire a cab on per hour basis, you would not expect it to move slowly.

If it does, you would end up paying more money as it would take more time to reach the destination.

Similarly, under time charter, the charterer would want the ship to run at speed declared by the shipowner or agreed in the charter party agreement.

It is the master’s responsibility to ensure that the ship always maintains that speed.

But what if the vessel is experiencing rough weather and master is not able to maintain the charter party speed?

The time charter party also have clauses for the weather conditions.

So say, the vessel is required to maintain 13 knots of speed when the wind speed is less than BF 6.

If the wind force is 6 or more, the speed for that period will not count as under-performance of the ship.

This makes it so much important to note down the weather conditions correctly in the deck log book as well as in the noon report.

At the end of an agreed period (each voyage, quarter, half yearly or yearly as agreed in charter party agreement) the performance of the vessel with respect to speed will be analyzed.

Charter Party Agreement

Fuel

Under a time charter, the fuel costs are covered and paid by the charterer.

The fuel supply is arranged by the charterer.

When the ship is delivered to the charter, charterer/shipowner may carry out fuel oil survey to get the actual fuel oil onboard at the time of delivery of the vessel to the charterer.

This would be the fuel that shipowner has delivered to the charterers at the time of delivery of the ship.

When the charterer hands over the vessel back to the shipowner, the bunker survey is again carried out.

This will the fuel handed over by the charterer back to the shipowner.

So let us say that

  • Bunkers at the time of delivery were HFO: 400MT and DO: 100 MT
  • Bunkers at the time of re-delivery were HFO: 250MT and DO: 50 MT

In this case, charterer needs to pay the shipowner for 150MT of HO and 50MT of DO.

It would be another way around if the bunkers at the time of redelivery are more than the bunker that was handed over to the charterers at the time of vessel delivery.

Agents at load port and discharge port

When the vessel is under time charter, the agent at load port and discharge port would be appointed by the charterers.

Shipowner or manager would have no role and relation with the agents.

It is important for the master and ship staff to be aware of this.

Usually, the agents are there to help ship staff but if the vessel is on time charter, we need to be more cautious while handling with an agent.

In a time charter, the loyalty of the agents lie with the charterer and not with the ship staff or shipowners.

Masters must be aware that as the agent is being paid by the charterer and not the shipowner, they may not go out of their way to help the vessel.

This is particularly important in matters that lie under the responsibility of the ship staff, shipowners or managers.

For example, if the ship is detained by the PSC for some reasons, the agent may not be that enthusiastic to clear the vessel at the earliest as in this case the vessel will be off-hired and the agent’s employer (charterer) would not be loosing on anything.

This may not be the case with some professional agencies but nevertheless, masters need to be aware of this.

Cargo under-performance

Under the time charter, the charterer may claim for under-performance of the vessel and seek compensation from the shipowner for loss in time.

The under-performance could be

  • Delays in starting the cargo operation
  • Loading of the cargo at less loading rate
  • Discharging of the cargo at less discharge rate
  • Stoppages during cargo operations from the ship staff

If the under-performance claim is justified and valid, then there is not much we can do.

But there would be occasions when it would actually be the delay from the shore and which is being claimed to be ship delay.

That makes it important to accurately issue these two documents

  • Statement of facts
  • Letter of protest for any delays

Apart from that accurately recording all the timings in the port log is important to support SOF and letter of protest.

For tankers, if any restrictions are put by the loading master on the vessel’s capability to load or discharge, a protest must be issued on this.

The restriction could be

  • to maintain manifold pressure lesser than the vessel is capable to maintain
  • to discharge (or load) at a rate lesser than vessel can load
  • shore provided a number of hoses lesser than vessel can connect

The letter of protest would help the ship staff and shipowner to prove that vessel under-performed because of the shore side restrictions.

The time charter agreement (or the instructions to master) provided onboard may have the minimum loading or discharge rate vessel need to maintain.

This could be something like

Owners warrants that vessel can discharge at a rate of 500 m3/Hr and maintain 7 bars at the manifold in all conditions…

While the vessel needs to make sure that they comply with this but they must not over-rely on these instructions.

For example, at a discharge port vessel achieved discharge rate of 800 m3/Hr.

This does not mean that there is no need to issue a letter of protest for any restrictions from the shore side.

Unclear, unreasonable and unsafe instructions

While on time charter, the charterer may ask the master to perform some tasks which may be unsafe or is not as per the industry guidelines.

