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”.
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
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 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”.
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
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.
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.
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.
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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.
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77 Comments


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

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

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

Great share! Thank you for the post. Ship manning

Glad you liked it Sompal...

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

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

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

Glad you found it helpful Amit...

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

Happy to help Prabhu...

Great Job sir. Keep up the good work

Thanks, Suraj...

hiiya is teh biya

Rajeev jassal hi

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

Glad to have you here Naresh...

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

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

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?

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.

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

I will consider writing on that as well...

Nice article Sir.

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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!

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

Speed over ground

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?

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

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

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

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

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

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!!

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

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.

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Thank you sir fyr excellent blog.

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

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thank you very much

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

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.

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MY HUSBAND LEFT AND DR ISIKOLO GOT HIM BACK TO ME AND I AM AMAZED AND HAD TO SPREAD THE GOOD NEWS My name is Jotasha Jones from Florida. When my man left me, I was traumatized and heartbroken and couldn't get myself for months. I did all I could to get him back but to no avail. I left for another city hoping I could start all over again. I came in contact with another man who I tried my best to be with but it didn't work out because I could not love him. I knew I still loved and wanted my man back to me. So I began to search for help and that was when I found DR ISIKOLO from different views i read about him. We got talking and I made him understand everything that I needed to know and I believed in him and complied with the procedures. He worked for me and restored the love and connection between me and my man and just after 48 hours as he promised, My man searched for me and we got talking and he came down to see me where i am and we made things up and became happy together again. DR ISIKOLO is trustworthy and he can help you too if you contact him for anything. Just text him via WhatsApp +2348133261196 or read and contact him via website (https://isikolotemple.com)

Hello my name is Vivian Marcus from the United State, i'm so exciting writing this article to let people seek for help in any Break up Marriage and Relationship, Dr Kachi brought my Ex Boyfriend back to me, Thank you Sir Kachi for helped so many Relationship situation like mine to be restored, i was in pain until the day my aunt introduce me to Dr Kachi that she got her husband back with powerful love spell with help of Dr Kachi So i sent him an email telling him about my problem how my Boyfriend left me and cheating on me because of her boss lady at work i cry all day and night, but Dr Kachi told me my Boyfriend shall return back to me within 24hrs and to me everything he asked me to do the next day it was all like a dream when he text me and said please forgive me and accept me back exactly what i wanted, i am so happy now as we are back together again. because I never thought my Ex Boyfriend would be back to me so quickly with your spell. You are the best and the world greatest Dr Kachi. if you're having broke up Ex Lover or your husband left you and moved to another woman, You do want to get Pregnant do not feel sad anymore contact: drkachispellcast@gmail.com his Text Number Call: +1 (209) 893-8075 You can reach him Website: https://drkachispellcaster.wixsite.com/my-site

Secrets of winning the lottery with spell.My name is Joan Gingher a four-time lottery winner in Texas. I never knew spell was very powerful until I won my first $5.4million in the lotto Texas in 1993 with the help of Dr Lucas, not just that, I can still remember when I contacted him in 1993 he told me he will help me win the lottery, not just once but anytime I play I thought it was all joke until he gave me another numbers in 2006 then I won $2 million in the Holiday Millionaire Scratch-off. My third win was in 2008 when I won $3 million from a Millions and Millions ticket, as if that was not enough, he personally accepted to give me free numbers to play in 2010 that gave me my highest price on the lottery $10 million. Dr lucas has been so good to me and telling you all about his good work was part of my promise to Dr Lucas, so I urge everyone trying so hard to win the lottery to visit Dr Lucas, he is the best when it comes to winning the lottery Email:: drlucasspelltemple@gmail.com or WhatsApp +2349047943567

Secrets of winning the lottery with spell.My name is Joan Gingher a four-time lottery winner in Texas. I never knew spell was very powerful until I won my first $5.4million in the lotto Texas in 1993 with the help of Dr Lucas, not just that, I can still remember when I contacted him in 1993 he told me he will help me win the lottery, not just once but anytime I play I thought it was all joke until he gave me another numbers in 2006 then I won $2 million in the Holiday Millionaire Scratch-off. My third win was in 2008 when I won $3 million from a Millions and Millions ticket, as if that was not enough, he personally accepted to give me free numbers to play in 2010 that gave me my highest price on the lottery $10 million. Dr lucas has been so good to me and telling you all about his good work was part of my promise to Dr Lucas, so I urge everyone trying so hard to win the lottery to visit Dr Lucas, he is the best when it comes to winning the lottery Email:: drlucasspelltemple@gmail.com or WhatsApp +2349047943567 .