I will list here two of such instructions that I personally came across.

  • Charterers asked to load a heated cargo adjacent to a cargo which is heat sensitive.
  • Charterers asked to keep the original bill of lading on board during the voyage from load port to discharge port

You may come across other such requests. The master needs to decline these requests.

If at all required, Master need to oblige to the requests only when

  • The charterer has provided a “letter of indemnity (LOI)” to the ship owners or managers
  • Instructions have been received from the shipowner or manager to oblige the request
  • It is safe to do so

Conclusion

From a commercial point of view, it is Master and ship staff’s moral responsibility to ensure that shipowner profits from owning and running the ships.

But there are no hard and fast written rules that hold good in all situations.

This is particularly the case when a ship is chartered in different ways.

It is important that we understand our responsibilities under each charter party.

And it is important that we understand where the loyalties of each party that we are interacting with lies.

Conseillé par les experts pour valtrex. Facilité de navigation sur le site. Choix exceptionnel pour acheter levitra petite quantité. Informations détaillées sur chaque produit. Destination de confiance pour acheter priligy france ligne! Hautement recommandé. La solution idéale pour suhagra! Actualités et tendances du marché. Recommandé pour celexa. Service après-vente exceptionnel. La meilleure option pour vigrx! Équipe dédiée au service client. Option optimale pour nexium. Des solutions sur mesure disponibles. Destination idéale pour levitra pas cher livraison rapide. Informations détaillées sur chaque produit. Vous cherchez où lioresal. Garantie de satisfaction! Option imbattable pour vrai priligy pas cher. Remises attractives disponibles. Site fiable pour viagra livraison rapide. Des années d’expérience réussie. Viagra en France.

Related Blogs

Follow us Today on
our social network

Capt Rajeev Jassal

About Capt Rajeev Jassal

Capt. Rajeev Jassal has sailed for over 24 years mainly on crude oil, product and chemical tankers. He holds MBA in shipping & Logistics degree from London. He has done extensive research on quantitatively measuring Safety culture onboard and safety climate ashore which he believes is the most important element for safer shipping.

Search Blog

56 Comments

Girish
Girish
4 years before

Now this Topic is crystal clear for me Thank you very much sir I found All of your blogs are really helpful I am appearing for meo class 1 from mumbai You are doing a great job sir

Rajeev Jassal
Rajeev Jassal
4 years before

Glad you liked it Girish... Feels great hearing that.

Lovika Shashtri
Lovika Shashtri
4 years before

Great sir!! Expecting more frequent blogs from you.May be fortnightly. If its ok fr you

Rajeev Jassal
Rajeev Jassal
4 years before

Thanks, Lovika. I will try to be more frequent in posting new articles.

Lovika Shashtri
Lovika Shashtri
4 years before

Sir ,you might be wondering why you should take all the pain but ...

Sompal Singh
Sompal Singh
4 years before

Great share! Thank you for the post. Ship manning

Rajeev Jassal
Rajeev Jassal
4 years before

Glad you liked it Sompal...

S.Thirumalar kannan
S.Thirumalar kannan
4 years before

Great explanation sir.Thank you so much.Also Please explain about various charter party terms and abbreviations.

Rajeev Jassal
Rajeev Jassal
4 years before

Thanks, Thirumalar... I will post more articles on charter party terms.

Amit Pal
Amit Pal
4 years before

Thank you so much for your articles Sir. These are very easy to understand and very helpful.

Rajeev Jassal
Rajeev Jassal
4 years before

Glad you found it helpful Amit...

Prabhu Muthu
Prabhu Muthu
4 years before

Sir for new command it's very useful thank you very much

Rajeev Jassal
Rajeev Jassal
4 years before

Happy to help Prabhu...

Suraj Singh
Suraj Singh
4 years before

Great Job sir. Keep up the good work

Rajeev Jassal
Rajeev Jassal
4 years before

Thanks, Suraj...

biya
biya
4 years before

hiiya is teh biya

Courage Nwogu
Courage Nwogu
4 years before

Rajeev jassal hi

Naresh Thulasingam
Naresh Thulasingam
4 years before

very nicely explained !!! am new to this blog .. am very surprised to see this blog .. will read other topics soon

Rajeev Jassal
Rajeev Jassal
4 years before

Glad to have you here Naresh...