My name is Matt. I'm here to say a very big thanks to Priest Salami and his great Oracle for saving my marriage. No one would have believe that I and my wife will ever come back together again as lovers. But this great spell caster reunited us in just 48hours. Priest Salami is truly a real and honest online spell caster. Contact him now on: purenaturalhealer@gmail.com. Whatsapp number: +2348143757229

i want to share to the whole world how Dr Kachi the Great of all the Spell Caster, that helped me reunite my marriage back, my Ex Husband broke up with me 3months ago, I have been trying to get him back ever since then, i was worried and so confused because i love him so much. I was really going too much depressed, he left me with my kids and just ignored me constantly. I have begged him for forgiveness through text messages for him to come back home and the kids crying and miss their dad but he wont reply, I wanted him back desperately. we were in a very good couple and yet he just ignores me and get on with his life just like that, so i was looking for help after reading a post of Dr Kachi on the internet when i saw a lady name SHARRON testified that Dr Kachi cast a Pure love spell to stop divorce. and i also met with other, it was about how he brought back her Ex lover in less than 24 hours at the end of her testimony she dropped his email, I contacted Dr Kachi via email and explained my problem to Dr Kachi and he told me what went wrong with my husband and how it happen, that he will restored my marriage back, and to my greatest surprise my Ex husband came back to me, and he apologized for his mistake, and for the pain he caused me and my children. Then from that day our marriage is now stronger than how it was before, Dr Kachi you're a real spell caster, you can also get your Ex back and live with him happily: Contact Email drkachispellcast@gmail.com his Text Number and Call: +1 (209) 893-8075 his Website: https://drkachispellcaster.wixsite.com/my-site

MY BOYFRIEND GOT BACK TO ME WITH THE HELP OF DR ISIKOLO AND I AM TRULY OVERWHELMED Hello everyone, I am Kim Grayson from Miami. When all hope was lost in making my relationship work again between me and my boyfriend, I went online in search of help and i read and contacted DR ISIKOLO via his website (https://isikolotemple.com) who came and fixed everything and he will remain appreciated by me for the rest of my life. Too many times I went through emotional trauma due to the unending problems I had with my man and it led to our break up and that's why I sought help and found out about DR ISIKOLO who came to my rescue. He told me the procedures and urged me to comply which I gladly did and he didn't delay the process of giving solutions to my problems and I got the result in just 2 days as he assured me. Don't bother seeking help elsewhere because he is too good at helping people. He is trustworthy and honest so text him now via WhatsApp: +234-8133261196 or his email: isikolosolutionhome@gmail.com

Hello everyone out here!! My Fiancée Lesbian who left me is back, I want to share my testimony it's my happiness with you all in this site, last year my Lesbian Wife left me for another woman, she abandon me alone and I miss her, since everything was so hard for me because i really love her so much, i didn’t lose hope i try my best to get her back when i was searching online and read testimonies of Dr Kachi how he has been helping ladies in getting there Ex lover back, I had no option than to seek for help, i contacted Dr Kachi explain my problem to him, Dr Kachi Guarantee me not to worry that's going to help me cast a return love spell for me, that will bring my Lesbian Wife back and assure me within 2days, it was just like a magic my wife who left me surely return back, i couldn't believe when she live the other lady and she come back to me with so much love and caring will are together now, I will never forget this help that Dr Kachi did for me, a love spell that brought my wife back. If you are here and you need help to get your Ex Lesbian back do contact Dr Kachi through this email: drkachispellcast@gmail.com I'm proud to be on his testimony page. His Number Text and Call +1 (209) 893-8075 Visit his Website: https://drkachispellcaster.wixsite.com/my-site

My name is Vanessa Edwards from Asburn USA. I never knew people could be so kind, selfless and amazing until DR ISIKOLO helped me with my marriage problems. My union with my husband was not up to a year when we started having problems. It was so frequent that i fell into depression and kept struggling with it and same time, my husband left me and vowed never to return. I didn't know what to do with my life at that point in time. I had to keep searching for help until DR ISIKOLO came to my rescue. After he made due consultations, it was clear to me that my husband's ex lover kept manipulating him so she can have him back. I was told what to do by DR ISIKOLO and with all assurance, i must get the result after 2 days which i complied and he helped me and the result was so amazing. Now my husband is back to me and we are conceiving our first child in warmth and happiness. if you have similar or love problems, Just text him via Viber/WhatsApp +2348133261196 or email him via: isikolosolutionhome@gmail.com or visit his website to read more about him and his works (https://isikolotemple.com)

Hello my name is Vivian Marcus from the United State, i'm so exciting writing this article to let people seek for help in any Break up Marriage and Relationship, Dr Kachi brought my Ex Boyfriend back to me, Thank you Sir Kachi for helped so many Relationship situation like mine to be restored, i was in pain until the day my aunt introduce me to Dr Kachi that she got her husband back with powerful love spell with help of Dr Kachi So i sent him an email telling him about my problem how my Boyfriend left me and cheating on me because of her boss lady at work i cry all day and night, but Dr Kachi told me my Boyfriend shall return back to me within 24hrs and to me everything he asked me to do the next day it was all like a dream when he text me and said please forgive me and accept me back exactly what i wanted, i am so happy now as we are back together again. because I never thought my Ex Boyfriend would be back to me so quickly with your spell. You are the best and the world greatest Dr Kachi. if you're having broke up Ex Lover or your husband left you and moved to another woman, You do want to get Pregnant do not feel sad anymore contact: drkachispellcast@gmail.com his Text Number Call: +1 (209) 893-8075 You can reach him Website: https://drkachispellcaster.wixsite.com/my-site
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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
Glad you liked it Girish... Feels great hearing that.