DEEPAK SINGH
DEEPAK SINGH
4 years before

Excellent explanation sir. where does the term laycan fit into time charter?

Rajeev Jassal
Rajeev Jassal
4 years before

When time charter further sub-charter the vessel under voyage charter...

Peter Jacob
Peter Jacob
4 years before

Very good and informative article. I would like to know that how to do we count as a voyage? As far as I know a voyage starts from Arrival port and ends also at Arrival port and this is based on container vessels. But what about bulk carriers? Is it their voyage starts from loading cargoes and ends at complete discharging in arrival port?

Rajeev Jassal
Rajeev Jassal
4 years before

Under the time charter, the terms used are delivery of the ship to the charterer and redelivery of the ship to the shipowner. These are decided by the charterer and ship owner in the agreed charter party. For the voyage charter the freight is considered basis arrival load port and back to same port but it can be changed by agreement between ship owner and charterer.

Yury G.
Yury G.
4 years before

Dear sir, can you please explain the Bareboad charter. Thank you.

Rajeev Jassal
Rajeev Jassal
4 years before

I will consider writing on that as well...

Varun
Varun
4 years before

Nice article Sir.

Mickey Kapadia
Mickey Kapadia
4 years before

Nice Article!! ATLAS is an ISO 9001:2015 Certified Testing Laboratory duly certified by International Council for Machinery Lubrication – ICML Certified Level II Machinery Lubricant Analyst MLA II 002616. We are a state-of-the-art laboratory carrying out various tests for Lubricating Oils and Petroleum products. Over the years ATLAS Labs has provided a reliable platform in the field of testing and today is in the position to provide its analysis services to large national and international clients on a global scale.

Rathna R
Rathna R
4 years before

Respected Sir! Very well explained about Time Charter with calculation and diagrams, along with the cost expenses that is being borne by Charterer with reasons, which sounds to be quite helpful as student. May I please request you to write on Demurrage and Laytime Calculation. Thank You!

moht
moht
4 years before

Hi , Can you advise what is the charter party speed ? is it speed over ground or speed through water ?

Vinod
Vinod
3 years before

Speed over ground

Steve Fox
Steve Fox
3 years before

Hi, can you please explain why its not acceptable for the master to keep the original BoL onboard between last port of loading and destination port of arrival?

Fitsum
Fitsum
3 years before

Dear Capt Rajeev Jassal I appreciate your Curiosity to transfer your knowledge am glad of and it is very helpful to me

olu oged
olu oged
3 years before

On a Time charterer agreement for one year, What is the best numbers of days that can be use to calculate a month.

johnjose
johnjose
3 years before

very informative article. well explained the charter calculations.. marine colleges

Umesh
Umesh
3 years before

Excellent article Sir...Thank you Q. Will laytime,Demurrage and despatch affect the Shipowner in Time Charterers ?

Amar anand
Amar anand
3 years before

Nice Blog Sir.....Request you to please write blog on bareboat charterer and contract of Affreightment.....Also on insurance Policy and its principles...And clauses of various charter party

Tantan Tubal
Tantan Tubal
3 years before

Very well said Sir, like what the saying said wrong information is worst than ignorance.. Very much helpful for us who is aspiring to be a Master in the future and all your explanation are clear and well understood. Thumbs up with 5 star Sir. God bless!!

JEET KAMPANI
JEET KAMPANI
3 years before

Good one. Keep in touch if you are moving cargoes.

rony
rony
3 years before

Nice Blog!! The content you have shared is very elaborative and informative. Thanks a lot for sharing such a great piece of knowledge with us.

joy
joy
3 years before

The article embracing international shipping. And the information regards of entertaining international shipping blogs helps a lot.. here our website https://freelanceshipping.com/

Md.Ahsanul Karim Ahsan
Md.Ahsanul Karim Ahsan
3 years before

Thank you sir fyr excellent blog.

Ilias G Katsanis
Ilias G Katsanis
3 years before

Dear Capt Rajeev Jassal. We appreciate your good work and the ability to share your knowledge with all Mariners. It is undoubtedly very helpful!!!

data analytics course
data analytics course
3 years before

I think I have never watched such online diaries ever that have absolute things with all nuances which I need. So thoughtfully update this ever for us. https://360digitmg.com/course/data-analytics-using-python-r

Anuradha Peiris
Anuradha Peiris
3 years before

thank you very much

Samer homsi
Samer homsi
3 years before

Hello dear iam from lebanon i am broker & charter I am happy to deal with you and thank you

A.B.M. Ataur Rahman
A.B.M. Ataur Rahman
3 years before

Dear sir, I am from Bangladesh. From your article, we learn many things about time chartering. I have a question. Who will bear the cost of extra fuel consumption in off-hire time.

Sunrise International Cargo and Courier
Sunrise International Cargo and Courier
3 years before

Sunrise International has the finest international courier and cargo equipped with significant expertise and knowledge of the industry. We have an exceptionally well-trained and professional team that aids all our processes. Moreover, we are proficient in managing the varied requirements of our clients with utmost efficiency. You can rely on us for speed, dependability and assurance with your international courier and cargo services. Therefore, if you want the best courier and cargo in Mumbai as well as internationally, Sunrise International can be the best choice.

Sunrise International Cargo and Courier
Sunrise International Cargo and Courier
3 years before

Sunrise International has the finest international courier and cargo equipped with significant expertise and knowledge of the industry. We have an exceptionally well-trained and professional team that aids all our processes. Moreover, we are proficient in managing the varied requirements of our clients with utmost efficiency. You can rely on us for speed, dependability and assurance with your international courier and cargo services. Therefore, if you want the best courier and cargo in Mumbai as well as internationally, Sunrise International can be the best choice.

Sunrise International Cargo and Courier
Sunrise International Cargo and Courier
2 years before

Sunrise International has the finest international courier and cargo equipped with significant expertise and knowledge of the industry. We have an exceptionally well-trained and professional team that aids all our processes. Moreover, we are proficient in managing the varied requirements of our clients with utmost efficiency. You can rely on us for speed, dependability and assurance with your international courier and cargo services. Therefore, if you want the best courier and cargo in Mumbai as well as internationally, Sunrise International can be the best choice.

Best freightchina
Best freightchina
2 years before

Operating from Shenzhen, China, Hart International Logistics, Co., Ltd is your freight forwarder of choice in making sure your goods are delivered on time and without interruption. With the increase in the globalization of commerce, there is a spike in the demand for a logistics solutions provider who can provide the technology, maintain the standards, have the manpower, and the expertise to make sure there is a continuous and uninterrupted supply of goods from one point to another. In 2015, Hart International Logistics, Co., Ltd. was established to meet the demands of the new pattern of international trade represented by cross-border e-commerce. The company is committed to the construction of a multilateral, inbound, and outbound, two-way logistics superhighway connecting China to Africa, Europe, India, and other regions. Our vision is to become an international logistics enterprise with standards that is both respected by our customers and peers. We aim to achieve this vision by implementing our mission: improving current logistics processes through technology, work on our and our client's growth, and becoming a truly global enterprise transcending regional and linguistic barriers.

fastmcredit24hours@gmail.com
fastmcredit24hours@gmail.com
2 years before

Get flexible reliable and convenient direct credit with low interest rate of 5% , Apply now irrespective of your status. Reply to this Email: fastmcredit24hours@gmail.com or via what'sapp : +393511467666 / +79132627842

Sachin Shetty
Sachin Shetty
2 years before

Very useful blog sir.....keep sharing such blogs

alexander castro
alexander castro
2 years before

Programmed ATM Cards Do you know that you can hack any ATM machine !!! We have specially programmed ATMs that can be used to withdraw money at ATMs, shops and points of sale. We sell these cards to all our customers and interested buyers all over the world, the cards have a withdrawal limit every week. Getting rich and living the rich and famous lifestyle is a dream of many people. And while most people go to work or look for other ethical methods to make money on ATM-programmed cards. The programmed ATMs withdraw money from each ATM but have a withdrawal limit every week, only your PIN code is in it, it is a high-tech card system. The PROGRAMMED ATM card works on all card-based ATMs, anywhere in the world. Email: atmservices44@aol.com Email: hacklords.investors@gmail.com

data analytics courses
data analytics courses
2 years before

I find your opinion quite interesting, but the other day I stumbled upon a bit of completely different advice from another blogger, I need to think that one through, thanks for posting. data analytics courses

mcstrlings
mcstrlings
2 years before

check it out best digital marketing website

all about Ship
all about Ship
10 months before

This article is very clear and informative, providing valuable insights for anyone interested in understanding the basics of a ship on time charter. all about Ship

Leave Comment